131 points english
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ENGLISHTRANSCRIPT
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Important points for Life Insurance Sector and related questions and answer
1. Insurance : Insurance is compensation of financial loss caused due to unpredictable, unexpected and unwanted event.
Que 1. Mr. Amit wants to accumulate 10 lakhs for his daughter's
marriage but he is afraid that if he dies before her marriage then
It will cause problem in her marriage arrangements. What
arrangements should he make?
Ans: He should have Insurance cover equivalent to his
needs. That means he should have insurance to meet his
responsibilities.
2. Proposer : A person who proposes to buy a policy. Que 1. Firoz buys a policy for Jasmine. Firoz will be called as..
Que 2. Zainab takes insurance in the life of Jasmeet. Zainab will be
called as..
Ans: Proposer
3. Proposal Form : This is a form to be filled by a person who wishes to buy a policy. (all his information is filled in this form)
Que 1. Underwriter can get the required information related to
proposer from..
Ans: Proposal form
4.Policy Holder : A person in whose name policy is taken. That means a person who pays for policy.
Que 1. Firoz buys a policy for Jasmine. Firoz will be called as..
Ans: Policy Holder
5. Life to be Insured : A person on whose life is covered or protected. (If husband buys policy for his wife then husband is policy holder and wife is life to be
insured)
Que 1. Firoz buys a policy for Jasmine. Jasmine will be called as..
Ans: Life to be Insured
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6. Insurer : One who gives the policy, one who settles the claim. e.g. Reliance, Tata, Birla etc.
Que 1. Valuation is done by..
Ans: Insurance Company
Que 2. According to 2002 IRDA regulation which insurer should have
Grievance Redressal system.
Ans: All Insurance Companies
7. Agent : Agent is the intermediate between Insurance company and the policy holder.
Que 1. Who is the primary underwriter while taking the policy?
Ans: Agent
8. Premium : Amount paid to buy a policy or Installment Que 1. What does Consideration mean in any Insurance Contract?
Ans: Premium
9. Sum Assured : The limit of policy amount or the amount payable to nominee in case of unwanted event occurs.
Que 1. If Naresh wishes to take the tax benefit of the full premium
paid which is 60000, what amount of sum assured should he avail in
ULIP plan?
Ans: 3 Lacs
10. Maturity : The lump sum amount received at the end of the term on survival. Que 1. Who initiates the process of settlement of Maturity Claim?
Ans: Insurance company initiates the process
11. Rider : It can be taken along with normal policy for extra benefit. Accidental Benefit Rider or Critical Condition Rider etc can be added to policy. It
is extra benefit over the actual Sum assured by paying small amount.
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Que 1. If a Accidental Benefit Rider is added to a Term Plan, how
much extra amount should the person pay for the rider benefit?
Ans: 30% of the basic premium
12. Underwriting : To examine the proposal to decide whether to give the policy or not. Que 1. Vishal and sandeep applied for a health plan in XYZ Life
Insurance Company. Vishal is asked to undergo a medical checkup
but Sandeep is not asked to do so. What will be most possible
reason?
Ans: Vishal is older than Sandeep
Que 2. An insurance agent sold two policies to two different persons
having the same policy term. He declares the commission to each of
them. The commission of one of the policy is more than the other.
What should be the reasons for this difference?
Ans: Both have chosen different types of policies
13. Underwriter : He is the employee of company who decides whether to accept or reject the proposal after examining the level of risk faced by
particular individual.
Que 1. Varun wishes to pursue a career in insurance and wishes to
be in a department which examines the level of risk. In which
department should he join?
Ans: Underwriter
14. Risk, Hazard & Peril : Risk is Economic loss i.e. death, hazard is reason for risk i.e. disease and Peril is the Natural calamity.
Que 1. How are perils and hazards normally distinguished under
term insurance policies?
Ans: Perils are risks that policyholders will die before a
specified date and hazards are factors which could influence
that risk.
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Que 2. According to insurance terminology which of the following
is correct?
Ans: 2. Smoking is a hazard and lung cancer is a peril
15. Investigator : A person who investigates in case of mishap or during settlement of higher claims. He collects information from external source.
Que 1. Investigators are appointed mainly to settle which kind of claim
Ans: The claims which are doubtful according to company
and the claims whose Sum Assured is high. Or in case of
Early claim (claims raised within 3 years are considered as
early claims)
16. Medical refree :This is team of Doctors who prepare a confidential report of medical checkup in case of individuals with high risk. They are not employee
of the Insurance Company.
Que 1. Vishal and sandeep applied for a health plan in XYZ Life
Insurance Company. Vishal is asked to undergo a medical checkup
but Sandeep is not asked to do so. What will be most possible
reason?
Ans: Vishal is older than Sandeep
17. IRDA : Insurance Regulatory and Development Authority was formed in 1999 and is followed since 2000.
Que 1. As per the IRDA regulations the decisions on the proposal
must to convey to the proposer within......
Ans: 15 days
Que 2. According to IRDA guidelines, how long does an insurance
company have to complete its investigation of a claim?
Ans: 180 days or 6 months
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18. Nominee : Legal heir of insured. A person who gets the Sum Assured on death of Life Assured.
Que 1. Which of the following statement is not true in connection with
nomination?
Ans: A person having a policy on the life of another should
make a nomination.
19. Truste : A individual who is appointed nominee through a special law. Maturity or death claim are given in his/her name only.
20. Married Woman : According to this act a married man can appointee his wife and children Property Act as trustee, that means the money will be given only to his wife and (MWP Act 1874) children in both maturity and death claim cases. ( for Hindu people 1 wife
and 2 children can be appointed as trustee and for Muslim people 2 wives
and 4 children can be appointed as trustee.
