Question 1

Insurance business is based on __________.&#10;A)Newtons Law&#10;B)Boyles Law&#10;C)The Theory of Probability and Law of large numbers&#10;D)Parkinsons Law

Accepted Answer

Insurance business fundamentally relies on the Theory of Probability and the Law of Large Numbers to predict and manage risk, allowing insurers to set premiums and reserves appropriately.

Question 2

Gross Premium means Net Premium plus___________&#10;A)Margin&#10;B)Profit&#10;C)Expense Loading&#10;D)Loss

Accepted Answer

Gross Premium is the total amount charged by an insurance company for an insurance policy, which includes the Net Premium (the amount needed to cover claims and benefits) plus Expense Loading. Expense Loading covers the insurer's operating expenses such as administrative costs, commissions, and profit margin.

Question 3

_____________ is pricing of insurance products driven by market forces&#10;A)De-tariffing&#10;B)Fixed Pricing&#10;C)Tariffing&#10;D)Penetration Pricing

Accepted Answer

De-tariffing refers to the removal of fixed tariffs or prices for insurance products, allowing insurance companies to set their prices based on market forces such as competition, demand, and risk factors.

Question 4

Insurance helps to:&#10;A)Prevent adverse situations from occurring&#10;B)Reduce the financial consequences of adverse situations&#10;C)Negate all consequences of adverse situations&#10;D)Make assets continuously productive

Accepted Answer

Insurance primarily functions to reduce the financial impact of adverse situations, such as accidents, illnesses, or property damage, by providing financial compensation. It does not prevent adverse situations from occurring, negate all consequences, or ensure assets are continuously productive.

Question 5

An actuary is expected to:&#10;A)Make an exact forecast of the future liabilities of policies&#10;B)Make a reasonable forecast of the future liabilities of policies&#10;C)Calculate the premium required to cover a risk on a long-term basis&#10;D)Find the probability of an insured event to happen in non-life policies

Accepted Answer

An actuary is expected to make a reasonable forecast of the future liabilities of policies.

Question 6

The principle of average applies when the value is _____________ in the proposal&#10;A)Understated&#10;B)Overstated&#10;C)Not ascertainable&#10;D)Negligible

Accepted Answer

The principle of average in insurance applies when the value of the insured item is understated in the proposal. This means if a claim is made, the payout may be reduced in proportion to the under-insurance.

Question 7

Fidelity Guarantee Policies cover losses due to fraud by ____________&#10;A)Employees&#10;B)Customers&#10;C)Borrowers&#10;D)Suppliers

Accepted Answer

Fidelity Guarantee Policies are specifically designed to protect businesses from losses due to dishonest acts or fraud committed by their employees.

Question 8

CTL as used in insurance&#10;A)Contributory Total Loss&#10;B)Constructive Total Loss&#10;C)Construction Totally Lost&#10;D)Contractors' Total Loss

Accepted Answer

Constructive Total Loss refers to a situation in insurance where the cost of repairing a damaged property (such as a ship or cargo) would exceed its value after the repair, making it uneconomical to repair. This concept is particularly relevant in marine insurance.

Question 9

GA as used in insurance&#10;A)General Assurance&#10;B)General Average&#10;C)General Adjustment&#10;D)Guaranteed Assurance

Accepted Answer

In insurance, GA stands for General Average, a principle used in maritime law where all parties in a sea voyage proportionally share the loss resulting from a voluntary sacrifice of part of the ship or cargo to save the whole in an emergency.

Question 10

Which of the following terms matches closest with 'Family Floater'?&#10;A)Health insurance&#10;B)Property insurance&#10;C)Accidental injury&#10;D)Consequential loss

Accepted Answer

Family Floater is a type of health insurance policy that covers the entire family under a single sum insured, rather than providing individual coverage.

Question 11

In cases where a Life Insurance Agent collects the premium from the policyholder and remits it to the insurer's office, he is acting as an agent of _____&#10;A)IRDA&#10;B)the Insurance Company&#10;C)the Policyholder&#10;D)the broker

Accepted Answer

The answer of In cases where a Life Insurance Agent...

Question 12

A policy where the policyholder makes a one-time payment of premium, is known as a ______________:&#10;A)Money-back policy&#10;B)Single premium policy&#10;C)Salary Savings Scheme policy&#10;D)Half-yearly policy

Accepted Answer

The answer of A policy where the policyholder makes a...

Question 13

i. State which of the statements given below is correct .&#10;A)An organisation can exist only with employees&#10;B)An organisation can exist only with different sections&#10;C)An organisation can exist only with its own office building&#10;D)An organisation can exist without a purpose

Accepted Answer

The answer of i. State which of the statements given...

Question 14

&#8230;&#8230;&#8230; may be described as a social device to reduce or eliminate risk of loss to life and property.&#10;A)investment&#10;B)saving&#10;C)insurance&#10;D)loan

Accepted Answer

The answer of &#8230;&#8230;&#8230; may be described as a social...

Question 15

State which of the statements given below is correct&#10;A)People generally feel that life related risks are imminent&#10;B)Religious beliefs interfere with the purchase of life insurance&#10;C)People are always keen to buy insurance&#10;D)Life insurance cannot be denied to anyone at any time

Accepted Answer

The answer of State which of the statements given below...

Question 16

Compared to the premium for a Whole Life plan, the premium for an Endowment plan will be ____________ for the same age&#10;A)more&#10;B)less&#10;C)the same&#10;D)double

Accepted Answer

The answer of Compared to the premium for a Whole...

Question 17

Select the expanded form of SA as commonly used in life insurance&#10;A)Sum Assured&#10;B)Surrender of Assurance&#10;C)Supplementary Assurance&#10;D)Stamp Act

Accepted Answer

The answer of Select the expanded form of SA as...

Question 18

Select the expanded form of OR as commonly used in life insurance&#10;A)Oral Rehydration&#10;B)Once Renewed&#10;C)Ordinary Rates&#10;D)Ordinary Renewal

Accepted Answer

The answer of Select the expanded form of OR as...

Question 19

Select the expanded form of SV as commonly used in life insurance&#10;A)Summary Valuation&#10;B)Selected Value&#10;C)Surrender Value&#10;D)Stamp Value

Accepted Answer

The answer of Select the expanded form of SV as...

Question 20

Which of the following terms matches closest with 'Automatic Teller Machines'?&#10;A)Divisional Offices&#10;B)Branch Offices&#10;C)Agents&#10;D)Information Kiosks

Accepted Answer

The answer of Which of the following terms matches closest...

Question 21

Which of the following terms matches closest with 'Foreclosure'?&#10;A)Surrender Value&#10;B)Nominee&#10;C)Death Claim&#10;D)Maturity Claims

Accepted Answer

The answer of Which of the following terms matches closest...

Question 22

Find out which of the given statements is incorrect&#10;A)An organisation must have a purpose&#10;B)An organisation is identified by its actions&#10;C)An organisation is identified by the building it occupies&#10;D)A organisation can sue and be sued

Accepted Answer

The answer of Find out which of the given statements...

Deck 2: Insurance Terminology and Principles