1. Underwriting is the process of
a) Issuing policies after duly signing and stamping the same.
b) Assessing the risk and taking a decision about the acceptance of the risk.
c) Collection of details about the proposers. d) Carrying out investigation about the correctness of the statements made in the proposal.
2. The Criteria and guidelines for the selection of risk (underwriting) are
a) Stipulated in the I.R.D.A Regulations
b) Stipulated in the Insurance Act 1938
c) Developed by each insurer.
d) Developed by the Insurance council
3. Which of the following does not form part of the possible decision of an underwriter?
a) To accept the risk at ordinary rates
b) To accept the risk with extra premium
c) To accept the risk on modified terms or special terms
d) To accept the risk for a stepped-up Sum Assured on his own.
4. As per I.R.D.A. Regulations, the insurer has to convey the decision on the proposal to the proposer
within …………….. days from receiving the proposal with all requirements:
a) 30 days b) 15 days c) 7 days d) 60 days
5. Which of the following does not form part of the purpose of medical examination?
a) To ascertain information required for assessing the risk by the underwriter
b) To reduce the chances of adverse selection by the company
c) To ascertain whether a more comprehensive medical check-up involving special reports is
warranted
d) To avoid lapsation of the policy
6. Which of the following does not form part of occupation hazard?
a) The exposure to danger or violence
b) The chances of developing illness due to working conditions
c) Increased risk of accidents
d) Area of residence
7. The parameters such as height. Weight, chest and abdominal measurements, blood-pressure and pulse
rate help the underwriter to assess the
a) Physical hazard b) Occupation hazard c) Moral hazard d) Insurable Interest
8. Moral hazard relates to the
a) Physical characteristics of the risk
b) Living conditions and environment of the proposer
c) Conduct, attitude and intentions of the proposer. d) None of the above.
9. Which of the following are possible indicators of fraudulent intentions?
(i) The proposer is requesting for insurance for a large amount at an advanced age.
(ii) The proposer asks for a policy insuring a non-earning family member without any existing
insurance cover for the earning member of the family.
(iii) The proposer asks for a policy to provide pension for him starting from his age 55 whereas his
present age is only 30.
(iv) When the medical check up is done at a place different from his place of residence.
a) (i) (ii) and (iii) are correct b) (i) (iii) and (iv) are correct
c) (i) (ii) and (iv) are correct d) (i) (ii) (iii) and (iv) are correct
10. Human life value concept is applied
a) In financial underwriting to cap the amount of life insurance an individual can get
b) In medical underwriting to assess the risk
c) In non-medical underwriting where risk is assessed on the basis of personal statement of the
proposer.
d) In group insurance to determine the insurance cover.
11. Under non-medical underwriting, the risk is covered without any medical check-up
(i) Subject to restrictions in respect of age and sum assured.
(ii) Only in respect of certain types of insurance plans
(iii) For all categories of live without any restrictions
(iv) Only for male lives
a) (i) (ii) and (iv) are correct b) (i) (iii) and (iv) are correct
c) (i) and (ii) are correct d) (i) and (iii) are correct
12. Rajesh is aged 35 years and is having remaining period of service of 25 years. He is earning an annual
income of Rs.4 Lakhs. After deducting taxes and other fixed deductions, his net annual contribution to
family is Rs.3,00,000 pa. At the current rate of interest (viz) 8% p.a. if someone invests Rs.37,50,000
in Bank F.D. it will fetch an annual interest of Rs.3,00,000. The Human Life Value calculated using
the simple income replacement method will be
a) Rs.10,00,000 b) Rs.75,00,000 c) Rs.37,50,000 d) Rs.90,00,000
13. There are certain cases where the underwriter will feel that the additional risk associated with a person
might diminish and become normal after a certain period, the insurer may impose a lien which
a) Will be applicable throughout the term of the policy
b) May be applied at diminishing rate expiring on completion of a specified period.
c) Will not affect the risk cover at any point of time during the policy term
d) Will be at an increasing rate applicable for 50% of the term.
