Risk and Insurance 1
Risk Management & Insurance Planning 1. Composite Insurance Agent Holds a license To act as an Insurance agent for a
a. Life Insurer b. General Insurer c. Both of the above. d. None of the Above. Solution: c
A composite agent is one one who is authoried to sell sell both Life ! General insurance products. . In propert! insurance "not in marine insurance# insura$le interest must e%ist at te time of
a. Loss b. "ontract c. Both a ! b d. None of the above Solution: c
In propert# insurance one needs to have insurable interest both at the time of contract a nd loss. $%ception is &arine insurance were in one needs to have insurable interest onl# at the time of Loss. 'ur ther in Life insurance one needs to have insurable interest onl# at the time of contract. '. (am$ling is an e%ample of
a. (ure risk. b. )peculative risk c. (ersonal risk d. (ropert# risk Solution: $ ). *ic of te follo+ing is te tird step in identif!ing risks
a. Identif# risks b. *evelop Alternative for handling risks c. "hoose and implement an appropriate )trateg#. d. Anal#e and evaluate risks +Risk &easurements, Solution: $ ,. Pure risk can $e def ined as a situation +ere
a. there is a chance of loss or no loss b. -here is a chance of a loss or a profit c. -here is a no chance of loss d. All of the above. Solution: a -. An organiation cannot finance its o+n risk cost "risk financing #
a. (a#ment out of current e%penses b. B# debt or euit# financing c. B# pre or post credit. d. B# approaching a reinsurance compan#. Solution: d /. 000000000000000 is te rigt of one person a2ing indemnified anoter under a legal o$ligation to do so to stand in te place of tat oter and a2ail imself of all te rigt and remedies of tat oter +eter alread! enforced or not.
a. )ubstitution. b. Indemnit# c. Adhesion d. )ubrogation. Solution: d 3. Toucing anoter person unla+full! is an e%ample of
a. Intentional -ort. b. Absolute liabilit#. c. Negligence. d. "onclusive tort. Solution: a
-ort is civil wrong doing/ which could be divided in to 0 t#pes +1, Intentional/ +, Absolute and )trict liabilit# and +0, Negligence. 4. Pricing of a product in an 5ife insurance compan! is a function of
a. &arketing b. 2nderwriting c. Actuarial d. 'inance Solution: c 16. Collection and pa!ments of monies in an 5ife insurance c ompan! is a function of
a. &arketing b. Actuarial
c. 'inance d. Legal and secretarial Solution: c
11. Auditing in an Life insurance compan# is a function of a. 2nderwriting b. Actuarial c. 'inance d. Legal and secretarial Solution: c
1. "ompliance to regulator and other public supervisor# bodies in an Life insurance compan# is a function of a. 2nderwriting b. Actuarial c. 'inance d. Legal and secretarial Solution: d
10. -he amount of insurance accepted b# the re3insurer is known as a. (remium b. Net premium c. "ession. d. Retention. Solution: c
14. 5hich polic# meets the need of 6securit# for children7s education8 the best a. -erm assurance plan b. "hildren deferred assurance plan c. *eferred annuit# plan d. 9ealth insurance. Solution: $
1:. Re3insurance Advisor# committee consist of ;;;;;;;;;;;; persons a. 'ive b. 'our c. )i% d. -en Solution: a
1<. Insurer has a period of within ;;;;;;;;; da#s of all reports received r eceived to decide about the claim. a. 0= da#s b. 4: da#s c. <= da#s d. >= da#s Solution: a
1?. 'or an# applicant to be registered as an IR*A licensed agent/ the minimum ualification reuired in an urban area is a. @ th standard b. @II th standard c. Graduation. d. (ost3Graduation. Solution: $
. $mplo#ees liabilit# for his emplo#ee7s inur# even when there is no negligence on the part of the emplo#er is an e%ample of a. Intentional -ort. b. Absolute liabilit#. c. Negligence. d. "onclusive tort. Solution: $
In case of strict liabilit# certain defenses are allowed but not so in Absolute liabilit#. 1>. Investigation regarding mortalit# factor in an Life insurance compan# is a function of a. &arketing b. 2nderwriting c. Actuarial d. Legal and secretarial Solution: c
=. -he limit of indemnit# for a *irect Broker is AC -hree times remuneration remuneration received at the end of ever# ever# financial #ear subect to a minimum limit limit of rupees fift# lakhs. lakhs. BC -hree times remuneration received at the end of ever# financial #ear subect to a minimum limit of rupees -wo crores and fift# lakhs. "C-hree times remuneration received at the end of ever# financial #ear subect to a minimum limit of rupees 'ive cror es. *C-hree times remuneration received at the end of ever# financial #ear subect to a minimum limit of rupees -en crores. Solution: a
(rofessional Indemnit# reuirement as per IR*A norms D
c. 'inance d. Legal and secretarial Solution: c
11. Auditing in an Life insurance compan# is a function of a. 2nderwriting b. Actuarial c. 'inance d. Legal and secretarial Solution: c
1. "ompliance to regulator and other public supervisor# bodies in an Life insurance compan# is a function of a. 2nderwriting b. Actuarial c. 'inance d. Legal and secretarial Solution: d
10. -he amount of insurance accepted b# the re3insurer is known as a. (remium b. Net premium c. "ession. d. Retention. Solution: c
14. 5hich polic# meets the need of 6securit# for children7s education8 the best a. -erm assurance plan b. "hildren deferred assurance plan c. *eferred annuit# plan d. 9ealth insurance. Solution: $
1:. Re3insurance Advisor# committee consist of ;;;;;;;;;;;; persons a. 'ive b. 'our c. )i% d. -en Solution: a
1<. Insurer has a period of within ;;;;;;;;; da#s of all reports received r eceived to decide about the claim. a. 0= da#s b. 4: da#s c. <= da#s d. >= da#s Solution: a
1?. 'or an# applicant to be registered as an IR*A licensed agent/ the minimum ualification reuired in an urban area is a. @ th standard b. @II th standard c. Graduation. d. (ost3Graduation. Solution: $
. $mplo#ees liabilit# for his emplo#ee7s inur# even when there is no negligence on the part of the emplo#er is an e%ample of a. Intentional -ort. b. Absolute liabilit#. c. Negligence. d. "onclusive tort. Solution: $
In case of strict liabilit# certain defenses are allowed but not so in Absolute liabilit#. 1>. Investigation regarding mortalit# factor in an Life insurance compan# is a function of a. &arketing b. 2nderwriting c. Actuarial d. Legal and secretarial Solution: c
=. -he limit of indemnit# for a *irect Broker is AC -hree times remuneration remuneration received at the end of ever# ever# financial #ear subect to a minimum limit limit of rupees fift# lakhs. lakhs. BC -hree times remuneration received at the end of ever# financial #ear subect to a minimum limit of rupees -wo crores and fift# lakhs. "C-hree times remuneration received at the end of ever# financial #ear subect to a minimum limit of rupees 'ive cror es. *C-hree times remuneration received at the end of ever# financial #ear subect to a minimum limit of rupees -en crores. Solution: a
(rofessional Indemnit# reuirement as per IR*A norms D
*irect broker 3 0 times of remuneration in (E subect to &in3 := lakhs Reinsurance 3 0 times of remuneration in (E subect to &in3 .: cr. "omposite 30 times of remuneration subect to with min : cr. =. An ultimate mortalit# table e%cludes data for . first : to 1: #ears . first 0 to : #ears . first 0 to < #ears . first ? to 1: #ears Solution: a
=. -he cheapest polic# in the market is . A term polic# . A unit linked polic# . An endowment polic# . A 5hole life polic# Solution: a
=. (articipating polices are policies entitled to . risk sharing . premium . bonus . fi%ed pa#ments Solution: c
=. An increasing term insurance means . -he term insurance sum assured increases with inflation . Both the premium and sum assured increases . -he term insurance increases at intervals . Fnl# the premium keeps on increasing. Solution:c
=. Fverseas mediclaim polic# does not cover one of the following D . Loss of passort . Loss of baggage . &edical accidents . (ersonal accident. Solution: $
It is loss of checked in baggage which is covered. =. ;;;;;;;;;;;;;;;; insurance is a -ariff (roduct . life . motor . health . marine Solution: $
Now onl# -hird part# is tariffed and not motor. =. -he process of due diligence conducted b# an insurance agent is k nown as . 2nderwriting . Investigation . Inspection . )ite "heck. Solution: a
=. -his t#pe of insurance is not easil# available in India . Ffficers liabilit# . *isabilit# Income (rotection. . 9ealth . Life Solution: $
=. Insurance Advisors and Agents are governed b# . IR*A . )$BI . A&'I . Both IR*A ! )$BI. Solution: a
=. &ortalit# rate is . Rate of death in a group. . Rate of death in the population. . (robabilit# of death in a group . (robabilit# that the insured will die before reaching a certain age . Solution: d
=. 9L e%plains in general . -otal income of an individual
. -otal worth of an individual. . -otal wealth of an individual. . $arning "apacit#. Solution: c
=. Adverse loss ratio refers to . 9igher premium being received b# the insurer . Lower premium being received b# the insurer . Lower than e%pected claim ratio in the pool . 9igher than e%pected claims ratio in the pool. Solution: d
=. -he other name of no fault liabilit# is . Absolute Liabilit#. . )trict liabilit#. . icarious Liabilit# . "ontractual Liabilit#. Solution: a
=. -he limit of indemnit# for a Reinsurance Broker is . -hree times remuneration received at the end of ever# financial #ear subect to a . -hree times remuneration received at the end of ever# financial #ear subect to a and fift# lakhs. . -hree times remuneration received at the end of ever# financial #ear subect to a . -hree times remuneration received at the end of ever# financial #ear subect to a
minimum limit of rupees fift# lakhs. minimum limit of rupees -wo crores minimum limit of rupees 'ive crores. minimum limit of rupees -en crores.
Solution: $
=. 5hich polic# meets the need of 6)ecurit# after retirement 8 the best . -erm assurance plan . "hildren deferred assurance plan . *eferred annuit# plan . 9ealth insurance. Solution: c
=. A sub standard Indian life is considered . an individual with health problems . a below average intelligent Indian life. . A life which cannot be insured . *epends on the underwriting standards of the insurance compan#. Solution: d
=. In insurance/ the contingenc# insured against is usuall# the . 'inancial loss . "ertain financial loss . Loss of profit . 2ncertain financial loss. Solution: d
=. Insurance companies often offer the services of specialists and e%perts to industr# in different fields. -his is for rendering advice on . Reduction in uncertaint# . Loss preventionHminimiation . Indemnification . None of the above. Solution: $
=. 5hich polic# meets the need of 6)ecurit# of the famil#8 the best . -erm assurance plan . "hildren deferred assurance plan . *eferred annuit# plan . 9ealth insurance. Solution: a
=. Fne of the following is not a valid e%clusion for -emporar# -otal *isablement . An# e%isting disablement . *isablement of parent . Insanit# . 5ar risk. Solution: $
=. -he limit of indemnit# for a "omposite Broker is . -hree times remuneration received at the end of ever# financial #ear subect to a . -hree times remuneration received at the end of ever# financial #ear subect to a and fift# lakhs. . -hree times remuneration received at the end of ever# financial #ear subect to a . -hree times remuneration received at the end of ever# financial #ear subect to a Solution: c
minimum limit of rupees fift# lakhs. minimum limit of rupees -wo crores minimum limit of rupees 'ive crores. minimum limit of rupees -en crores.