Que 1. Under Married Womens Property Act, 1874 a policyholder is...
Ans : Trustee
Que 2. In MWP act 1874 there is a provision made regarding Life
Insurance policy and is applicable to..
Ans : Married Man
21. Endorsement : It is a process to make changes in the Policy documents, e.g. name, address, mobile number, mode etc.
Que 1 . If a customer has mentioned he is a drinker in the proposal form,
the insurance company can exclude this hazard and mention it in which
part of the policy document?
Ans: Endorsement
Que 2. Which part of the policy document are the locations of Ombudsman
Courts mentioned?
Ans: Endorsement
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22. Assignment : A process to transfer the rights or title of the policy. (gift/loan). One who transfers the title is called Assignor and the one who accepts it
is Assignee. There are two types of Assignment 1) Absolute
Assignment and 2) Conditional Assignment
Que 1. Which of the following statements in correct in connection with
assignment?
Ans: Assignee cannot make fresh nomination in the policy
Que 2. Manish took a loan from Pankaj of Rs.10 lac, Manish transferred his
Insurance policy of 10 lac to Pankaj as a security with the agreement of when
Loan is fully paid, policy title will be revert back to name of Manish is called
Ans: Conditional Assignment
23. Contract : As policy is a asset a Legal Contract/Agreement is formed between Company and Policy holder. There two type of contracts
1) Life Insurance Value Contract and 2) Health Insurance Indemnity Contract
Que 1. An individual is said to be competent to enter into a
contract if they are
Ans: 18 years
Que 2. If a contract is signed by a 15 years old boy, this contract
will be considered as..
Ans: Invalid
24. Clause : It is a condition which is applicable to the individual with high risk, e.g. job profile, disease/disorder, etc. Once this condition is applied it
works for whole policy term.
Que 1. Vikas is 35 year old and is posted as a soldier in Indian
Army. He wants to buy a policy for himself. His risk will be
categorized according to which regulation of Insurance Act?
Ans: According to Clause (as he is in Army the risk for loss of
life is more, hence Life Insurance company will not pay any
claim if he dies during war/on duty)
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25. Lien : This condition is applicable where the risk is reducing. It is applicable for certain period of the policy term not for the whole
term. Underwriter wil decide the term for Lien (5 years is the
maximum Lien Term)
Que 1. In certain case if Underwriter feels that the risk associated
with the individual is is reducing, he will accept the proposal with....
Ans: Lien
Que 2. Lien is imposed on a policy when underwriter feels that.....
Ans: the risk associated might decrease
26. Indemnity : This Principle states that you cannot make profit out of Insurance. It is the amount paid as per actual loss occurred. It is applicable to General Insurance
and not to the Life Insurance as Life Insurance is a Value Contract.
Que 1. The concept of indemnity is based on the key principle that
policyholders should be prevented from
Ans: Making profit out of Insurance
27. Utmost Good : This principle is concerned with Faith between Insurer and Insured. Faith Declaration by client that all the information filled in proposal form are correct and true. If the information filled is incomplete or is false, then settlement
of death claim will not take place. Period for this is 24 months from inception.
Que 1. Principle of utmost good faith will operate in existing policy
Ans: If the policy has lapsed and it has to be revived
28. Insurable : This Principle means that you can insure the things/people which you own, Interest i.e. its presence causes profit and absence causes loss. Que 1. In case of life insurance, Insurable interest must exist
Ans: At inception of policy
Que 2. What amount of insurable interest does an individual have in his
own life?
Ans: Unlimited
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Que 3. If Insurable interest does not exists at the time of inception of the life
Insurance policy then, life insurance contract is
Ans: Invalid
29. Surrender : After paying premium for 3 full years, policy holder willingly returns the policy. Que 1. Available Loan amount under life Insurance policy is generally based on
Ans: Surrender Value
30. Physical Risk : Physical Characteristics, Job Profile and Gender. Que 1. If both parents of proposer died in their thirties due to heart attack
what is the kind of peril or hazard the proposer has?
Ans: Physical Risk
Que 2. In the personal statement, Harish declares that he consumes alcohol
twice every week. This is a...
Ans: Physical Risk
31. Moral Hazards : Risk caused due to habits, untruthfulness, carelessness, and greed. Que 1. A person with a criminal background due to Financial fraud would
come under which hazard
Ans: Moral
Que 2. Manish being a sole earning member of his family not Insured himself
But looking for insurance for his son who is student there is possibility
Ans: Moral hazard
32. Foreclosure : Loan+interest=surrender value, when this situation occurs the policy is foreclosed by Insurer.
Que 1. On foreclosure, if Death claim arises before the payment of the
surrender value, the payment would be payable to:
Ans: Legal heir of Life Assured
33. Ombudsmen : It is a platform where the disputes between Company and Policy Holder are resolved. Ombudsman can resolve cases upto 20 lacs Sum Assured.
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Disputes are resolved in 10 days. Decision given by Ombudsman is obligatory
to the Company but not for the Policy Holder. Policy holder can approach
only one forum at a time.
Que 1. If a case is already before the consumer forum, then the ombudsman
should
Ans: Dismiss the case
Que 2. The Ombudsmans powers are restricted to insurance contracts of
value not exceeding?
Ans: 20 Lacs
Que 3. What is the period of award passed to the customer decided by
ombudsman?
Ans: 3 months
Que 4. How many Ombudsman offices are situated in India?
Ans: 12
34. Risk Retension : To bear the Risk on our own. No Insurance bought to cover the risk. Que 1. Vinay doesnt want to take insurance on himself. He feels that his
family will survive with the funds available in the bank and monthly rentals
received from village. This comes under Risk
Ans: Retaining (Risk retention)
35. Risk Transfer : Transfer the risk faced by us to the someone else, i.e. Insurance Company. Que 1. Mr. Mahesh is a software engineer. He has taken a term insurance
for Rs. 30,000,00/- for 30 years. This is an example for-----------------
Ans: Risk Transfer
Que 2. Which is the best option to transfer risk?