14. Pricing of various products of an Insurance company is done by
a) The Actuary b) The underwriter
b) The chief Accountant d) The C.E.O. of the Insurance company
15. Gross premium is arrived at by Actuary after making a loading for expenses bonus and profit margin to
a) The risk premium b) The level premium c) Net premium d) Mortality premium
16. A Proper financial plan can provide the benefits of
a) Protection of income, medical needs, dependant’s welfare
b) Fulfillment of protection needs of an individual, return on investments and tax benefits
c) The protection of family’s maintenance in the absence of the income provider.
d) Protection of the family from the existing loan burdens
17. Most of the insurance plans offered by the life insurance companies provide
a) Guaranteed maturity benefits alone b) Flexible death cover alone
c) Death benefit and maturity benefit including survival benefits
d) Foreign travel and sickness insurance cover
18. The simplest form of insurance plans offered by life insurance companies offering only death cover for
a specified number of years is called
a) Whole life Insurance plan b) Limited payment whole life plan
c) Pure Endowment Plan d) Term insurance plan
19. Those who cannot afford to pay a higher premium, but still wants to have an insurance cover for a
required amount who would like to include a savings goal to their insurance later, when they can afford
a higher premium can take out
a) An Endowment Policy b) a Money Back Policy
c) Term insurance Policy d) Convertible Term Insurance policy
20. Joint Life insurance plans covering two or more persons under a single policy are issued by insurance
companies for
a) Married couple or business partners b) Brothers and sisters
c) Colleagues working in the same office d) Parents and children
21. A group insurance policy provides insurance protection to a group of people brought together for a
common objective. However, that group should not be
a) Group of employees of an organisations b) Customers of a bank
c) An organisation is formed for the purpose of taking up life insurance.
d) Members of a professional body
22. Micro insurance aims at providing insurance cover for amounts ranging from Rs.5000 to
a) Rural population b) Minor children
c) Kisan card users d) Persons belonging to low income group
23. Salary savings scheme (SSS) is
a) Specific type of insurance plan b) Only term insurance plan is offered under SSS
c) It s just a convenient arrangement to collect the premium through salary deduction
d) A group insurance policy
24. Tax benefits available for life insurance products are contained in
a) Sec.113 of the Insurance Act b) I.R.D.A Regulations
c) Sec.80C and 10(10D) of the Income Tax Act d) Sec.80G & Sec.80CCF of the Income Tax Act
25. Which of the following category of protection needs has to be taken up immediately and provided for
fully?
a) Critical priority category b) Low priority Category
c) Medium priority Category d) High priority Category
26. The medium term goals an individual may have include saving money for
a) Buying consumer durable like Air-conditioner or L.E.D. Television
b) Their children’s education and marriage
c) Their vacation at a hill station
d) Providing modular kitchen for their home.
27. Financial planning of an individual
a) Is a one-off activity b) Best done at random based on peer influence
c) Needs to be done taking professional advice and needs to be reviewed regularly until the goals
are achieved d) Can be done most appropriately by the individual himself.
28. Which of the following investment/savings product will be best suited for Rahul who has recently
retired from service from a private sector organisations,
a) Bank Fixed Deposit b) Gold and Silver
c) Real Estate d) Pension product offered by life insurance companies
29. Life Insurance products which provide an element of savings are found to be superior to other forms of
savings in respect of
a) Return on Investment b) Liquidity
c) Meeting the protection needs d) hedge against inflation
30. Which of the following savings does not rank for deduction from taxable income under sec.80C of the
Income Tax Act?
a) Life Insurance premium b) Public Provident Fund
c) Mutual Funds units other than E.L.S.S. d) contribution to pension Funds
31. If inflation is running at 5% and you wish to get a return of atleast 5% net of inflation, your investment
should get attleast a return of
a) 8% b) 10% c) 9% d) 12%
32. In the case of a reduction in the interest rate
a) Investment in Bank deposits become more attractive
b) Borrowings become costlier for companies which may put pressure on profitability of the
companies
c) Demand for equities may go up and share prices will go up d) Will lead to reduction in consumption
33. Rakesh wants to create an Emergency Fund to meet any emergency needs like medical treatment,
sudden travel expenses or any major repair to his car/house. He would best be advised to set aside
some money in
a) Real Estate b) Single Premium Endowment Policy
c) Bank Deposit and a debt fund in Mutual Funds d) Public Provident Fund
34. Medium term needs of a clients can best be taken care of by life insurance policies. Such needs will
include savings for
a) Emergencies like hospitalization, attending to unexpected repairs to car ; annual vacation etc.,
b) Children’s education, marriage etc
c) Purchase of a house d) Post-retirement income
35. The insurance plans that take care of the needs of aged people are
a) Money Back Policies b) Joint Life Policies
c) Annuities and Health insurance products d) ULIPs
36. With Medical expenses soaring in recent years, coupled with vulnerability to diseases, the need for
health insurance is now greater than ever before. Therefore it is prudent to have health cover
a) At advanced stage of life b) at middle ages
c) at young age d) at every stage of lie
37. Riders are conditions or clauses that are added to the base plan
a) That restrict the existing benefits available under the policy
b) That excludes specific risks from the purview of the cover
c) That provide additional benefits on payment of additional premium
d) And available without any restriction whatsoever
38. Accidental death benefit, critical illness benefits waiver of premium, enhanced death cover are
examples of
a) Multiple benefits b) Extended covers c) Multipurpose covers d) Riders
39. Which of the following statement is not correct in respect of family floater insurance plan
a) Under this policy an individual can cover self, spouse, children and parents
b) The insurance cover is shared among the family members covered in fixed proportion
c) The insurance company may specify the number of people that can be covered
d) This is an yearly renewable policy, where under premium may change every year.