=. -he disadvantage of a term polic# . it is e%pensive . it is onl# for a short period . there is no bonus . All of the above. Solution: c
=. 5hich polic# meets the need of 6 special needs8 the best . -erm assurance plan . "hildren deferred assurance plan . *eferred annuit# plan . 9ealth insurance. Solution: d
=. &arket Research of e%isting products in an Life insurance compan# is a function of . &arketing . 2nderwriting . Actuarial . 'inance Solution: a
=. Fne of the following is not a valid e%clusion for "ritical Illness Insurance . 9I virus infection. . )uicide or self inflicted. . (re3e%isting "ritical illness. . $%isting disabilit#. Solution: d
=. -he principle of subrogation is derived form the principle of . 2tmost good faith . Adhesion . *ut# of disclosure . Indemnit# Solution: d
=. -he 6dut# of disclosure8 follows from . -he doctrine of adhesion . -he principal of subrogation . -he principle of indemnit# . -he principle of utmost good faith Solution: d
=. Fffer in life insurance contract refers to . (roposer pa#ing first premium . (roposer7s application form for insurance . Friginal polic# document Solution: $ . "ompan#7s brochure dul# authenticated. =. 9ealth insurance for children is provided for children aged 4 #ears . 5ith no precondition . Fne of the parents being insured. . Both the parents covered concurren tl# . Both A and B Solution: c =. *omicillar# hospitaliation period is defined as . Fne da# . -wo da#s . -hree da#s . 'our da#s. Solution: c =. an Arog#a Bima polic# is a . Life insurance (olic# . &arine insurance polic# . -ravel insurance polic# . 9ealth insurance. Solution: d an Arog#a polic# is a &edicalim H health insurance polic# b# 2nited India Insurance "ompan#. =. (ublication of a false statement in a permanent form designed to damage the reputation of another person. Is an e%ample of . Intentional -ort. . Absolute liabilit#. . Negligence. . "onclusive tort. Solution: a
Intentional -ort could be Libel 3 (ublication of false statement to damage others reputation. )lender 3 *amaging reputation verball# Assault 3 2nlawfull# touching another person.
=. Bhavish#a Arog#a polic# is meant for pers ons in the age group between . : to :: #ears . 0= to :: #ears . : to <= #ears . 0= to <= #ears. Solution: a
Bhavish#a Arog#a is a life term polic# where medical benefits are made available after retirement of the insured3 b# New India Assurance. =. -he disadvantage of a whole life polic# . it is e%pensive . it is onl# for a short period . there is no bonus . All of the above. Solution: a :?. In insurance parlance -(A means . -hird part# Assessor . -hird (art# Adustor . -hird (art# Administrator . -otal (remium Amount Solution: c :. -he working capital of a -(A should be minimum . Rs. :/==/=== . Rs. 1=/==/=== . Rs. :/==/=== . Rs. 1=/===/=== Solution: d :>. "ommercial vehicle insurance does not include . Goods carr#ing vehicle insurance. . (assenger carr#ing vehicle insurance. . A famil# car insurance . All of the above. Solution: c <=. In life insurance insurable interest must e%ist at the time of . Loss . "ontract . Both a ! B . None of the above Solution: $
n propert# insurance one needs to have insurable interest both at the time of contract and loss .$%ception is &arine insurance were in one needs to have insurable interest onl# at the time of Loss. 'ur ther in 5ife insurance one needs to a2e insura$le interest onl! at te time of contract.
<1. In insurance market *#namics/ the risk manager must choose between . Risk evaluation ! speculation. . Risk rentention and risk transfer . Risk identification and safet# . Risk financing and actuarial aspects. Solution: a <. -he insurance compan# has to respond to all communication received from the polic#holders within . A week of receipt of such communication . 1: da#s of their receipt . 1= da#s of their receipt Solution: c . = da#s of their receipt. <0. In haard logic tree/ under the peril water damage/ haards are . &alicious *amage/ subsidence/ hurricane . 'lood/ storm/ bust pipe or other apparatus/ burst water main . )pillage or leakage or 'lammable Liuids. . )ubsidence and flooding. Solution: $ All are water related perils. <4. 5hich of the following is not a classification of term insurance polic# . sum assured with bonus return term insurance . Level benefit term assurance . Increasing benefit term assurance . *ecreasing benefit term insurance Solution: a <:. (articular risk is a risk that affects . $ntire econom# . Fnl# individual . Government . None of the above Solution: $ Solution: (articular risk effects an individual where as 'undamental risk effects whole econom#. <<. 9ome loanH&ortgage protection insurance refers to . (ropert# insurance polic# . "redit insurance polic#
. Life insurance polic# guaranteeing the mortgage loan. . None of the above Solution: c . 5hile treating the appropriate techniues for treating loss e%posures/ the maor issue for top risk management concern is . *isabilit# management . Regulator# changes . Fccupational )afet# and health Act regulations . 5orkers compensation costs. Solution: d ?=. In controlled -hird part# captive business/ retailers are underwriting . "redit life/ health and disabilit#J e%tended warrant# . )ubcontractor coverages . oint ventures . "redit life/ health and disabilit#J mortgage insurance/ title insurance/ auto and propert#. Solution: a ?1. -o keep the license in force the composite broker shall have to pa# registration fees calculated at the rate of ;;;;;;;;;;;; per annum. . Rs. Lakhs . Rs. 0 Lakhs . Rs. :/=== Solution: $ . Rs. :=/=== ?. Kuick asset ratio is used to a. *etermine the investment capacit# of the firm a. *etermine firm7s liuidit# to cover une%pected pa#ment too. a. *etermine the current assets of the firm a. *etermine the current liabilities of the firm. Solution: $ ?0. )tandard deviation and coefficient of variation d. Are used in fair value accounting d. $conomic indicators d. ðods used to measure dispersions d. None of the above. Solution: c ?4. (roduct development in an Life insurance compan# is a function of d. &arketing d. 2nderwriting d. Actuarial Solution: a d. 'inance ?:. )elf insurance funds ma# be identified as d. "ontingenc# funds used to spread the cost of losses more evenl# over a large term d. (rofitabilit# not due to normal trading/ but because of e%ceptionall# good or bad loss e%perience d. "ontribution collected from each of the division of the compan# d. None of above. Solution: a ?<. If unacceptable Risk is accepted d. -his would bankrupt the firm d. Futcome will be that of a speculative risk d. Futcome will be that of a d#namic risk d. None of the above. Solution: a ??. "harging of losses to current operating costs d. Is a form of reducing losses. d. Is a form of evaluating the losses. d. Is a form of financing the losses. d. Is a form of Identif#ing the losses. Solution: c ?. -he waiting period under a disabilit# benefit polic# refers to d. -he period of time that must elapse before the polic# benefit will commence d. -he period of time that must elapse before settlement of the claim after submission. d. -he period of time that must elapse before the issue of the polic# document. d. -he period of time that must elapse before the proposal can be considered. Solution: a ?>. -he law of reinsurance is primaril# based on d. law of torts d. law of vicarious liabilit#
d. law of contract d. law of specific relief Solution: c =. An Indian Insurance compan# can transact d. Life insurance and general insurance bus iness d. Life insurance and reinsurance business d. General and reinsurance business Solution: d d. $ither Life or general insurance or reinsurance business. 1. -he reinsurance contract itself ma# relate to d. Fne particular compan# d. Fne particular ceding insurer d. Fne particular insurance d. Fne particular catastrophe Solution: c . -he following factor is not ver# important form an underwriter7s view d. Age d. )e% d. Fccupation d. 'amil# income Solution: d 0. In fire insurance/ a reinsurance polic# was called as d. A guarantee polic# but nowada#s is more commonl# referred to as facultative reinsurance d. A coagulative polic# on propert# insurances with specific focus on catastrophe insurances d. A fire fighting comprehensive polic# with focus on mega risks d. An e%traneous perils covering polic# in the event of disaster. Solution: a 4. Ram insures his home worth Rs.:= lakhs for Rs.0= lakhs. -he house is destro#ed in a fire and he suffers losses worth Rs.= lakhs. 9ow much will he receive from the insurance compan# d. Rs.1= lakhs d. Rs.= lakhs d. Rs.1< lakhs d. Rs.1 lakhs Solution: MaC -he answer is Rs. 1= lakhs because Ram is underinsured b# 4=. :. Reinsurance cannot e%ist d. 5ithout its global character d. 5ithout captive insurers d. 5ithout there being direct insurance/ for the first part# is reinsured who has alread# issued a direct polic# d. 5ithout past data of catastrophe risk covered. Solution: c <. -he application of the law of contract does not appl# to ;;;;;;;;;;;;;contracts. d. Insurance d. )tock markets d. (ropert# deals d. None of them Solution: d ?. $ver# reinsurance instrument e%ecuted out of India c hargeable with dut# ma# be stamped d. 5ithin four months d. 5ithin five months d. 5ithin three months Solution: c d. 5ithin si% months. . Insurance can be ;;;;;;;;contracts. A O Benefit/ BO Indemnit#/ "O Negotiated. d. Fnl# A d. $ither B or " d. Fnl# A d. Fnl# B Solution: $ >. 'undamental risk is a risk that affects d. $ntire econom# d. Fnl# individual d. Government d. None of the above Solution: MaC 'undamental risk effects whole econom# and particular risk effects individual. >=. 5hich one of the following is not a personal risk d. risk of premature death d. risk of sickness d. risk of unemplo#ment d. risk of car accident Solution: d >1. (olic# costHconversion O =.==1/ Interest allowed euivalent to after ta% return O=/ annual premium O 10/===/ *ividend or bonus O 0/=== death benefits O =/==/=== "ash surrender value at the end of current polic# periodO
d. 44.<< d. :?.4 d. 1.:1
Solution: MaC (olic# "ost +per thousand, O M(& P ")(C M1PiC3M") P *C
3333333333333333333333333333333333333333 M*B3")C Q =.==1 (&O (remium3#earl#J ") O "ash surrender value at the end of polic# #earJ ")( O "ash surrender value at the end of previous #earJ i O interest or rate of returnJ * O*ividend or bonusJ *B O *eath benefitJ polic# cost conversion givenO=.==1. 9ence answer is 1>.?=. >. (olic# costHconversion O =.==1/ Interest allowed euivalent to after ta% return O1>/ annual premium O 14/===/ *ividend or bonus O /=== death benefits O :/==/=== "ash surrender value at the end of current polic# periodO.?= d. 44.<< d. :?.4 d. 1.:1 Solution: bS (olic# "ost +per thousand, O M(& P ")(C M1PiC3M") P *C 3333333333333333333333333333333333333333 M*B3")C Q =.==1 (&O (remium3#earl#J ") O "ash surrender value at the end of polic# #earJ ")( O cash surrender value at the end of previous #earJ i O interest or rate of returnJ * O *ividend or bonusJ *B O *eath benefitJ polic# cost conversion givenO=.==1. 9ence answer is 44.<<. >0. (olic# costHconversion O =.==1/ Interest allowed euivalent to after ta% return O1/ annual premium O 14/===/ *ividend or bonus O 1/=== death benefits O 0=/==/=== "ash surrender value at the end of current polic# periodO:/:=/=== / cash surrender value at the end of previous polic# #ear O :>====. 5hat is polic# cost per thousand d. 1>.?= d. 44.<< d. :?.4 d. 1.:1 Solution: cS (olic# "ost +per thousand, O M(& P ")(C M1PiC3M") P *C 3333333333333333333333333333333333333333 *B3")C Q =.==1 (&O (remium3#earl#J ") O "ash surrender value at the end of polic# #earJ ")( O cash surrender value at the end of previous #earJ i O interest or rate of returnJ * O*ividend or bonusJ *B O *eath benefitJ polic# cost conversion givenO=.==1. 9enceanswer is :?.4. >4. (olic# costHconversion O =.==1 / Interest allowed euivalent to after ta% return O1 annual premium O 1:===/ *ividend or bonus O ==== death benefits O =/==/=== "ash surrender value at the end of current polic# periodO::/=== / cash surrender value at the end of previous polic! !ear 7 -66666. 5hat is polic# cost per thousand d. 1>.?= d. 44.<< d. :?.4 d. 1.,1 SolutionD dS (olic# "ost +per thousand, O M(& P ")(C M1PiC3M") P *C