Ans: Transfer
36. Human Life : Human Life is actually the annual income of the individual but as far as Value (HLV) Insurance is considered HLV is 20 times of the annual income. Que 1. While calculating the HLV, individual's future income, total period in
the services, hike in monthly take home salary and________ is considered.
Ans: Discount Rate
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37. Paid up value : (No. of premium paid * Sum Assured)+ bonus (Total no. of premium payable) Que 1. Mr. Shailesh has an endowment policy with 30 years policy term, he has paid for eight years. The sum assured Rs.8,00,000/- and accumulated bonus Rs.60,000/-. What is the paid up value? Ans: 273333
38. Loan : Loan amount given is 90% of the Surrender value. Loan is not given over ULIP policies.
Que 1. Available Loan amount under life Insurance policy is generally based on
Ans: Surrender Value
39. Lapse : If the revival period of the policy comes to an end and the policy is still not revived, then it gets lapsed.
Que 1. Ramesh has bought one policy and has paid only one premium. He is
unable to pay further premiums. He wishes to revive the policy after 5 years
of commencement date. What will happen to this policy?
Ans: Policy will get lapsed (revival period is 5 years)
40. Actuary : He is the officer in the Insurance company who calculates the profit, premium rates and bonus rates.
Que 1. In life insurance business if a person is working in calculating premium
rates of insurance products, then he is
mostly likely a member of
Ans: Institutes of actuaries of India
Que 2. Kunal works for Insurance company to decide the
Insurance amount which institute do he belong to....
Ans: Institutes of actuaries of India
41. First Premium : This is proof given by company on commencement of risk. Receipt Que 1. When is the First premium receipt considered as proof?
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Que 2. Mr. A has submitted the proposal form, when does the risk commences
for the company?
Ans: On generation of First Premium Receipt
42. Renewal Premium : All future receipts received after first premium receipt. Receipt Que 1. Amit buys a pure Endowment plan on half yearly mode. What
would be the receipt called when he pays 2nd installment of his half
yearly premium?
Ans: Renewal Receipt
43. Pooling of Risk : To pool all the people facing same kind of risk together. Que 1. Law of large numbers is worked out by which of the following?
Ans: Pooling of Risk
Que 2. With pooling of risks an insurance company pools the premium
collected from several individuals to insure them against similar risks.
At what circumstances will the insurance companies pool the risk
of a life insurance and health insurance together?
Ans: Under no circumstances
44. Income Tax Act 1961 : 1. 80 C tax exemption over 1 Lac invested in life Insurance 2. 80 D tax exemption of 15000/- extra for investment in health
insurance for himself and 20000/- if he buys health
insurance for parents
3. 10 (10) D All the returns from Life Insurance are tax free
4. 80 E interest paid over education loan is deducted from taxable
income
5. 24 (b) interest paid over home loan is deducted from taxable
income
Que 1. What's the limit of tax benefit that can be availed under
Section 80C.?
Ans: 100000/-
Que 2. Under which section of Income tax Act 1961 a person can
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acquire tax benefit over the premium paid for Health Insurance Policy?
Ans: 80 D
45. Term Insurance : If the policy holder dies within the policy term then the nominee will receive the Sum Assured.
Que 1. In case of a term plan the maximum premium of the
accidental rider can be.
Ans: 30% of Base Premium
Que 2. In term insurance if Critical illness rider claim happens then
what will happen to existing policy
Ans: Critical Illness benefit will ceases. After taking
benefit of CI Sum Assured if the policy holder dies
within 6 months, nominee will not receive basic sum
assured. But if he dies after 6 months nominee will get
basic sum assured as well.
Que 3. Mr.Baskar had taken a Term plan for a sum assured of
Rs. 7 lakhs. He also has an ADB rider worth Rs. 4 lakhs.
Unfortunately Baskar died in a car accident. How much will be
the death claim settlement?
Ans: Total 11 lakhs will be paid
Que 4. Pure Term Insurance is example of
Ans: Non-participating Plan
46. Pure Endowment Plan : Policy holder gets the sum assured only on survival. Que 1. Prashant bought a policy of sum assured of 75Lacs for 30
years.
According to document if Prashant survives for 30 years then he will
get 75 lacs, but if he dies during policy period his family will not
receive sum assured. Which policy is this?
Ans: Pure Endowment plan
47. Endowment Plan : Both Maturity and Death benefit are given in this kind of plans Que 1. Mr. Shailesh has an endowment policy with 30 years policy term,
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he has paid for eight years. The sum assured Rs.8,00,000/- and
accumulated bonus Rs.60,000/-. What is the paid up value if bonus
accumulated and if not bonus accumulated?
Ans: 213333 or 273333
Que 2. Endowment plan is combination of.......
Ans: Pure Term plan and Pure Endowment plan
48. Group Insurance : One policy is bought and covers many individuals, e.g. employer can buy one policy and cover all employees. This policy is called Master Policy
Que 1. Group Insurance is opted in which case?
Ans: Employee and Employer
49. Joint Life Policy : One policy covers 2 individuals. This policy is available for husband wife or business partners.
Que 1. Who can opt for Joint Life Policy?
Ans: Husband Wife or Business Partner
Que 2. Suresh has asthama, but he has taken joint life policy. There is no
need of nominee. Why is it so?
Ans: Because it is Joint Life Policy
50. Industrial Policy : This policy is for the low income group. The minimum premium is Rs.15/- per week.
Que 1. Radheshyam is an auto rickshaw driver, his income is very less.