40. Under a Health Insurance plan, the insurance company pays the insured a fixed amount on a daily basis
in the event of hospitalization, which may be more or less than the cost of actual treatment. This plan
is called
a) Group Health Insurance Plan b) Cashless facility Plan
c) Critical illness plan d) Daily hospitalization cash benefit plan
41. Which of the following statement is correct in respect of health insurance plans
a) Not all costs will be covered by the insurance company and there may be some expenses that
might be excluded from the cover.
b) Cashless facility is available in all hospitals in respect of all health insurance policies
c) Pre-existing diseases are covered without any restriction
d) The total amount of the hospital bill will be fully reimbursed by the insurance company.
42. Waiver of premium rider is commonly available under which of the following plans?
a) Term Insurance Plan b) Health Insurance Plans
c) Children’s Endowment Plans d) Annuity Plans
43. The I.R.D.A. Regulations in respect of riders stipulate that
a) No policy can have more than two riders attached to it.
b) The premium for any single rider shall be as specified in the regulation
c) The benefits arising under each of the riders shall not exceed the sum insured under the base
plan
d) All riders can be added freely at will of the policyholder without any restriction
44. An annuity is a series of regular payments from an annuity provider to an individual referred to as
a) Beneficiary b) Annuitant c) Assignee d) Nominee
45. Annuities are often described as the ‘reverse’ of life insurance because
a) Premiums are payable either in a lump sum or in installments b) The annuity payments are dependent on the contingency of survival whereas life insurance
cover is for the contingency of death.
c) Annuities can be immediate or deferred
d) Annuities are bought from life insurance companies
46. Life annuity is a type of annuity where the insurance company
a) Makes the annuity payment throughout the life time of the annuitant and the annuity payment
ceases on the death of the annuitant
b) Guarantees annuity payments for a minimum fixed number of years.
c) Continues to pay the annuity to the surviving spouse d) Makes a refund of the premiums paid on the death of the annuitant
47. Which of the following type of annuity is devised to address the problem of inflation ?
a) Life annuity b) Guaranteed period annuity
c) Life annuity with return of purchase price d) Increasing annuity
48. Commutation facility available under annuity policies enable the annuitant
a) To start receiving the annuity payments after a certain period
b) The increase the pension amount on payment of additional contribution
c) To make a partial withdrawal upto one-third of the accumulated Fund
d) To surrender the policy during the regular annuity phase.
49. Which of the following statement is incorrect in respect of the Income-Tax benefits available for life
insurance policies.
a) An individual can pay the premiums for health insurance plans for self, spouse, children and
parents and make use of the tax benefits applicable.
b) Premiums paid for riders under life insurance policies also qualify for deduction from taxable
income subject to the limits prescribed
c) The premiums paid for pension plans during the accumulation phase quality for deduction from
taxable income subject to prescribed limits.
d) The annuity payments receivable under the pension products of life insurance companies are
exempted from Income-Tax as per sec.10 (10D)of the Income-Tax Act.
50. The accidental death benefit rider will not cover.
a) Death caused by accidental fall from a tree
b) Death caused by snake bite
c) Death caused by drowning
d) Death caused by accidental fall during mountaineering.
ANSWERS:
Q&A
1 B
2 C
3 D
4 B
5 D
6 D
7 A
8 C
1 B
2 C
3 D
4 B
5 D
6 D
7 A
8 C
9 C
10 A
11 C
12 C
13 B
14 A
15 C
16 B
17 C
18 D
19 D
20 A
21 C
22 D
23 C
24 C
25 A
26 B
27 C
28 D
29 C
11 C
12 C
13 B
14 A
15 C
16 B
17 C
18 D
19 D
20 A
21 C
22 D
23 C
24 C
25 A
26 B
27 C
28 D
29 C
30 C
31 B
32 C
33 C
34 B
35 C
36 D
37 C
38 D
39 B
40 D
31 B
32 C
33 C
34 B
35 C
36 D
37 C
38 D
39 B
40 D
41 A
42 C
42 C
43 C
44 B
45 B
46 A
47 D
48 C
49 D 45 B
46 A
47 D
48 C
50 D