3333333333333333333333333333333333333333 M*B3")C Q =.== (&O (remium3#earl#J ") O "ash surrender value at the end of polic# #earJ ")( O cash surrender value at the end of previous #earJ i O interest or rate of returnJ * O*ividend or bonusJ *B O *eath benefitJ polic# cost conversion givenO=.==. 9ence answer is 1.:1 >:. (olic# costHconversion O =.==/ Interest allowed euivalent to after ta% return O=/ annual premium O 10/===/ *ividend or bonus O 0/=== death benefits O =/==/=== "ash surrender value at the end of current polic# periodO.: d. .00 d. .> d. <1.: Solution: aS (olic# "ost +per thousand, O M(& P ")(C M1PiC3M") P *C 3333333333333333333333333333333333333333 M*B3")C Q =.== (&O (remium3#earl#J ") O "ash surrender value at the end of polic# #earJ ")( O cash surrender value at the end of previous #earJ i O interest or rate of returnJ * O*ividend or bonusJ *B O *eath benefitJ polic# cost conversion givenO=.==. 9ence the answer is >.: ><. (olic# costHconversion 7 6.66 / Interest allowed euivalent to after ta% return O1>/annual premium O 14/===/ *ividend or bonus O /=== death benefits O :/==/=== "ash surrender value at the end of current polic# periodO.: d. .00 d. .> d. <1.: Solution: bS (olic# "ost +per thousand, O M(& P ")(C M1PiC3M") P *C 3333333333333333333333333333333333333333 M*B3")C Q =.==
(&O (remium3#earl#J ") O "ash surrender value at the end of polic# #earJ ")( O cash surrender value at the end of previous #earJ i O interest or rate of returnJ * Odividend o r bonusJ *B O *eath benefitJ polic# cost conversion givenO=.==. 9ence the answer is .00 >?. (olic# costHconversion 7 6.66 Interest allowed euivalent to after ta% return O1/ annual premium O 14/===/ *ividend or bonus O 1/=== death benefits O 0=/==/=== "ash surrender value at the end of current polic# periodO:/:=/=== / cash surrender value at the end of previous polic! !ear 7 ,46666. 5hat is polic# cost per thousand d. >.: d. .00 d. .> d. <1.: Solution: 8c9 (olic# "ost +per thousand, O M(& P ")(C M1PiC3M") P *C 3333333333333333333333333333333333333333 M*B3")C Q =.== (&O (remium3#earl#J ") O "ash surrender value at the end of polic# #earJ ")( O cash surrender value at the end of previous #earJ i O interest or rate of returnJ * O*ividend or bonusJ *B O *eath benefitJ polic# cost conversion givenO=.==. 9ence the answer is .> >. (olic# costHconversion 7 6.66 / Interest allowed euivalent to after ta% return O1 annual pr emium O 1:===/ *ividend or bonus O ==== death benefits O =/==/=== "ash surrender value at the end of current polic# periodO::/=== / cash surrender value at the end of previous polic! !ear 7 -66666. 5hat is polic# cost per thousand d. >.: d. .00 d. .> d. <1.: Solution: dS &ortalit# O 0====H:====== O =.==< No. of people who would die O :==== Q =.==< O 0== Amount reuired to pa# them O 0== Q ===== O < crores -herefore premium reuired O >. A group of :==== persons each aged 0: #ears wishes to appl# for term insurance for a one #ear period for a sum of Rs./==/===. If mortalit# tables show that out of :=/==/=== people 0=/=== die within a #ear/ find the premium to be paid b# each of the :==== applicants. d. 1== d. 1:= d. 10== d. 14== Solution: a 1==. A group of ?:=== persons each aged 00 #ears wishes to appl# for term insurance for a one #ear period for a sum of Rs./:=/===. If mortalit# tables show that out of 1==/==/=== people :/=== die within a #ear/ find the premium to be paid b# each of the ?:=== applicants. d. <: d. ?== d. ?:= Solution: a d. == 1=1. A group of 4:=== persons each aged 04 #ears wishes to appl# for term insurance for a one #ear period for a sum of Rs.0/:=/===. If mortalit# tables show that out of <=/==/=== people 0=/=== die within a #ear/ find the premium to be paid b# each of the 4:=== applicants. d. 1<:= d. 1?== d. 1?:= d. 1== Solution: c 1=. A group of ::=== persons each aged 4= #ears wishes to appl# for term insurance for a one #ear period for a sum of Rs.0/==/===. If mortalit# tables show that out of ?:/==/=== people :=/=== die within a #ear/ find the premium to be paid b# each of the ::=== applicants. d. 1== d. 1>== d. === d. 1== Solution: c 1=0. A group of 0:=== persons each aged 0= #ears wishes to appl# for term insurance for a one #ear period for a sum of Rs.0/==/===. If mortalit# tables show that out of 1=/==/=== people <=/=== die within a #ear/ find the premium to be paid b# each of the 0:=== applicants. d. 1:== d. 1:= d. 14== d. ?:= Solution: a 1=4. A group of :==== persons each aged #ears wishes to appl# for term insurance for a one #ear period for a sum of Rs./:=/===. If mortalit# tables show that out of :=/==/=== people :/=== die within a #ear/ find the premium to be paid b# each of the :==== applicants. d. 1:== d. 1:= d. 14== d. ?:= Solution: $ 1=:. A group of <==== persons each aged 4: #ears wishes to appl# for term insurance for a one #ear period for a sum of Rs./=/===. If mortalit# tables show that out of =/==/=== people 4=/=== die within a #ear/ find the premium to be paid b# each of the <==== applicants. d. 1:==
d. 1:= d. 14== d. ?:= Solution: c 1=<. A group of ::=== persons each aged 4= #ears wishes to appl# for term insurance for a one #ear period for a sum of Rs.0/==/===. If mortalit# tables show that out of <=/==/=== people ::/=== die within a #ear/ find the premium to be paid b# each of the ::=== applicants. d. 1:== d. 1:= d. 14== Solution: d d. ?:= 1=?. "alculate 9L to recommend adeuate insurance coverJ &r. Ritesh/ AgeO 0= #rs Retirement age <= #ears. 9e is Asst. ice president. 9is monthl# salar# is ::/===. he pa#s professional ta% of rs.0=== and income ta% subect to allowable deductions i.e. ta% paid Rs. 10=== Reasonable self maintenance e%penditure estimated Rs.4:=== p.a.J life insurance premium for self Rs. 1=== with total sum assured Rs. 1=====. 'or wife and child he pa#s insurance premium of Rs. 1=:== and Rs. <:== respectivel# rate of interest assumed for capitaliation of future income is at . Adeuate additional insurance recommended is d. Rs. :=/==/=== d. Rs. 4/==/=== d. Rs. ::/==/=== d. Rs. 1=/===/===. Solution: $ 1=. "alculate the 9L to recommend total insurance cover &r. A(-$. 9is present age 4: #ears. 9is retirement age is ?= #rs. 9is total income of Rs.1/==/=== + )alaries 1 : lakhs/ dividends on individual shares .: lakhs/ 92' co3par tner profit share 1.: lakhs/ interest on bank deposit and other investment 1 lakh/ minor daughters income added 1 lakh., he has paid following ta%esD "orporate professional ta% :=== income ta% 41==== as per individual ta% return filed. 9e pa#s total life insurance premium of Rs.::=== +self insurance cover ).A. /==/===, Reasonable maintenance charge for a person of his stature is assumed as Rs. 1=====p.a. applied rate of interest to arr ive at a present value of his future income is at : d. Rs. .< crores d. Rs. 0 crores d. Rs. 1.= crores d. Rs. 1 crores. Solution: a 1=>. &r. and &rs. Rao/ aged 4< and 4 #ears/ both have a life e%pectanc# of 0: #ears. "alculate the insurance reuired based on need based and income replacement methods on &r. Rao7s life. Eou have the following information "urrent investmentsD Rs.:/==/===/ $%penses Rs. 0/==/=== +including 1 lakh of &r. Rao7s personal $%penses, &r. Rao7s income post ta% rs. 0.: lakhs. 'inal costs Rs. 1 lakhs. (ost ta%/ post inflation rateHdiscount factor is 0. d. 4 lakhs/ 11? lakhs d. = lakhs/ < lakhs d. 4 lakhs/0 lakhs d. = lakhs/ : lakhs. Solution: c 11=. A planner and prospect agreed for an endowment polic# for Rs.4 lakhs limited pa#ment for 1= #ears with a term of = #ears. If reversionar# bonus is taken as ?.: per annum and terminal bonus as Rs. 1:= per 1=== what will be maturit# value
d. Rs.1=/:=/=== d. Rs.1=/<=/=== d. Rs.1=/?=/=== d. Rs.1=/=/=== Solution: MbC Revisionar# Bonus O 0=/=== Q = O <.== lakhs -erminal Bonus =.<= lakhs )A 4.== lakhs 3333333333333333 &aturit# value 1=.<= lakhs 111. -his is not a risk faced b# the individual in their various ac tivities d. 'inancial risk d. "umulative risk d. (ure risk d. )peculative risk Solution: $ 11. A person goes to the neighborhood lotter# store and bu#s a lotter# ticket. -his is an e%ample of d. (ure risk d. *#namic risk d. )peculative risk d. Non financial risk Solution: c 110. A living person will face the risk of death at all points of their life and this risk will be classified as d. (ersonal risk d. (ropert# risk d. Liabilit# risk Solution: a d. None of the above 114. $ver# time the children move out to pla# in the afternoon in the summer holida#s their mother insists that the# wear a cap to keep out the impact of the direct ra#s of the sun and to drink water to avoid deh#dration. -his is an e%ample of
d. Risk transfer d. Risk avoidance d. Risk retention Solution: d d. Risk reduction 11:. A footballer who is voted as the $uropean 'ootballer of the #ear does not take an insurance polic# on his legs and continues to pla# as before. -his is a case of d. Risk transfer d. Risk avoidance d. Risk retention Solution: c d. Risk reduction 11<. 5hile deciding upon the risks to be insured the various factors considered for the process are d. arious events of risk d. )everit# of the financial loss d. 'reuenc# of occurrence d. All of the above Solution: d 11?. All the risks present for a person can be insured d. -rue because risk can be transferred d. 'alse because it has to fulfill the reuired conditions of measurabilit#/ homogeneit# etc d. -rue because a person can take the necessar# insurance d. 'alse because ever#one does not have all the different kinds of risk Solution: $ 11. An insurance contract is meant for the purpose of d. Indemnit# d. (rofit d. "apital gains d. $arning return Solution: +a, Indemnit# is to bring back the insured back to the position heHshe was prior to the loss. -here should be no gain. 11>. Insurance helps a person to d. (revent a profit d. (revent a loss d. &ake a capital gain d. $arn a rate of return Solution: $ 1=. -he role of insurance in the econom# will relate to the process of d. (roviding funds for investment and credit d. "ontrolling inflation d. (ushing up interest rates d. "ontrolling the foreign e%change Solution: +a, Insurance companies can provide long term funds for the countr# which can be channeled in to long term infrastructure proects 11. A person wants insurance for his motorcar. -he point regarding the colour of his wall in his house will be a ;;;;;;;; point for the purpose of insurance d. &aterial d. )lightl# material d. Non material d. None of the above Solution: c
&aterial fact is an# fact which would influence the insurer in accepting or declining a risk or in fi%ing the premium or terms and conditions of the contract. 9ere the c olour of wall is non material to the r isk being insured. 1. 2nder the principle of insurable interest there should be ;;;;;;; that can be insured . (ropert# . Life . (otential liabilit# . All of the above Solution: d 10. -he following will not be factor covered for being insured under the principle of insurable interest . Right . )pace . Interest . Limb Solution: $ 14. -he insured must have a ;;;;;;; with the subect matter of insurance for benefiting from it ii. Right ii. Interest ii. Relationship ii. None of the above Solution: c 1:. A person owns a building in which he sta#s. In this case insurable interest is created b# d. Nature d. "ommon law d. "ontract Solution: d d. )tatue 1<. A person has ;;;;;; insurable interest in his own life
d. (art d. )pecific d. 2nlimited Solution: c d. Limited 1?. A person got married in the last week of *ecember ==:. In the month of November ==< does the wife have an insurable interest in the life of the husband d. No because a #ear has not passed since marriage d. Ees because a person has an automatic insurable interest in the life of the spouse d. No because onl# the husband has an insurable interest in the life of the wife Solution: $ d. None of the above Risk and Insurance 1>