Which Life Insurance policy can he buy?
Ans: Industrial Policy
51. Micro Insurance : A policy for low income group. They can opt for sum assured of 5000 to 50000 for Life Insurance and 5000 to 30000 for Mediacal Insurance.
Minimum premium for this type of Insurance is Rs. 15/- per week.
Two types of agents can sell insurance:
1) Agent who has IRDA license (an immature, unsound mind
and individual with criminal background cannot become agent)
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2) NGO, Co-operative Banks, Rural Corporate Agent, etc.
Que 1. What is the range of sum assured offered in the Micro Insurance?
Ans: 5000 to 50000
Que 2. Micro insurance is made specifically for people from........ group
Ans: Low income
Que 3. How much maximum Sum Assured can be taken under micro
insurance for any Health policy bought?
Ans: 30000
52. Insurance History : 1) Indian Life Insurance Regulation was formed in 1912 2) Insurance Act was formed in 1938
3) Life Insurance Corporation was formed in 1956
4) Insurance Regulatory and Development Authority (IRDA)
was formed in 1999 and was implemented since 2000
5) Married Woman Property Act 1874
6) Anti-Money Laundering Act was formed in 2002
Que 1. Mr. Avas has passed the IRDA exam in 2010 and got a license but
he has not worked. He wants to apply to renew his license once again,
in which year he can apply for the same?
Ans: 2013
Que 2. To ensure that the premiums are paid out of a legitimate source
of funds cash is accepted
Ans: 50000
Que 3. Which one of the section deals with the licensing of an agent?
Ans: Insurance Act 1938 section 42
Que 4. The guidelines for annual assumed growth rate are given by
Ans: IRDA
Que 5. Who has the authority in insurance company to issue/cancel the
agents license
Ans: Designated Person
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53. Life Cycle ; 1) Childhood (0-17 yrs) 2) Young unmarried (18-25 yrs)
3) Young married (26-30 yrs)
4) Married with kids (31-35 yrs)
5) Married with elder children (36-45 yrs)
6) Pre-retirement (46-59 yr)
7) Retirement (60 yrs and above)
Que 1. The sole focus during a clients fact-find session was healthcare
requirements and estate planning. Which main life stage is he most
likely to fall into?
Ans: Retirement
Que 2. For which age group is the Life insurance most important?
Ans: Pre-Retirement
Que 3. One couple want to buy a policy best suitable for their 7 years kid.
Which is the best option for them?
Ans: Child Plan, Term plan, Money Back Plan, ULIP
Que 4. Now a days life expectancy is increasing consistently and it is
above 60. Although there are many challenges to be faced, how can
these challenges be covered?
Ans: Health Insurance Policy
Que 5. Which is the special feature of ULIP that handles risk profile of the
individual for long term?
Ans: Capital Appreciation
54. Investment : 1) High Priority (Immediate investment required) Priority 2) Medium Priority (Little investment to start with)
3) Low Priority (Think of investment in future)
Que 1. Manish and Manisha is a married couple with one child. They want
to plan for savings, child education/marriage and their retirement and
protection of income. Which should be their lowest priority?
Ans: Marriage
Que 2. For his investment need, Ravi has parked funds in equity. The
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returns from this form of investment can be categorized as
Ans: High Risk
Que 3. Vijay, aged 30 years and married, is the sole bread winner for his
family. He is saving enough with banks. As an agent, which need
you prioritize first?
Ans: Financial Security Need
55. Priority of Life Cycle : 1) Protection of self life 2) Protection of Income
3) Protection of Self and Family's health
4) Protection of Child Education
5) Protection of Child's Marriage
6) Investment to protect the Responsibilities
7) Investment for post Retirement Life
Que 1. Manish and Manisha is a married couple with one child. They
want to plan for savings, child education/marriage and their retirement
and protection of income. Which should be their lowest priority?
Ans: Marriage
Que 2. Mr. Shyam is 20 years old and has started earning recently,
he has no responsibilities over him. Which policy should he buy?
Ans: Term Insurance, ULIP
56. Kinds of Insurance : Types of Insurance 1) Life Insurance
2) Non-life Insurance
a) Fire, b) Marine, c) Miscellaneous I) Vehicle, ii) Travel, iii) Health,
iv) Assets v) liabilities
3) Miscellaneous
Que 1. Insurance market is divided into
Ans: Life Insurance and Non-life Insurance
Que 2. Following are the types of Insurance.
Ans: Life Insurance, Non-Life Insurance and
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Reinsurance
Que 3. ............. are the clients of reinsurance.
Ans: Insurance Company
57. Bonus : Extra amount received with the Sum Assured while claiming the Maturity Claim or Death Claim. There are four types of bonus:
1) Simple Revisionary bonus bonus received over Sum Assure every year
2) Compound Bonus bonus received over Sum Assured and previous
year's bonus every year
3) Terminal Bonus Bonus received over long term policies
4) Interim Bonus - 31st March is the date of valuation
Insurance sector, returns for the same are declared in September Any
claim (Death/Maturity) which arises within March to September
are settled with different bonus and it is Interim bonus.
Que 1. Which one of the following bonuses is given by insurer
as an incentive to the insured to for long term:
Ans: Persistency Bonus/ terminal Bonus
Que 2. Interim bonus is valid till which period?
Ans: Till declaration of next bonus
58. Loading : Extra amount charged over the premium by the company due to various reasons, e.g. increase in expenses, bonus given, unpredictable
and uncertain Maturity Claim.
Que 1. If the annual premium for a plan is 32000 and a frequency
loading of 4% is added in a quarterly premium what is the amount that
needs to be paid.
Ans: 8320
Que 2. If bonus is given under a plan the additional premium added
is known as
Ans: Loading
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59. ULIP : This are the policies which are linked with Share Market. The person bears the risk for money (capital appreciation or loss). NAV Net Asset Value
In ULIP give and take of money is in the form of NAV.
The price used to buy NAV is called Offer
Price and the price at which NAV is sold is Bid Price.
Que 1. A 25 year youngster, is employed in a MNC recently. His salary is
30000 p.m.. He has no responsibilities to face. Which policy can he buy?
Ans: ULIP (Unit Linked Insurance Plans)
Que 2. Switching is not a rite suggestion in case of ULIP policies. As this
increases
Ans: Investment of Risk
60. Saving Products : These are the options where individual can save funds for their future. 1) Banks RD, FD, Saving Account, etc.
2) Post Office Savings RD, FD, KVP, NSC, Time Deposit etc.
3) Mutual Fund Dependant on share market
4) Corporate Bond It is a kind of FD, with fixed interest rate
5) Share Market Risk involved
6) Metal Gold, Silver, etc.
7) Life Insurance
Que 1. Gautam wants to buy Kisan Vikas Patra or Time Deposit, where
should he go?
Ans: Post Office
Que 2. Who manages Mutual Fund?
Ans: Asset Management Company (AMC)
61. Kinds of Premium : 1) Net Premium There are two parts of the premium one for maturity claim and other for death claim. Company invests this premium after
deducting the charges. The interest received from the investment
is deducted from the loading added to premium. Such premium
is called Net premium.
2) Risk Premium Premium charged for Death Claim.
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3) Gross Premium Net Premium + Loading (charges)
4) Level Premium Average Premium calculated for the complete policy
term.
Que 1. If the sum assured remains the same, what will be impact of net
premium if the age of the policyholder increases
Ans: It remains constant
Que 2. Level Premium is calculated based on
Ans: Risk Premium
62. IRDA/SEBI/RBI : 1) IRDA sets all the regulations related to Insurance company and agent's eligibility and code of conduct.
2) SEBI (Securities and Exchange Board of India) regulates the securities
market in India and protects the interests of the investors
3) RBI is regulator, supervisor and monetary authority on Indian Financial
system. It also sets guidelines for banking operations
Que 1. Who is a regulator, supervisor and monetary authority of the
financial system in India?
Ans: RBI
Que 2. As per the IRDA regulations the decisions on the
proposal must to convey to the proposer within......
Ans: 15 days
Que 3. Who act as an intermediary by offering a trading platform for
buying and selling of shares?
Ans: Bombay Stock Exchange
63. E-Sales : Online sale of Policy Que 1. Which type of sale is done through internet?
Ans: Direct Sale
Que 2. Which of the following ways is easier for a person to take a saving
product?
Ans: Internet (E-sales)
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64. Mutual : There are two parties involved in the Insurance contract. Same kind of understanding over the terms in the contract.
Que 1. Both the parties to a contract must agree and understand the
same thing and in the same sense which is called .....
Ans: Consensus ad idem
65. Free Look Period : Policy holder can cancel the policy within 15 days after receiving policy document if he/she wishes to.
Que 1. Mr. Kumar is taken one life insurance policy with ABC Company.
But he is not satisfied with the policy benefits. What Mr. Kumar
can do under this situation?
Ans: He can send back the policy document to insurance company
with in 15 days from policy receiving date.
Que 2. How many days does the Free Look Period last?
Ans: 15 days
66. Inflation : If the price of goods & services increase & value for money fall. Que 1. Anand received post taxation 5% return on his fixed deposit
in a bank. If his net return is 3%, what can be the reaso
Ans: Inflation
67. Health Insurance : Individual Health Plan covers a single person. Family Floater Health Insurance covers whole family (wife, children, parents). Group Health
insurance covers group of people. Daily Hospitalization Cash Benefit
Rider A certain fixed amount is paid irrespective of actual expenses (ICU
expenses given). members also. We will call these plans as..
Ans: Family Floater Health Insurance Plan
Que 2. In what situation Waiting Period is applicable in a health
insurance?
Ans: Pre-Existing Illness
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68. Fact Finding : Identifying the Insurance need of the client by knowing his responsibilities, assets, marital status, no. of children, age, liabilities, etc
Que 1. In the context of financial planning, how is the difference between
real needs and perceived needs best described?
Ans: Real needs are actual needs and perceived needs are based
on a clients thoughts and desires.
69. Churning : Ask the client to invest in the existing policy again and again or convince client to shift from existing policy to new policy for earning high
commission.
Que 1. If the agent recommends the client to terminate an endowment
plan and take a whole life in order to earn higher commission its termed as
Ans: Churning
Que 2. Varun, aged, 32, had a Insurance cover of 10,00,000/- . He was
approached by an advisor who made some analysis and told him that his
Insurance need is higher than 10, 00,000 and suggested that he surrenders
the existing policy and buys a new one. This is example of
Ans: Churning
70. Participating Plan : Client has the right to participate in the profit (Bonus) of the company. The Endowment Plan, Money Back Plan, Whole Life Plan are the
participating plans. Non participating plans donot provide this benefit
(no bonus eg Term, ULIP)
Que 1. During a fact finding process the need analyzed were income
replacement and childrens education. But the customer insists on only
a child plan for the time being and asks the agent to give him a child
plan. The agent should.
Ans: Give a child plan and revisit the client on a later date
Que 2. Mr. Shanth has taken an endowment policy of 20 years. He has
paid premium for 10 years and now the policy is in force. At this point
of time can Shanth take loan?
Ans: Mr. Shanth can take loan which should be certain
percentage of the surrender value of the policy.
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71. Indisputability : In the first 2 years of the policy, if the insurer comes to Clause section 45) know that some material fact has not disclosed by the proposer, it can
declare the policy to be null and void.