1. In case of a mortgage the situation for the two parties in terms of insurable interest is d. Fnl# the mortgagor has insurable interest d. Fnl# the mortgagee has insurable interest d. Both have insurable interest arising d. None of the two have insurable interest Solution: c 1>. -he following will have insurable interest in the role that the# pla# d. -rustees d. Bailee d. $%ecutors d. All of the above Solution: d 10=. A person is not supposed to profit from an insurance polic# but should be in a position similar to what he was in before the loss occurred. -his is outlined b# the principle of d. 2tmost good faith d. Insurable Interest d. Indemnit# d. )ubrogation Solution: c 101. -he feature of indemnit# can be undertaken through the route of d. Repairs d. Reinstatement d. Replacement Solution: d d. All of the above 10. -he risk that are covered b# an insurance polic# are called d. 2ninsured perils d. Insured perils d. $%cluded perils d. None of the above Solution: $ 100. A life insurance polic# sa#s that the death on account of a war will not be covered b# the insurance polic#. -his will be classified as a d. 2ninsured peril d. Insured peril d. $%cluded peril d. None of the above Solution: c 104. In an insurance contract the side making the offer is d. -he insurance compan# d. -he insured d. -he beneficiar# d. All of the above Solution: "$# In insurance contract / the insured makes o ffer and it is the compan# which acceptsHdenies. 'urther/ if insurance compan# changes an# terms it makes an counter offer to the insured and then it is up to insured to accept or den#. 104. In terms of competence from the side of the insurance compan# it has to d. Be over 1 #ears in e%istence d. Be over : #ears in e%istence d. 9as to have an insurance license under the regulations d. All of the above Solution: c Risk and Insurance =
10:. -he consideration in the insurance contract is the pa#ment of d. "ommission d. (remium d. 2nderwriting amount d. 'i%ed amount of pa#ment Solution: $ 10<. -he value e%changed in terms of premium paid and the pa#out in case of a loss is not eual but is based upon an uncertain event. -his is based upon the feature of d. Aleator# contract d. 'i%ed contract d. Adhesion
Solution: a d. 2tmost good faith 10?. An insurance compan# leaves the setting of the insurance rate upon the person who is assigned to set the rate. -his person will look at the specific case a nd determine the premium rate. -his is an e%ample of d. Individual rating d. "lass rating d. &erit rating Solution: a d. None of the above 10. -his is not a wa# of determining the merit rating for an insurance compan# d. )chedule rating d. $%perience rating d. "lass rating d. Retrospective rating Solution: c Rating could be31. Individual or udgmental. . "lass or manual. 0. &erit rating T )chedule / e%perience ! Retrospective. 10>. All of the following statements describe the operation of a life annuit# $@"$(-D d. Because of the interest factor/ an annuitant is assured of receiving back more than he or she paid in d. -he annuitant is assured that he or she cannot outlive the length of time of the annuit# pa#ments d. -he emphasis is on the liuidation of the fund as opposed to its growth d. -he older the annuitant is when he or she receives the first annuit# pa#mentJ the greater will be the amount of each pa#ment Solution: a
14=. A t#pe of risk with high freuenc# but low severit# is probabl# best ha ndled b# a. Avoidance b. )ubrogation c. )elf3insurance Solution: c d. 2nder3Insurance 14. )peculative risk can have following outcomes ;;;;;;;;. +A, Loss +B, Gain +", )tatus Kuo d. A onl# d. B onl# d. " onl# Solution: d d. A/ B ! " 140. LALGI is ;;;;;;;;;;;. d. (rivate contribution guarantee scheme d. (rivate insurance d. (ublic benefit guarantee scheme d. )ocial insurance Solution: +d, Landless Agricultural Labourers Group Insurance + LALGI , scheme is a social securit# group scheme where in head of the famil# betwen 1 to <= #ears is eligible if has no land.Fn death till <=#ears a sum of Rs. ===His paid to the famil#. 144. 'or risk to be insurable which one of following is not correct d. -he loss must be fortuitous or accidental. d. -he loss must not be catastrophic. d. -he loss produced b# the risk must be definite and measurable. d. -here must be a sufficientl# large number of heterogeneous e%posure units to make the losses reasonabl# predictable. Solution: d -he large number of units have to be homogenous. 14:. In 2nit3Link polic#/ market risk is with ;;;;;;. +A, Insured +B, Insurer d. A d. B d. Both A ! B d. Neither A nor B Solution: a 14<. &inimum age at entr# for &edi3claim is ;;;;;;;;;;;. d. #ears d. >1 da#s d. 0<: da#s d. 1 #ears Solution: $ uestions 1)/ to 13 carr! t+o mark eac
14?. An insurance compan# pa#s the insured the sum for the goods destro#ed in his godown. -here is still some additional part of the goods that is picked up from the godown and this results in an additional sum of Rs :=== coming in. In this situation the share of the insurance compan# is d. Rs = d. Rs :== d. Rs :=== d. Rs 1==== Solution: c 14. -here is a godown that is worth Rs = lakh. A person insures it for Rs 1: lakh and there is a fire that completel# destro#s the godown. In this case the insurance compan# will pa# d. Rs :===== d. Rs 1======
d. Rs 11:=== d. Rs 1:===== Solution: c -he propert# is under insured b# : and hence the claim would be of ?: onl#. 14>. A propert# is worth Rs 1= lakh and an individual insures it for a sum of Rs 1 lakh. In this case when a fire destro#s the full propert# then the insurance compan# will pa# the insured a sum of . Rs :===== . Rs ===== . Rs 1====== . Rs 1===== Solution: c Insurance is for indemnification purpose and there cannot be an# profit from it. 1:=. -here is an asset worth Rs 1= lakh and this is insured for a sum of Rs lakh. -here is a loss wherein half of the asset is destro#ed. -he insurance compan# will pa# a sum of d. Rs 0==== d. Rs 4===== d. Rs :===== d. Rs ===== Solution: $ 1:1. -here is an e%cess of 1= in a polic# and in the e%ample where there is an amount of Rs ==== that will be the claim then the insurance compan# will pa# d. Rs = d. Rs === d. Rs 1=== d. Rs ==== Solution: c $%cess is a compulsor# deductible from claims. 9ere 1= and hence === would be deducted. 1:. -here is an e%cess of Rs. :=== in a polic# and the amount spent for the e%pense that has to be reimbursed under the polic# comes to Rs 4:==. -he insurance compan# will pa# d. Rs = d. Rs :== d. Rs 4:== d. Rs :=== Solution: a -he purpose of e%cess is to keep awa# the small claims and reduce the e%penses of servicing claims. )o/ nothing would be paid here as e%cess is :=== and loss is 4:== which is below e%cess limit. 1:0. A polic# has an e%cess of Rs :=== and a limit of Rs 1 lakh. 5hen there is a claim of Rs ::=== b# the person insured then the insurance compan# will pa# a sum of d. Rs = d. Rs :=== d. Rs :==== d. Rs ::=== Solution: c 1:4. A polic# has a limit of Rs 1 lakh. 5hen there is a claim of Rs ===== b# the person insured then the insurance compan# will pa# a sum of d. Rs = d. Rs :==== d. Rs 1===== d. Rs ===== Solution: c -he claim cannot be more than the limit fi%ed in the polic#. 1::. -here is an asset worth Rs 1= lakh. A person insures this for Rs : lakh each with different insurance companies. If the entire asset is destro#ed then each insurance compan# will pa# d. Rs :==== d. Rs :===== d. Rs ?:==== d. Rs 1====== Solution: $ Both the companies would contribute to the loss. 1:<. -here is an asset worth Rs = lakh. A person insures this for Rs = lakh each with two insurance companies. If this is destro#ed to the e%tent of := then the amount that will be paid b# the insurance companies together is d. Rs 1====== d. Rs ====== d. Rs :===== d. Rs 4====== Solution: a In insurance there is no scope for profit or gain/ onl# indemnification. 1:?. A person takes insurance for Rs : lakh from one insurance compan# and Rs 0 lakh from another for the asset worth Rs lakh. In this case when there is a loss of Rs < lakh then the total sum paid b# the two insurance companies put together will be d. Rs : lakh d. Rs < lakh d. Rs lakh d. None of the above Solution: $ Both the companies would contribute to the loss.
1:. If the rate of insurance is Rs 0 per thousand per #ear and there is an insurance polic# of Rs 0 lakh then the premium will come to d. Rs 0=== d. Rs <=== d. Rs >=== d. Rs >>== Solution: c 1:>. -he following figure is not a premium figure paid b# a holder of an insurance polic# d. Rs :== d. Rs 104: d. Rs 0:4< d. Rs 1. per thousand Solution: d Rate is the price per unit of coverage i e 1=== in insurance while premium is the total cost or price paid for the coverage. 1<=. An insurance compan# has been in the business of insurance in particular countr# since the last 1: #ears. -he compan# activel# uses the data that has been generated for the past several #ears for the purpose of developing the insurance rates that it will charge its customers. -his process is known as d. Insurance coverage d. Loading d. (remium process d. None of the above Solution: $ 1<1. (remium on &otor Insurance polic# does not depend on which one of the following factors d. Uone of operation of the vehicle d. Insured *eclared alue +I*, of the v ehicle d. "ubic capacit# of the vehicle d. Age of the owner of the vehicle Solution: d 1<. In several unit linked polices the ;;;;; charge can be as high as 0=30: d. 'irst #ear charge d. Administrative charge d. Risk charges d. Asset management fees Solution: a Solution: a (remium allocation charges are generall# higher in the 1 st #ear in 2LI( plans. 1<0. A person took a life insurance polic# on Fctober ==:. : da#s later he slashed his wrists after an argument with his famil# and conseuentl# died. -he claim under the polic# a. 5ill be paid because the polic# is in his name a. 5ill be paid because the polic# has completed 1: da#s a. 5ill not be paid because he did not die due to a disease a. 5ill not be paid because of coverage under the suicide clause Solution: * 1<4. A person has a premium due on 1: November. )ince he was traveling abroad he has not been able to pa# the premium. After he is back on : November can he pa# the premium d. Ees because a person can pa# premium an#time d. Ees because the time falls within the grace pe riod clause of the polic# d. No because the due date was the last date for pa#ment d. No because the premium can onl# be paid after a month Solution: $ 1<:. A person wants to ensure that while he has taken the necessar# life insurance cover there is also some e protection to him and his famil# in case there is a serious illness that affects the person and which can drain him of financial resources. In such a situation one can take the option of which rider d. 5aiver of premium d. Accidental death d. "ritical illness Solution: c d. Guaranteed insurabilit# 1<<. 5hen a rider is taken on an insurance polic# along with an additional benefit there would be an additional cost in terms of d. 9igher premium d. Lower premium d. Lower benefit d. )ame benefit Solution: a 1