Que 1. Which of the following falls under voidable contract?
Ans: Misinterpretation
Que 2. Indisputability clause can be enforced by the insurance
company during the
Ans: First Two years of policy
72. Role of Financial : Where the Agents help the policy holder to maintain a stable life. They Services & also help the Govt. for smooth
Insurance functioning.
Que 1. Mrs. Sheela received some amount out of her
husbands death. In such a situation what will be her prime focus?
Ans: Investment Management
73. Indirect Channels : These are the channels who sell insurance on behalf of the Insurer (Agents, Bancassurance, Broker, etc. )
Que 1. If a client wants to compare between all financial products then
the best person he can approach is
Ans: Broker
74. Code of Conduct ; Duties and Responsibilities of Agents as per IRDA for agent Que 1. If the license of an agent has been disqualified by a designated authority in 2010 then the person can apply for a license in which year.
Ans: 2015
Que 2. If a policy holder buys a policy from the advisor and lodges a
complaint, it should be treated as :
Ans: Same for all policies sold by advisor
Que 3. If the advisor license has terminated then what he has to do?
Ans: 50 hours training to be attended once again along with
renewal fee Rs. 250.
Que 4. After how many years the License of the agent can be renewed?
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Ans: 3 years
Que 5. Agent should apply for renewal of his license how
many days before the expiry of his license?
Ans: 30 days
75. Phases of Insurance : First Phase Pre-Liberalization 1956 formation of Life History Insurance Corporation
Second Phase Liberalization 1999 IRDA was formed.
Foreign Direct Investment in Indain Insurance sector was allowed
upto 26%
Third Phase 23 Insurance companies work in India till date.
Bancassurance and Micro Insurance were also introduced.
Que 1. Under current regulations what is the maximum stake that
the Foreign Partner in Insurance Company hold?
Ans: 26%
76. Financial Risk / : The economic loss is called as Financial Risk, e.g. if a single person Pure Risk is income source of family and he dies then family faces financial loss.
In Pure Risk there is no chance of making profit, i.e. No person can
earn through Insurance.
Que 1. Which of the following Risk is associated with those events
which are not in control of an individual and also no possibility of
making profit.
Ans: Pure Risk
Que 2. On 6th August there was a typhoon. Mr.Augustin who had insurance died in typhoon. Now how will the insurance company will categories this particular risk ? Ans: Under the category of Pure risk
77. Insurer collects : Name, Age, Address, Marital Status, Weight, Height, Medical History, following details who is proposer, who is life assured. If the proposer is illiterate left
through Proposal hand thumb impression.
form
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Que 1. When an illiterate person wants to have a policy.....
Ans: an impression of the left thumb is taken and third party
has to attest it
Que 2. The underwriter can get the required information (name, age,
address, marital status, weight, height, nominee, etc.) about the proposer
Ans: Proposal Form
78. The Agent Role : Agent is directly in contact with the proposer, due to this he knows the in Underwriting actual risk faced by proposer i.e. his habits, life style,financial status. Hence agent can submit Agent Confidential Report. Agent is also called
Primary Underwriter.
Que 1. What is the basic role of the Insurance Agent?
Ans: Primary Underwriter
79. The Agent Role : Insurance agent has information regarding various products available in in Financial market. He also has information regarding tax benefits which can be Planning availed. He can use his knowledge of Financial solutions and guide
the Investor.
Que 1. An agent was explaining to his customer the guaranteed benefits
of the product. Which one of the following documents he would have
used to explain the same?
Ans: Benefit Illustration Document
Que 2. Amit & Rashmi are newly married. Both are working couple.
They want to invest their savings of 100,000 annually to build corpus
to make down payment for their house 5 years from now. An adviser sold
than a unit link product to meet their requirement. This results in...
Ans: Opportunity of new business for adviser
80. Recurring Deposit : Plans offered by Banks where interest & principal is paid at the time of Plan Maturity. Interest is calculated on quarterly basis in compounded form. Client invests the amount on monthly basis.
Que 1. In Cumulative bank deposit the interest that in normally
compounded on what basis.
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Ans: Quarterly
Que 2. With this type of deposit the bank pays the principal and the total
interest at the end of the term.
Ans: Cumulative Deposit
81. Effect of Interest : Reserve Bank of India decides the interest rates. When interest rates Rates drop down people invest less and take more loan, buy more shares, that means people will invest in Equity and Mutual Funds. Similarly if
interest rates raise then they will save in saving instruments and will not
take loan and shares.
Que 1. Mukesh buys shares at lower price and sold at higher price, the
Difference between the two prices is known as:
Ans: Capital Appreciation
Que 2. If RBI increases the interest rates then what will be the effect on
share prices.
Ans: Shares will be less attractive.
82. Annuities : Annuity works in completely opposite manner as that of Life Insurance as Life Insurance amount is received after death of individual where as
Annuity stops when the individual dies. It is also called as Pension Plan.
Client can get the annuity in 4 modes as per their wish monthly, quarterly,
half yearly and yearly.
Que 1. A person wishes to earn a certain amount after retirement, the
amount which is invested yearly depends on...
Ans: 1. Accumulation Phase, 2. Amount which is required,
3. Instruments used for investment
Que 2. Which is the best saving option for senior citizen?
Ans: Pension Plan
Que 3. Customer has opted for a 5 yrs guaranteed annuity option. What
will happen to annuity, if the customer survives for 5 years after the end
of guarantee period?
Ans: Till he dies
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83. Commutation : If a person has taken a annuity plan, before getting his annuities he
receives a 1/3rd of invested amount as a commutation and remaining
2/3rd part is used to buy annuity. The important factor of annuity is
annuity lasts till death.
Que 1. A lump sum withdrawal allowed as commutation in annuity plan is
Ans: 1/3rd part of Accumulated amount
84. Identifying Client : Collect all the below given data from the client to identify his needs. Needs Client's assets, responsibilities, marital status, no. of dependants, income, insurance cover, health insurance cover, present protection, savings and
requirement after retirement is the basic information which is collected.
Depending on this information agent can suggest the solution.
Que 1. In the context of financial planning, how is the difference
between real needs and perceived needs best described
Ans: Real needs are actual needs and perceived
needs are based on a clients thoughts and desires.
85. Suggestion by : 1) If the client is unmarried and has no dependant members, agent can Insurance Agent suggest ULIP and Tax beneficial plans.
2) If the client is unmarried and has parents dependant on him then
agent can suggest him income protection plan (Term Plan)
3) If the client is married with kid, then the agent can suggest a Term
plan for both husband and wife, Child plan for child's secure future and
health plan / family floater.
4) If the client is in the stage of pre-retirement then agent can suggest a
Health Insurance Plan, Pension Plan, and after retirement he can enjoy
Annuity.
Que 1. During a fact finding process the need analyzed were income
replacement and childrens education. But the customer insists on only
a child plan for the time being and asks the agent to give him a child plan.
The agent should.
Ans: Give a child plan and revisit the client on a later date
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86. Fact Finding Form : This form consist of all the information regarding the client so that agent can suggest correct solution which will satisfy his needs. The details
include information regarding personal information, present insurance
cover, monthly income and expenses.
Que 1. Which process does the agent follow while fact finding process?
Ans: Identify client needs, Quantify the needs and Prioritize
them
Que 2. What is the objective of Fact Finding?
Ans: Identify client needs and gather the information
Que 3: The fact finding process doesnot include..
Ans: Ask client to surrender previous policy to get a new policy
87. Documents for : 1) Identity Proof Driving License, passport, voter id, pan card, Insurance government certificate.
2) Address Proof Driving License, passport, light bill, telephone bill,
rationcard, bank passbook, insurance receipt.
3) Non Standard proof Astrology, self affidavit, village panchayat certificate
Que 1. Mr. Ram Prakash stays in avillage, and he donot have any age
proof to be handed over for insurance policy. Insuarance company had
asked him to attach a Gram Panchayat Certificate as a proof for age. What
will be this certificate called?
Ans: The Certificate attested by Surpanch will be considered as
Non Standard Age proof but he will get the insurance policy.
88. Responsibilities of : Identify the prospect insurance client, identify client needs, acquire Insurance agent knowledge about various saving products, provide the solution to the
client as per his needs. Check whether the information filled in proposal form
is accurate. Collect all the required documentation e.g. Age proof, Identity
card, Address proof, Medical report, the documents required for
underwriting. Agent should disclose the commission amount only if the
client asks for the same. If the client denies to buy a policy then he should
ask the reason for rejection.
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Que 1. If the client does not wish to proceed with the recommendations
right at the moment the agent should
Ans: Should ask for the reason for not going with the
recommendation
89. Fraudulent Claims : If the client buys a insurance policy solely to make economic profit by hiding the necessary facts and if the claim arises, then this claim is called
Fraudulent Claim. Normally claims are of two types: 1. Maturity Claim,
2. Death Claim Death certificate and claimant's statement are the
documents required during Death Claims. The claim amount will be settled
only if the policy is in force. If a person is missing for last 7 years then he
is considered dead and the death claim is processed.
Que 1. A person is presumed to be dead if he is missing or not heard of
from for how many days?
Ans: 7 years
Que 2. What is the maximum Time in which The insurer should settle a
claim when all documents are submitted
Ans: 30 days
Que 3. Mr. Kumars wife is suffering from blood cancer. Doctors lost their
hope on her live. Mr. Kumar would like to take Life Insurance policy on
wifes name in order to get monitory benefit. Insurance company rejects this
proposal on the grounds of.
Ans: Legality of object or purpose
Que 4. Aman has taken a term plan for 20 years. In the 3rd year he
suffered financial crisis due to which he was unable to pay premium within
grace period and died after 1 month. The nominee files a claim and is
rejected because
Ans: Policy was not in force
Que 5. Rakesh purchased a life insurance policy. While writing a proposal
form he hide that he practices mountaineering. Sadly he died in an accident
while climbing Mount Everest. The insurers rejected the claim. What is the
reason for rejection?
Ans: Non - disclosure
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90. Insurance Act : This act has provisions regarding agent commission, renewal, investment 1938 of the premium, appointment of the employees, policy transfer, assignment, nomination. Regulations for agent, their commission, protection of policy
holder's interests. An agent giving concession in his commission is illegal
according to section 41(1). Any foreigner can become a agent and
earn commission.
Que 1. Issuance of a license to a person has been stipulated in.........Act
Ans: Insurance Act 1938 section 42
91. Anti Money : This is the process in which the illegal money earned is invested in such a Laundering way that it is converted to legal earning, e.g. money invested in Life
2002 Insurance is easily converted into legal income. To curb this process of Money
Laundering, Government has passed this Act, no cash payment will be accepted
above Rs.50000/-, all the amounts above 50000/- will be accepted through
cheque and drafts along with PAN card.
There are three steps of Money Laundering 1. Placement 2. Layering
3. Integration
Que 1. How much maximum cash payment is accepted in the Insurance
policy?
Que 2. According to AML what is the maximum limit for cash premium
payment
Ans: 50000
Que 3. Which is the second stage in converting illegal income to legal income
Ans: Layering
Que 4. What is the second stage in Money laundering?
Ans: Layering
Que 5. State the no. of stages involved in Money laundering
Ans: Three stages Placement, Layering, Integration
Que 6. When was the Anti-Money Laundering Act passed for Insurance
sector?