d. Indirect propert# risk d. Loss of income d. All of the above Solution: c 1<>. A person enters into a contract in the course of his printing business. *ue to the non fulfillment of the contract he was reuired to pa# damages to some other part#. -his is an e%ample of d. )tatutor# liabilit# d. (ersonal liabilit# d. (rofessional liabilit# d. All of the above Solution: c 1?=. -he overflowing of the river led to floods in )urat this #ear. After being trapped in their houses for over : da#s the )oni famil# was able to have access to food and water. In order to tackle such a situation in the future the famil# moved to aipur. -his action of the famil# tackling the risk will be classified as d. Risk transfer d. Risk avoidance d. Risk retention d. Risk reduction Solution: $ 1?1. A person has a fire in his stock house and goods to the e%tent of Rs. 0:=== are destro#ed in the fire. -here is no other loss because of the fire and the person after looking at the situation files a claim for Rs. ?:===. -his is an e%ample of d. Normal claim d. 'raudulent claim d. Inflated claim d. None of the above Solution: c 1?. A painting is insured with a private collector for Rs. :lakh. 9e uietl# ships off the painting to one of his associates and then claims the insurance with the compan# for the reuired sum stating that the painting was s tolen while he was on vacation. -his is an e%ample of d. Normal claim d. 'raudulent claim d. Inflated claim d. None of the above Solution: $ 1?0. A person gives out his motorc#cle on lease to his friend with the condition that an# ta% or repairs that will arise on the vehicle will have to be borne b# the user. In this case the user has an insurable interest because of d. -here is no insurable interest d. "ommon law d. "ontract d. )tatue Solution: c 1?4. A person has borrowed Rs. lakh from his friend. Fut of this a sum of Rs :==== has alread# been paid back. -he amount of insurable interest of the person who had loaned the mone# in the life of the borrower is d. Rs = d. Rs :==== d. Rs 1:==== d. Rs ===== Solution: c 1?:. A person has a share of := in a propert# with his partner. -he propert# is valued at Rs. = lakh. If the person insures the full value of the propert# of Rs = lakh then he will be allowed the insurance for d. Rs = d. Rs 1====== d. Rs ====== d. None of the above Solution: c 1?<. In the above case the person can be deemed to be an agent for the cover of d. Rs = d. Rs 1====== d. Rs 1:===== Solution: $ d. Rs ====== 1??. A person )harad own various properties in the cit# of aipur. 9e has an agent a#esh who operates and undertakes several activities on his behalf. a#esh goes to an insurance compan# to take insurance on the propert# on behalf of )harad. In this case there d. Is no insurable interest d. It is upto the insurance compan# to decide on the matter d. -here is an insurable interest for the agent on behalf of the principal d. None of the above Solution: c 1?. A person got married in the last week of *ecember ==:. In the month of April ==< the husband wants to know whether he has insurable interest in the propert# of his wife d. No he has insurable interest onl# in his own propert# d. No there cannot be an# uestion of insurable interest for a #ear after marriage d. Ees there is insurable interest because the marriage is not registered Solution: d d. Ees because souses have insurable interest in each others propert#
11. ina#ak/ 0< #ears and married/ works for a multinational firm/ which provides adeuate medical and related covers. 9e is also able to accumulate sick leave. 9e alread# has his own home and savings of Rs. 0: lakh/ which are well invested. 5hich insurance cover does he reuire the most d. Life "over d. &edical "over d. (ropert# Insurance Solution: a d. -emporar# -otal *isablement "over 1. ;;;;;;;;;; Insurance protects oneself against losses as a result of lawsuits d. Life d. &edical d. (rofessional Indemnit# d. 9ome Solution: c 10. Loss of income of earning member of famil# is a ;;;;;;;;;;; t#pe of risk. d. Liabilit# d. (ersonal d. (ropert# d. (rofessional Solution: $ 14. Fnl# a ;;;;;;;;; insurance polic# can be assigned d. 9ealth d. Life d. (ropert# d. Liabilit# Solution: $ 1:. General insurance policies shall be void unless the person affecting the insurance has an insurable interest in that propert# at the time the polic# is affected as well as at the time of the occurrence of the insured event. d. -rue Solution: a d. 'alse 1<. If the life insurance polic# is endorsed under &5( Act/ 1?4 then ;;;;;;;;;;;;;;;;;. d. "reditors have first claim over polic# proceeds d. "reditors have no claim over polic# proceeds d. "reditors have residual claim over polic# proc eeds d. Income ta% authorities have claim over polic# proceeds Solution: $ 1?. 5hich of the following statements about law and the insurance agent is +are, true i. An insurer is responsible for the acts of its agents when the agents are acting within the scope of the agenc# agreement. ii. "onsumers should not assume that an agenc# r elationship e%ists ust because someone claims to represent an insurance compan#. d. I onl# d. II onl# d. Neither I nor II d. Both I and II Solution: d 1. Vavita purchased collision insurance on his new c ar. 5hile Vavita was driving home from work/ another driver failed to stop at a stop sign and hit Vavita7s car. Vavita phoned his insurance agent and reported the accident. -he agent said/ 6*on7t worr#/ Vavita/ we7ll pa# to get #our car fi%ed. And after we pa# for the damage to #our car/ we will tr# to collect from the driver who damaged #our car.8 -he process the agent described is called d. 5aiver. d. "onsideration. d. $stoppels. d. )ubrogation. Solution: d 1>. 5hen someone reasonabl# relies upon a representation of fact/ what legal doctrine prevents the representation of fact from being retracted if the individual who relied upon the representation of fact would be harmed d. $stoppels d. 5arrant# d. 5aiver d. Agenc# Solution: a 1>=. -he assignment of propert# insurance b# the seller of the propert# to the purchaser of the propert# is onl# valid if the insurer approves the assignment. -he reason that the insurer must approve the assignment of a propert# insurance polic# is that d. Insurance contracts are contracts of utmost good faith. d. Insurance contracts are bilateral contracts. d. Insurance contracts are personal contracts. d. Insurance contracts are aleator# contracts. Solution: c 1>1. 5hen &aria applied for a life insurance polic#/ she answered 6No8 in response to the uestion 69ave #ou visited a doctor for an# reason during the previous 1 months8 In fact/ &aria visited a doctor five weeks ago after e%periencing chest pains. )he was referred to a specialist who determined that &aria has severe heart disease. If &aria dies shortl# after the life insurance polic# is issued/ upon what grounds will the insurer be successful in den#ing the claim d. "oncealment d. 5aiver
d. 5arrant# d. &isrepresentation Solution: d 1>. 5hich of the following statements is +are, true with respect to the human life value approach i. -he human life value approach considers all sources of income that the famil# receives. ii. -he human life value approach does not consider the time value of mone#33future cash flows are not discounted back to present value. d. II onl# d. Neither I nor II d. I onl# Solution: $ d. Both I and II 1>0. An individual who is inured as result of a tort ma# bring a legal action against the person who caused the inur#. In a court of law/ the inured part# is known as the d. -ortfeasor. d. (laintiff. d. Attorne#. d. *efendant. Solution: $ 1>4. In some situations/ it is not necessar# to prove fault for inuries resulting from an act for the act to be deemed negligent. )uch situations are described as involving d. "omparative negligence. d. "ontributor# negligence. d. Breach of contract. d. )trict liabilit#. Solution: d 1>:. "onditions that increase either the freuenc# or s everit# of loss are calledD . )ubrogation. . Risks. . 9aards. Solution: c 1><. 5hat is the main responsibilit# of the underwriting department of a life insurance compan# . -o guard against adverse selection. . -o set a limit on the amount of insurance issued. . -o set adeuate insurance rates. . -o avoid e%posures that could result in loss. Solution: a -he underwriter tries to manage the risk of adverse selection. " is incorrect/ because the rate is usuall# set after establishing underwriting standards. * is incorrect/ because the purpose is not to avoid e%posure but to manage risks. B is a responsibilit# of underwriters but is not their main responsibilit#. 1>?. Liabilit# arising out of work done b# independent contractors is known as d. "ontingent liabilit#. d. "ompleted operations liabilit#. d. (remises liabilit#. d. "ontractual liabilit#. Solution: a 1>. 5hich of the following statements is +are, true with respect to 5orkers "ompensation and $mplo#ers Liabilit# Insurance I. 5orkers compensation insurance is characteried b# deductibles and coinsurance. II. 5orkers compensation provides coverage for occupational inur# and disease. d. I onl# d. II onl# d. Neither I nor II Solution: $ d. Both I and II 1>>. An individual ma# commit an act that results in bodil# inur# or damage to someoneWs propert#. A court of law ma# order the person responsible for the wrongful act to pa# damages to the part# who was inured. -his t#pe of risk is called the d. )peculative risk. d. (ropert# risk. d. Liabilit# risk. d. 'undamental risk. Solution: c ==. -wo wa#s of assessing life insurance needs is a need based approach and the other is the income replacement method. 5hat in #our udgement would be the life cover reuired for &r.Rao on the basis of each of the two approaches. &r. Rao is the sole income earner in the famil#. &rs. Rao is a homemaker. -he# are aged 4= and 0< respectivel#. Life e%pectanc# for both of them is another 4= #ears. -he# have no children. Fther information #ou have isD "urrent investment port folio 3 Rs.= lakh.J $stimated final $%penses 3 Rs. 1 lakh.J (resent annual e%penses3Rs. 4 lakh +including a lakh of &r. RaoWs personal e%penses,J &r. Rao7s post3ta% income in hand3Rs.0.: lakh.J Assume a post ta%/ post inflation returnHdiscounting factor of 0.. "alculate the insurance reuirement under the Needs Based method. d. Rs.14. lakhs d. Rs.14. lakhs d. Rs.1:.= lakhs d. Rs.1:.4 lakhs
Solution: d 'amil#.s e%penses after death of &r.Rao will fall to Rs.0 lakhs. 'ind 'uture va lue of these e%penses for 4=
#ears with inflation at 4. 9ence 'uture value is Rs.14.4= lakhs. Add Rs.1 lakh as 'inal e%penses. 9ence Insurance reuirement will be Rs.1:.4= lakhs. ;se te information $elo+ to pro2ide ans+ers to uestions 61 6 and 6'
Eour client earns Rs. <=/=== annuall#. )he is married and has a child aged three. If she should die/ she wants her famil# to receive Rs. 4:/=== annuall# for the ne%t = #ears/ with the first pa#ment due on her death/ and to provide Rs. 1=/=== for her child7s college education in fifteen #ears time. )he also wants to set up a final e%pense fund of Rs. 1:/===/ and pa# off the mortgage/ automobile loan/ and outstanding credit card balances. $%tracts of her personal balance sheet are as followsD • •
•
Assets
"ondominium Rs. (ersonal (ropert# Automobile &utual 'unds Bank *eposits Life Insurance &ortgage Reducing -erm Assurance Group *eath Benefit Total
1=/=== :=/=== 4=/=== :=/=== 1=/=== 1==/=== 1==/=== 0=/=== ,46666
Liabilities
Automobile Loan Rs. &ortgage "redit "ard Balance Total
1:/=== 1==/=== :/=== 16666
Assuming that the life insurance proceeds and liuid funds can earn < annuall#/ calculate =1. -he present value of the annual incomes b. :==/4< b. :1
b. >==/=== Solution: c (mt O 4:=== J nper O = #ears J rate O < pvO :/4?/11:. =. -he present value of her child7s college education cost d. ,66/1 d. ::/>1 d. 11>/? d. 10=/?: Solution: a fvO 1==== J nper O 1:J rate O < pvO :==?1. =0. -he minimum amount of additional life insurance #our client should purchase to attain her financial goals. d. No insurance is needed d. 1)'666
d. 1:/=== d. 44=/=== Solution: $ +-otal Liabilities O :>?/1< P 10:/=== -otal Assets O :>=/===, =4. "alculate half #earl# premium on the basis of the following dataD (lan T -erm T endowment : #ears/ tabular premium Rs.:0.4= per thousand Accepted with *AB e%tra Re.1 per thousand ).A. Fccupation $%tra Rs.0 per thousand ).A. Rs.1/ :=/=== Rebate Rs. Eearl# &ode O Rebate T less 0 9alf #earl# premium T less 1.: Kuarterl# premium T Nil &onthl# premium T plus : d. =?= d. 4=>: d. ??4= d. <1= Solution: $ -abular premium T pa#ment mode discount T large )A discount Poccupation P *AB :0.4= T =.= O :.<= T .== O := .<= P 0 P 1 O :4.<= :4.<= Q 1:= O 1>= H O 4=>: • • • • • • • •
6,. Calculate loan amount:
)um Assured Rs. &ode of (a#ment Rebate for half3#earl# mode *ate of commencement *ate of last premium paid *ate of calculation -able -erm
1/ :=/=== 9alf #earl# 1 10.=. 10.=.> 1.=0.>: 1<3:=
)urrender value Rs. :.0 ested bonus declared from 0H to 0H>1D Rs.1:= p er thousand sum assured Interim bonus declared on 01.=0.>D Rs.?: per thousand sum assured. LoanD >= of surrender value if the polic# is at force or : of surrender value if polic# is in paid T up condition. a. 1/ b. 1
Solution: $
(aid3up value T No. of premiums paid @ sum assured H No. of premium pa#able P bonus if an#. )urrender value T paid Tup value @ ). factorH1== (aid3up value O > @ 1/ :=/===H1== O Rs.10/ :== P / :== O 0/ the interim bonus on 01.=0.> is not taken for calculation loan amount, )urrender value O 0 Q 1:==== H 1== P :== O 0<=== ) O :.0 H 1== Q 0<=== O 1/ Loan 1 Q : H 1== O 1<==4. : because polic# is though paid up but lapsed. 6-. Calculate paid
)um Assured T Rs.1/ ==/=== (lan T 5ithout (rofit $ndowment -erm T = #ears *ate of commencement T =.=.1>>: Last premium paid T =.=.=== Kuarterl# &ode *ate of Birth T =.=.1>:= -abular premium T :=.=: a. :/=== b. :=/=== c.