Ans: 2006
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92. K.Y.C./COPA : Know Your Customer This means that the insurance company should know the information about their customer. Company should ask for the required
documents.
COPA Consumer Protection Act Customer can approach various forums if
he has some disputes with the company.
The disputes are heard in following manner District level 20 Lacs,
State level 1 Cr, National level 1 Cr and above.
Que 1. When was the Consumer Protection Act passed?
Ans: 1986
Que 2. The Authority of COPA is limited to what amount at the district level.
Ans: 20,00,000/-
93. Qualification of : If the agent resides in a rural area (population min 5000) he should be 10th an Insurance pass, 50 hrs training and clearing the exam. Renew license after every 3 years Agent by paying Rs. 250/-. If the agent resides in a urban area (population above
5000) he should be 12th pass, 50 hrs training and clearing the exam. Renew
license after every 3 years by paying Rs. 250/-. If the agent has composite
license he should undergo 75 hrs training. The important criteria is he should
be sound mind, no criminal background, and a mature person.
Que 1. Basic qualifications of agent
Ans: Graduate and sound mind
Que 2. Basing on which criteria the qualification of Agent is determined?
Ans: Domicile status
Que 3. After undertaking financial planning exercise, the prospective client
said that he does not have funds for investments. To resolve this query, which
skill of an agent would be tested?
Ans: Handling Objection
Que 4. If the agent has to undergo training for more than 50 hours, what is it
called?
Ans: Composite Agency / Composite License
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94. Protection of : Policy holder can appeal to Ombudsman for grievance redressal. IRDA has Policy Holder's also started a redressal call center (IGCC), where a policy holder can give a Interest phone call or mail their complaint. The toll free no. is 155255. IRDA will give
Regulation the decision in 15 days. Insurance company will give the decision in 10 days.
2002 Ombudsman will give the decision in 90 days.
Que 1. As per Regulation for protection of Policyholders interest 2002 (IRDA),
Which insurer will have a grievance redressal System
Ans: All Insurers
95. E.T.F.S. (Gold) : Buy Gold through internet. Here gram of a Gold is treated as units. Hence if a person has 100 ETF units then he has 50 - 100 grams gold. 1 unit ETF = 0.5
gms or 100 gms gold.
Que 1. What is the advantage of converting physical gold assets to gold ETFs.
Ans: Liquidity
Que 2. If we hold 100 units in gold ETF, It means that how much grams we
have in physical
Ans: 50 gms or 100 gms
96. Whole Life Plan : In this policy premium is paid for the limited term but the policy continues for Whole Life.
Que 1. If a client has a surety that he would survive till 100 years. Which plan
will the Agent suggest him?
Ans: Whole Life Plan
97. Return of : In this policy if the policy holder survives for entire term then the paid Premium premiums would be returned. Que 1. Suresh has adequate reserve capital with him and he wishes to
protect his income, moreover he feels that if he does not die then he would
need the amount. What type of plan should he opt for?
Ans: Return of the Premium
Que 2. Rakesh wants to buy a policy primarily for Risk Cover but at the end
of
the term he wants to get at least some return. Under which policy he will get
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these benefits
Ans: ROP Plan
98. Money back Plan : In this policy the sum assured is returned to policy holder in regular intervals, i.e. 25% of sum assured at each interval.
Que 1. Harshs policy matured, however he was paid only 25% of the sum
insured in spite of all his premiums been paid on time. This indicates that his
policy is a
Ans: Money Back Plan
Que 2. A customer gets periodic benefits without any claim and then when he
dies during the term of the policy, his nominees gets the sum insured. What
type of policy is this ?
Ans: Money Back Plan
99. Numerical : 1) If a person wants to avail tax benefit, then he should have sum assured 5 Questions times of premium he is paying. e.g. if he pays 60000/- premium he should have 3 lacs sum assured.
2) In Life Insurance there is option of 5% increase every year.
3) The maximum EMI would 40% of the income, i.e. if a person's monthly
income is 80,000, then the EMI amount will be 32000/-
100. Deferred : Deferred annuity is paying a specific premium for certain period and after a Annuity certain period start the pension. Que 1. Mr. Ramakant is 35 years old. He has bought retirement plan for 20
years. This type of pension plan is known as..................
Ans: Deferred Annuity
101. Immediate : To pay a lump sum amount to the company at one time and start getting Annuity pension immediately. Que 1. A person is going to retire in 3 months, he wants the returns in the form
of pension, which kind of policy he should buy?
Ans: Immediate Annuity
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102. Grace : It is the extra time given by the insurance company after the due date of Period renewal premium. 30 days grace period for yearly/half yearly/quarterly premium mode and 15 days grace period for monthly premium mode.
Que 1. What is the extra time given to pay the due premium called?
Ans: Grace Period
103. Lapse : The benefits of the policy ceases if the premium is not paid even after grace period is over.
Que 1. Mr. Radheshyam had bought a policy in 2010. Due to some financial
crisis he couldnot pay the premium in 2012. Grace period for the premium is also
over. What will happen to the policy?
Ans: Policy will lapse. If Radheshyam dies within the policy term then his
nominee will not receive any policy benefit.
Que 2. If a person buys a Endowment plan with the CI rider. He just pays the
first premium and unable to pay further premium. Suddenly he came to know
that he has cancer. Now he wants to revive his policy, what conditions will
company apply?
Ans: Company will conduct medical examination and will accept the
premium with late charges, and the policy will be revived. But during
medical examination company comes to know that he has cancer, then
his policy will be rejected. If the client donot disclose the detection of
cancer and company revives the policy without examination, then the
principle of Utmost Good Faith applies. After revival if the person dies
d