Solution: c
No. of premium paid @ sum assuredHnumber of premium pa#able Rs.1/ ==/=== @ 1H= O
-he sales literature of an insurer/ pertaining to a particular participating polic#/ claims that in the past/ the compan# had paid maturit# benefits of two3and3a half times the basic sum assured on their 1:3#ear endowment policies. -he compan# uses the uniform compound reversionar# bonus s#stem and the terminal bonus s#stem to distribute profits to its participating polic#holders. Assuming a uniform reversionar# bonus rate of 0: per thousand sum assured was declared over the last 1: #ears/ a basic sum assured of :=/=== and level annual premiums of :/=<<. =?. Ignoring mortalit#/ calculate the terminal bonus content in the maturit# proceeds d. :=/=== d. 41/0 d. 0/?. 5hich of the following is needed to calculate the clientWs human life value i. Average annual earnings to the age of retirement. ii. )election of an appropriate capitaliation rate iii. "osts of self3maintenance. iv. Number of #ears from the clientWs pr esent age to the contemplated age of retirement. d. I/ ii d. I/ ii/ iii d. I/ iii/ iv d. I/ii/ iii/iv Solution: d
-he uestion asks what is needed to calculate the value of a life. -he human life value is determined b# finding the present value of the future cash flows +the client7s annual salar#,. A/ B/ "/anf * are all needed in this calculation. 1=. 5hen fine arts or antiues are insured under a homeowners polic# b# an endorsement/
d. "overage is usuall# on a replacement cost basis. d. "overage is usuall# on an actual cash value basis. d. "overage is usuall# provided on a valued basis. d. -he perils are the same as the homeowners polic# to which the endorsement is attached. d. "overage limits are the same as the homeowners polic# to which the endorsement is attached. Solution: c 11. 5hich of the following is +are, true regarding the ownership of life insurance A polic# can onl# be issued to the insured. Generall#/ assigning a polic# reuires proof that the insured is still YinsurableY meaning still in good health. Fnl# a person with an insurable interest/ generall# a relative/ a business associate/ or lender/ can be named as a beneficiar#. -he owner can assign +transfer, the polic# to whomever he or she chooses/ even if the assignee has no insurable interest. d. 1/ / and 0 onl#. d. 1 onl#. d. and 4 onl#. d. 4 onl#. Solution: d Life insurance policies can be issued to an#one with an insurable interest. -he polic# ma# be assigned to an#one and an#one ma# be named as beneficiar#. -he insured need not be insurable at the time of assignment 1. -he following are statements made concerning contracts of insurance. Identif# the statementHs that isHare correc t. I. (ropert# and liabilit# insurance contracts are freel# assignable b# (olic# owners without the insurer7s prior approval. II. -he reuirement that the insured must cooperate with the insurer in defending a liabilit# claim is an e%ample of a condition precedent . a. I onl# b. II onl# c. I and II d. Neither I nor II Solution: d 10. A son cannot insure his parents7 life. a. -rue b. 'alse c. -rue onl# if both parents are earning a regular income. Solution: a d. -rue onl# if the son is dependent on the parents. 14. ;;;;;;;;; insurance polic# cannot be assigned. a. -erm b. $ndowment c. &one# back d. 2LI( Solution: a 1:. An assigned life insurance polic# can rev ert to the original polic# holder once the liabilit# is paid off. a. -rue $. 'alse c. It can revert onl# at the discretion of the assignee. d. -rue/ but the original polic# holder will not receive an# of the interim bonuses which e. have been declared on the polic#. Solution: a 1<. -he minimum capital reuired for an insurance co mpan# as per the IR*A guidelines is Rs. ;;;;;;; crores. a. := b. ?: c. 1== d. == Solution: c 1?. &a%imum sum assured available under a Life insurance polic# currentl# is Rs. ;;;;;; lakhs a. := b. ?: c. 1== Solution: d d. No ceiling is mandated 1. -(As are being emplo#ed currentl# in ;;;;;;;;; policies. a. &edical Insurance b. &otor Insurance c. Life d. Both a and b Solution: d 1>. &rs. &ishra is a female assessee aged ::. -he ma%imum amount of income ta% deduction that she will get on account of pa#ment of premium on a &edical Insurance polic# is Rs. ;;;;; a. 1==== b. 1:== c. 1:=== d. ==== Solution: a =. -he Insurance Act was passed in ;;;;;;;;; a. 1>:< d. 1>0 d. 1? • • •
•
Solution: $ d. 11 1. "lause pertaining to "ontribution and )ubrogation are contained in ;;;;;; insurance contracts. d. Life d. &edical d. Accident d. (ension (lan Solution: $ . -he cost of insurance premium is ;;; ;;;;; proportional to the odds of an event occurring. d. *irectl# d. Inversel# d. Indirectl# d. *ata insufficient Solution: a 0. 5earing a helmet while riding a bike is an e%ample of ;;;;;;;;;;; d. Risk Retention d. Risk Reduction d. Risk )haring d. A combination of all the three options Solution: $ 4. A start3up coming approaching the stock market with an I(F is an e%ample of d. Risk Retention d. Risk Reduction d. Risk )haring d. A combination of all the three options Solution: c :. &r. inod has purchased medical insurance policies from two companies vi. @ and E for a sum of Rs.: lakhs each. 9e files for a claim of Rs.: lakhs from @/ who reimburses him for the same. @ then approaches E and recovers half this amount from it. @ has emplo#ed the principle of ;;;;;;; d. "ontribution. d. )ubrogation d. "ollaboration d. Intimidation Solution: a <. -he following are e%amples of ;;;;;;;;;;;. I. Futstanding balance on credit card II. )hort3term loans outstanding III. Bank overdraft e. Long term liabilities e. "urrent liabilities e. Long term assets e. "urrent Assets Solution: $ ?. In India/ life insurance has been traditionall# sold more as a ;;;;;;;;;; product. d. (rotection d. Investment d. -a%3saving d. None of the above Solution: c . -he rights of a beneficiar# under an &5( life insurance polic# are not affected b# divorce. d. -rue d. 'alse d. 'alse in the case of 9indus Solution: a d. -rue onl# in the case of &uslims >. A general insurance will usuall# insist that ;;;;;;;; is professionall# valued before providing a 9omeowners Insurance "over. a. Residence a. $lectronic items a. eweller# Solution: c a. 'urniture 0=. No claim bonus is not available in a ;;;;;;;;;;;; polic# d. &otor Insurance d. 9ealth Insurance d. 9ome "ontents d. Both a and b. Solution: c 01. Income/ Income plus e%penses/ &ultiple of salar# are all methods of calculating insurance need b# e. Research e. Rule of thumb e. (ast record e. None of the above Solution: $ 0. A client e%plains that she onl# wants an insurance polic# that will cover her famil# against financial risk over the ne%t five #ears/ while she still has dependent children and a large mortgage. It is unlikel# her income will increase over this period. 5hat t#pe of insurance is she looking for d. An unit linked insurance plan d. &one# back polic# d. -erm insurance with a level premium d. -erm insurance with a stepped premium Solution: c
00. 5hich of the following is t#pe of pecuniar# insurance . "ommercial vehicle insurance . $ngineering insurance . &one# polic# . 5orkmanWs compensation Solution: c 04. (articipating policies are those where ;;;;;;;;;;;;;. d. Both insurer and insured participates in each others loss d. Insured participates in running of insurance of compan# d. Insured participates in surplus of insurance compan# Solution: c d. Insurer participates in loss of insured 0:. -here is an e%cess of Rs :=== for a health insurance polic#. In a case where there is an e%pense of Rs :==== for the insured then the insurance compan# will pa# d. Rs :=== d. Rs 4:=== d. Rs :==== d. Rs ?:=== Solution: $ $%cess is a compulsor# deductible and hence 4:=== would be paid. '-. Anand +as dri2ing is car ome from +ork +en a pit dug $! te municipal corporation in te road remained open and unmarked. He met +it an accident and ad to $e ospitalised for ' monts. *at are te insurance claims tat can a rise f rom tis accident=
d. Anand can claim personal insurance for the accident/ as it was not caused b# negligence on his partJ the municipal corporation cannot claim third part# loss insurance to pa# damages to Anand/ as it was negligent. Anand can claim insurance for damage due. d. Anand can claim temporar# disabilit# insurance and insurance for his damaged car d. Anand has to appl# to the municipal corporation for damages/ which the corporation will pa# out of its claims for liabilit# to third part#. 9is motor insurance will cover damages to his car. d. )ince the municipal corporation was negligent/ it would not be able to lodge a claim to recover pa#ment of damages to Anand. Anand will onl# receive motor insurance claims on his car. Solution: a '/. Su>ata +as standing on te terr ace of er $uilding anging out clotes. Se accidentall! fell off and landed on te sunsield of te ne%t floor +ic crased and damaged te car of er neig$our parked $elo+. *at are te insurance claims tat arise from tis e2ent=
d. )uata can claim personal accident insurance. Both her neighbours will claim propert# insurance for the freak accident. d. )uata cannot claim accident insurance as the accident was caused b# her negligence. 9er neighbours can claim propert# insurance cover for loss to their propert# d. )uataWs neighbours will collect damages from her/ which )uata can p a# out of insurance cover for losses to third parties. d. )uataWs neighbours will not be able to c laim insurance/ as the damage to their propert# due to such freak accidents is not usuall# covered b# insurance. )uata will be able to claim her accident insurance/ as she did not fall intentionall#. Solution: a '3. ?uring retirement a person +ould maintain a ig le2el of life insurance protection to:
+1, (a# estate dut# +, (rovide succession or dependent income +0, Repa# outstanding debt +4, Build cash value . +1, and +, . +1, and +0, . +1,/ +, and +0, . None of the above
Solution: $ '4. @our client as $ougt life insurance and medical insurance $ut as not $ougt a co2er for permanent disa$ilit!. His argument is tat e is pa!ing too muc $! +a! of premium for risks tat e $elie2es are far< fetced and not likel! to a ffect im. *at +ould !ou ad2ise te client=
d. A financial planner can persuade the client to consider the losses from permanent disabilit# and highlight the risks to the client and recommend an appropriate polic# for him. d. If a client is not willing to bear the costs of premium/ it can be assumed that he is willing to bear the costs of risk retention. Insurance ma# not be necessar# in such cases. d. If losses that would occur to the client in the event of permanent disabilit# are higher than what he can bear/ the client is better off bu#ing insurance. -he costs of insuring against losses/ which have lower probabilit# of happening/ will in an# d. -he amount of insurance a person will bu# depends on his perception of risks and their impact on him. It would not be possible to persuade this client to bu# more insurance. Solution: a
4=. )uresh has not bought accident insurance cover/ though his two3wheeler is covered for damages from accidents. 9e wears a helmet and drives carefull#. 5hat can #ou sa# about his risk management d. )uresh has insured the propert# risk. 9e controls some of his personal risk and retains the rest of the risk. d. )uresh has controlled his personal risk and insured his propert# risk
d. )uresh has not done an#thing to manage his risks and has to immediatel# go for accident and personal risk cover. 9e cannot rel# on third part# damages alone to cover the risk of the road. d. )uresh has transferred his personal risk to other drivers of the road/ insured his propert# risk and can claim damages Solution: a is accidents are caused b# third part# negligence. 41. &rs. Rangnekar/ a 4=3#ear3old widow/ has a 3#ear3old son. 9er current savings are not adeuate to provide for her sonWs post graduate studies however she will be able to save it up b# the time he finishes graduation i.e. when he is = #ears old. &ortalit# tables indicate that her life e%pectanc# is another 0= #ears. 5hich of the following is true d. )he needs to insure her life for 1 #ears d. )he does not need to insure her life d. )he needs to insure her life for 0= #ears d. )he needs to insure her son.s life for 0= #ears Solution: a 4. 9olistic Institute of 5ealth &anagement has a great $ducation centre and a full business. *r.)hah/ 9ead Academics is held in high esteem nationwide for his e%pertise/ knowledge and lecture deliver#. 9e has made a outstanding contribution for the last #ears to ena ble market leadership for 9olistic Institute of 5ealth &anagement. -he most appropriate polic# that the owners ma# take in the interests of business on the life of *r. )hah would be ;;;;;;;;;;;;;. d. (ersonal Accidental Insurance d. -erm Insurance d. Ve# &an Insurance Solution: c 40. -he gross income of a person is at Rs 0 lakh when the average ta% rate is =. *ue to the receipt of an additional sum of Rs lakh the average rate goes up to :. If there is then an additional sum of Rs :==== spent for own e%penses then the amount remaining for the famil# is d. Rs 0:=== d. Rs 0?:=== d. Rs 4:=== Solution: a d. Rs 4:==== 44. (ersonal *ata of NileshD $arningsD Rs. lakh p.a *ebtsD Rs. 1/==/=== -otal $%pensesD Rs. 1//:? -o support dependents ?: of pre3death salar# +if no debt, -o support dependants spouse and one child/ ?: of pre3death salar# reuired +if no debt,. Assuming simple interest of ? p.a/ As a 'inancial (lanner find out the Insurance reuired b# "apital Retention Approach and the times it will cover his current annual salar# d. Rs. /4/=== and 1= times of current annual salar# d. Rs. /4/=== and 1 times of current annual salar# d. Rs. 1/4/=== and 11 times of current annual salar# d. Rs. 1/4/=== and 1 times of current annual salar# d. Rs. /<:/0== and : times of current annual salar# d. None of the above Solution: $ 4:. Briesh has a health insurance polic# with sum assured Rs.1= Lakhs. -he deductible is Rs. /:==. Briesh had a operation to remove his appendi% which cost him Rs. 0=/?:=. 9e also lost Rs. :/=== in wages as he could not work for weeks. 5hat would be the amount paid b# the insurance compan# d. Rs. 0=/?:= d. Rs. /:= d. Rs. 00/:= Solution: c d. Rs. 0:/?:= 4<. Normal medical policies do not have a loss of earning cover. 5hich one of the following does not come under principal of merit rating d. )chedule rating d. $%perience rating d. Retrospective rating d. udgement rating Solution: d Rating could be3 I. Individual or udgmental I. "lass or manual I. &erit rating T )chedule/ $%perience ! Retrospective 4?. Bima Vavach Eoana is a polic# designed for which area a. 2rban Area b. Rural Area c. Both of them d. None of them Solution: $ Bima kavach Eona is a premium back term plan b# Birla )unlife speciall# for rural masses. 4. 5hich one of the following is not the &one# Back (olic# of LI" d. eevan "hha#a d. eevan Anand d. eevan )urbhi d. eevan Rekha
Solution:$ eevan Anand is combination of whole life and endowment/ 5hile all other 0 are mone# back policies. All
these policies are from LI". 4>. 5hich one among the following professionals are not eligible for (rofessional Indemnit# "over a. (lastic )urgeons a. General (h#sician a. *entists Solution: a a. "onsulting (h#sician :=. YRaaraeswari &ahila Val#anY is a polic# designed for women/ it comes under which categor# of InsuranceD d. 9ealth (lan d. &one# Back d. -erm (lan d. (ersonal Accident Solution:d Raaraeshwari mahila kal#an is a *isablit# polic# b# 2nited India Insurance "ompan#. :1. In &ediclaim/ what is the limit of premium which is totall# e%empt from Income -a% d. Rs.1=/=== / if both the partners are covered d. Rs.1=/===/ if paid b# a cheue d. Rs.1:/===/ for famil# package d. Rs. =/===/ if insurer has life insurance polic# :. A person is looking at evaluating the life insurance needs that will arise for him. -he estimate is that final medical e%penses will be around Rs 1.: lakh/ the funeral charges Rs ====. In addition his wife will reuire Rs lakh in her retirement period. In this case his immediate cash needs ar e d. Rs 1?==== d. Rs 0?==== d. Rs ==== d. Rs 0:==== Solution: a 1:==== P ==== O 1?====.Because lakhs is income need. :0. In the above case/ If the Readustment (eriod $%penses at toda#7s value is Rs 0 lakhs and the *ependenc# (eriod $%penses at toda#7s value is Rs 1 lakhs/ plus the Blackout (eriod $%penses are Rs. : Lakhs / As a 'inancial (lanner find out his 6Net Income Needs8. d. Rs :.?= lakhs d. Rs 1: lakhs d. Rs = lakhs d. Rs. lakhs d. None of the above Solution: d :4. In the above case/ as a 'inancial (lanner find out his Insurance Reuirement as per 6Needs Approach8/ Note his Investments in &utual 'unds and )tocks are valued currentl# at Rs. Lakhs as well as he has an e%isiting Insurance (olic# with a )um Assured of Rs..?= Lakhs. a. Rs. :.?= Lakhs a. Rs. 1?.?= Lakhs a. Rs. 1: Lakhs a. Rs. 10 Lakhs a. None of the above Solution: d ::. A person lives in a nuclear famil# consisting of his wife and two children. 9e wants to assume his premium needs at : per cent for self plus 1 percent for other members of his famil#. 9e has an income of Rs : lakh and an e%pense figure of Rs 0 lakh during the #ear. -he e%pense is e%pected to go upto Rs 0.: lakh ne%t #ear. -he amount of insurance cover reuired here is d. Rs : lakh d. Rs 1= lakh d. Rs 1: lakh d. "annot be determined Solution: d Fnl# premium pa#able can be worked from the information and not the cover. :<. A person lives in a nuclear famil# consisting of his wife and two children. 9e wants to assume his premium needs at : per cent for self plus 1 percent for other members of his famil#. 9e has an income of Rs : lakh and an e%pense figure of Rs 0 lakh during the #ear. -he e%pense is e%pected to go upto Rs 0.: lakh ne%t #ear. -he amount of premium that will be used for the insurance cover will be d. Rs 4==== d. Rs 4:=== d. Rs :==== d. "annot be determined Solution: a : P 1 P O of incomeX. H 1== Q :===== O 4==== :?. A person lives in a nuclear famil# consisting of his wife and two children. 9e wants to assume his premium needs at : per cent for self plus 1 percent for other members of his famil#. 9e has an income of Rs : lakh and an e%pense figure of Rs 0 lakh during the #ear. -he e%pense is e%pected to go upto Rs 0.: lakh ne%t #ear. As a 'inancial (lanner find out the amount of premium that will be used for the insurance cover b# emplo#ing 6(remium as a (ercentage of Income ðod8. d. Rs 4==== d. Rs.41===
d. Rs 1<=== d. Rs 14=== d. None of the above Solution: a :. Refer to the above case stud#/ As a 'inancial (lanner find out the -otal Insurance cover he can avail b# using the 6(remium as a (ercentage of Income ðod8 +Note Insurance (remium for age 0< is Rs. 4.== per Rs. 1=== sum assured. c. Rs 0: lakhs c. Rs 1== lakhs c. Rs 4= lakhs c. Rs. 1=.:= lakhs c. None of the Above Solution: $ 4 H 1=== Xso/ for 4=/=== one can bu# for 1 crore. <=. In case of a need that will amount to Rs 0 lakh for : #ears after a period of 0 #ears and where the rate prevailing is : then this figure converted to an insurance need toda# comes to d. Rs 111>> d. Rs 1>40 d. Rs 10:<4?4 d. Rs 14:4> d. Rs. :<0= d. Rs. :<4? d. Rs. :>11> Solution:c find pv given rate 1= H1 J nper O 1 Q : J pmt O 1== pvO :<4?. <4. 'rom the following particulars/ calculate paid3up valueD )um assuredD Rs.:=/===/ (lanD $ndowment without profit -ermD = #ears *ate of commencementD 1>H=H1>>4 Last premium paid #earl#D 14H=H=== a. Rs. :=/=== b. Rs. 1?/:== c. Rs. 1:/=== d. Rs. 1/=== Solution: $ :==== Q? H = O 1?:==. <:. "ase 1D -he owner of a building with running machiner# seeks to insure the propert# b# choosing a certain sum assured/ as full value of the risk to be covered. "ase D the owner of a propert# suffered a fire loss. 9e seeks to restore the cover value to its original level to make up for the loss and is willing to pa# additional premium for this purpose. +A, -he former is a case of reinstatement as a basis of indemnit#/ while the second instance is one of reinstatement of sum insured following a loss under the polic#. +B, No/ it is in reverse order. c. )tatement A is right c. )tatement B is right c. Both statements A ! B are wrong c. None of the above Solution: a <<. Ashish purchased a sofa set for Rs.:=/=== and insured it on an actual cash value basis. -hree #ears later the sofa set was destro#ed in a fire. At the time of the loss/ the furniture had depreciated to := of its value. -he replacement cost of a new sofa set at the time of the loss was Rs.<=/===. -he deductible was Rs.0/===. 5hat amount would Ashish get from the insurance compan# d. Rs. 4?/=== d. Rs. :?/=== d. Rs. ?/=== d. Rs. /===
Solution: d :=/=== T :/=== MdepC O :/=== . "laim to be paidO :/=== T 0=== M dedC O ===.
/=== d. Rs. 1=/=== d. Rs. 1>/=== d. Rs. 04/=== Solution: a ==== T 1==== O 1==== T 1=== O >===. <>. -he net cost of insurance per Rs.1/=== based on the traditional net cost method will beD d. Rs. +3=.<4, d. Rs. 1.4>> d. Re. =.:1? d. Rs. :.4 Solution: a-raditional net cost methodO premium paid3MdividendsP)C 333333333333333333333333333333333333333 No. of #ears 4:<== T :=4 H = O 3<4. H 1=== O 3=.<4 ?=. -he net cost of insurance per Rs.1/=== based on the surrender cost method will be d. Rs. +3=.<4, d. Rs. +3=.4=4, d. Rs. =.:<1 d. Rs. 1.:?? Solution: c )urrender cost method O ?>1:> T M 44== P 0:<=C H 04.?1> ?1. -he net cost of insurance per Rs. 1/=== based on the net pa#ment cost method will beD d. Rs. +3=.<4, d. Rs. 1.4>> d. Rs. 1.0 d. Rs. 1.:?? Solution: d Net pa#ment method O ?>1:= T 44== H 04.?1> ?. -he net cost of insurance per Rs.1/=== based on the traditional net cost method will beD e. Rs. +3=.?=, e. Rs. +3=.?=, e. Rs. =.?>= e. Rs. :.4 Solution: -raditional net cost methodO premium paid3MdividendsP)C 333333333333333333333333333333333333333 No. of #ears ?0. -he net cost of insurance per Rs.1/=== based on the surrender cost method will beD e. Rs. +3=.?=, e. Rs. >.=4 e. Rs. 1.:1= e. Rs. 1.4:4 Solution: )urrender cost method O ?>1:> T M 44== P 0:<=C H 04.?1> ?4. -he net cost of insurance per Rs.1/=== based on the net pa#ment cost method will beD d. Rs. +3=.?=, d. Rs. >.=4 d. Rs. 1.:1= d. Rs. 1.4:4 Solution: Net pa#ment method O ?>1:= T 44== H 04.?1> ?:. Ramesh has a famil# medical insurance polic# with sum assured of Rs. 1/==/===. -he polic# has a deductible of Rs. /=== that applies to each covered person. 9e and his famil# are inured in an accident and have to be hospitalied for treatment. -he treatment e%penses of each areD RameshD Rs. /:== 9is 5ifeD Rs. 1=/=== • •
9is *aughterD Rs. ?/=== 9is )onD Rs. :== d. Rs. =/=== d. Rs. 1=/=== d. Rs. 1?/=== d. Rs. 1/=== ?<. Ashok/ born in 1>:=/ has a life e%pectanc# at birth of <: #ears. )ita/ his wife/ born in 1>:: has a life e%pectanc# at birth of ?= #ears. Assuming that the life e%pectancies have not changed/ Ashok is planning to bu# an annuit# to be paid to him or his wife till an#one of them is alive. 9e should bu# an annuit# for ;;;;;;;; #ears. e. 1= #rs. e. 1 #rs e. =? #rs e. 1? #rs Solution: d ??. 'or dependent parents/ the least important risk to be covered is e. Life insurance cover e. 9ospitaliation H )ickness Insurance e. *isabilit# Insurance e. Long term "are cover Solution: a ?. )uresh/ the driver/ driving Ram7s car +Ram was traveling in the car, was involved in a collision accident against the boundar# wall of Rahul7s house and also inured Rahul/ Ram7s neighbour. It was later ascertained that driver )uresh was under the influence of alcohol. Fne of the perils mentioned below will not be covered while setting the claimD . Repair charges to Ram7s car . Boundar# wall repair charges of Ram7s house . &edical treatment charges of Ram . &edical treatment charges of Rahul Solution: a ?>. 'or guaranteed renew abilit# of term insurance policies/ which of the following are important factors d. Age of the insured d. (remium rates d. Risk status d. All of the above Solution: d =. A father takes out a polic# to meet his son7s enhanced educational needs when the son reaches 1 #ears of age. 2nfortunatel# after pa#ing : #ears premium/ the father dies. B# what means can the polic# be kept in force without pa#ment of further premiums so that the intended benefits are retained d. Accident benefit premium d. Lien on polic# d. (remium waiver facilit# d. None of the above Solution: c 1. 'or professionals with limited time span of income earning possibilities/ the following plan of insurance would be ideal d. 5hole life d. -erm assurance d. Immediate annuit# d. Limited pa#ment endowment plan Solution: d 0. 2nder an Fverseas -ravel Insurance polic#/ the ma%imum cover for third part# liabilit# is d. 2) Z 1/==/=== d. 2) Z /==/=== d. 2) Z :/==/=== d. None of the above Solution: a 4. 5hich of the following statement+s, is H are -rue )tatement +A,D -he e%istence of insurance ma# make people to e%ert less effort to control losses. )tatement +B,D It might also induce commitment of frauds against insured. d. Both A ! B statements above are true d. )tatement A is true d. )tatement B is true d. Both A ! B statements are not true Solution: a :. A -erm Insurance plan can be for d. "onstant cover d. *ecreasing cover d. Increasing cove d. All of the above Solution: d <. -he actuar# is responsible for d. (roduct design d. (remium rates d. (aid up and surrender value d. All of the above Solution: d ?. (remium is the legal consideration paid b# the d. Insurer
d. Insured d. Agent d. Broker Solution: $ . Rate of premium depends on the basis of d. Age d. -erm d. (olic# t#pe d. All of the above Solution: d >. -he amount reuired to meet the risk of death for a given age in a particular #ear is called d. Risk premium d. Net premium d. Gross premium d. None of the above Solution: a >=. -he proposal form includes d. (ersonal details of the client d. (olic# details d. Information about the insure d. Risk factors in insurance business Solution: a >1. -he proposal form has to be signed b# d. -he proposer and witnessed b# a third part# d. -he proposer and the agent d. -he proposer and the person whose life is to be assured d. Both A and " Solution: c >. -he surplus generated from the investment division of an insurance compan#/ which is distributed amongst the polic#holders is called as d. Bonus d. Interest d. &aturit# value Solution: a d. None of the above >0. $ver# polic#holder is given the option to choose premium pa#ment ;;;;;;;;;;; d. &ode d. 'reuenc# d. 'reuenc# d. Both A and B Solution: d >4. -erm insurance provides ;;;;;;;;;;; benefit d. *eath d. )urvival d. No d. &aturit# Solution: a >:. An owner of a large group of privatel# owned residential propert# units is s eeking cover from a general insurance compan# for +i, fire and other associated perils +ii, depreciation in the value of propert# +iii, complete destruction of propert# from terrorist strikes for the ne%t si% months. -he chances are that the insurance compan# will;;;; d. Fffer cover for +i,/ +ii, and +iii, d. Fffer cover for +i, and +iii, d. Fffer cover for +i, onl# d. Fffer cover for +i, and +ii, Solution: c ><. 5hich of these are not contracts of indemnit# d. Life insurance d. 'ire insurance d. 9omeowner7s insurance d. Baggage insurance Solution: a >?. "onsider the two statements below +A, 5hile assessing financial liabilities/ it is customar# to include credit card debt/ hire purchase of household goods/ lease etc. under short term liabilities. +B, Longer term liabilities include personal loans etc. d. )tatement A alone is correct d. )tatement B alone is correct d. )tatements A ! B are correct d. None of the above Solution: a >. "onsider the two statements belowD +A, (ast losses ma# be a precursor of further losses in all t#pes of life and general insurance business. +B, (ast losses ma# be a precursor of future losses in some general insurance cases/ critical illness and personal accident insurance cases. d. )tatement A alone is correct d. )tatement B alone is correct d. )tatements A ! B are correct d. )tatements A ! B are incorrect Solution: $
>>. 5hich of these is involved in Needs Anal#sis d. Needs $%plaining d. Needs )euencing d. Needs (rioritiation d. None of the Above Solution: c 0==. -he prescribed training program for life insurance or a general insurance agenc# that an applicant has to undergo is for ;;;;;;;;. . := hours . 1:= hours . = hours . 1== hours Solution: d 0=1. A Broker is characteried b# the fact that he isd. Attached to the insurance compan# d. Representative of a group of companies d. An independent intermediar# d. $mplo#ed b# the insurance compan# Solution: $ 0=. 5hich agenc# conducts the pre3recruitment test for a prospective agent d. -he Insurance "ompan# d. Insurance Institute of India d. IR*A d. Actuarial )ociet# of India Solution: $ 0=0. -he IR*A allows a cooling period of ;;;;;; for the holder of a Life Insurance polic#. d. 1= da#s d. 1: da#s d. 0= da#s Solution: $ d. =? da#s 0=4. A "omposite Broker ma# be defined asd. A general and life insurance broker d. Fne who carries on business as a broker and agent d. An insurance and reinsurance broker d. A general insurance agent Solution: $ 0=:. 5ithin how man# da#s of accepting a pr oposal must an insurer handover the cop# to the insured d. 1= da#s d. 1: da#s d. =? da#s d. 0= da#s Solution: d 0=<. "onsider the two statements belowD +A, An important step in risk control is to spread out the cost of risks evenl# over a period of time. +B, -he obective should be to minimie the cost of risk. Ff the above two statements/ what should be the correct order of obectives d. Both A ! B are of eual importance d. -he given orderD first A then B is correct d. B should precede A d. None of the above Solution: a 0=?. Life e%pectanc# has been on the rise in India since 1>1 because of d. an improvement in dietar# practices d. )afer birth practices d. $nhanced health care amenities d. All of the above Solution: d 0=. 5hich of these will NF- be considered a dependant while taking insurance d. "hildren d. Relatives d. A spouse or partner Solution: d d. None of these 0=>. Fne must look at various stages of an individual7s life to anal#e hisHher insurance need. -hese stages of life comprise d. Eoung famil# d. Eoung adult d. &atured couple d. All of these Solution: d 01=. 5hich of these insurances are appropr iate for a #oung adult d. 9ousehold insurance d. (ersonal protection insurance d. Automobile insurance d. All of these Solution: d 011. Liabilit# e%posure is NFd. )elf 3 inur# in an accident d. Inur# to emplo#ees
d. Bodil# inur# or propert# damage d. (rofessional negligence in giving advice Solution: a 01. 5hich of these is provided for under a -erm Insurance polic# d. Fnl# the premium is paid till the date of death d. )um assured in case of death d. )um assured plus bonus in case of death Solution: $ d. None of these 010. A (articipant 5hole Life polic# will allow the insurer to participate in d. -he da# to da# running of the insurance compan# d. -he board of the insurance compan# d. -he profits of the compan# d. None of these Solution: c 014. &r. )ingh has applied for a bank loan of Rs. one crore to launch his own business venture. 9e is an $lectronics $ngineer b# profession. -he bank approves his loan with a conditional h#pothecation of P: and reuests h im to h#pothecate the life polic# as collateral securit# for mortgage redemption. "alculate the sum assured of the polic#. d. = lakhs d. ?: lakhs d. 1.: crore d. crores Solution: c 01:. ;;;;;;;;;; is a claim arising out of the life assured/ surviving till the end of the selected term of the life insurance d. Annuit# d. &aturit# claim d. *eath claim d. None of the above Solution: $ 01<. An $ndowment polic# ma# be defined as one that pa#sd. (remiums on death onl# d. (remiums paid on death or survival d. Assured benefits on death onl# Solution: c d. Assured benefits on death or survival 01?. -he disadvantage of insurance mechanism includes d. Reduction of uncertaint# d. Fperating e%penses and moral haard d. "apital gain and financial risk d. None of the above Solution: $ 01. 5hich of these policies refer to a 9ome LoanH &ortgage (rotection d. "redit insurance polic# d. (ropert# insurance polic# d. (olic# guaranteeing the mortgage loan d. None of the above Solution: c 01>. 5hich of these is NF- provided for b# an $ducational Life polic# d. "ontinued $ducational support to an insured individual7s children/ in case of his death d. $ducation to insured individuals up to a c ertain age d. (a#ment of educational e%penses at a future time Solution: $ d. All of these 0=. 5hat is a 6"ooling off8 provision in an insurance polic# d. 5hen the insured individual can elect to cancel the polic# and receive refund of the premium d. 5hen the insured individual does not have to pa# a premium d. 5hen the insurance compan# cools off or stops its operations d. None of these Solution: a 01. If a claim arises out of the death of an insured individual/ ;;;;; would be paid the mone#. d. -he first son of the insured individual d. -he spouse of the insured individual d. -he mother of the insured individual d. -he person nominated under the polic# b# the individual/ if an# Solution: d 0. Insurance under *isabilit# Insurance is not provided for;;;;;;;;;;; d. *isabilities caused b# sickness d. *isabilities caused b# accidents d. *isabilities caused b# hereditar# causes d. None of these Solution: c 00. 2nder personal accident insurance/ the amount insured is associated with;;;;;;;;; d. Income of the insured individual d. 'amil# sie of the insured individual d. Age of the insured individual d. (ersonal habits of the insured Solution: a 04. -he insurance provided b# critical illness covers d. Assured benefits for maor illnesses d. 9ospital e%penses for maor illnesses
d. Long3term care after a maor illness d. All of these Solution: a 0:. Income (rotection insurance allows for protection against loss of income in which of these instances d. A business loss d. -he insured individual7s disabilit# or sickness d. 2nemplo#ment of the insured individual Solution: $ d. *eath of the insured individual 0<. A 9ospital $%penses Insurance polic# will NF- cover d. $%penses incurred due to outstation treatment d. (re and post hospitaliation e%penses d. 9ospitaliation e%penses following an accident inur# d. None of these Solution: a 0?. -he initial procedure followed b# a planner while reviewing a client7s insurance program is d. -o determine client7s liabilit# d. -o anal#e the insurance need of the client d. -o clarif# with the client if there are an# changes in his needs. d. -o establish the freuenc# of review of the client7s planning process Solution: d 0. -he evaluation of a client7s program will conclude with;;;;;;;;;;; d. $%ecuting the revised program d. $stablishing a time for a future review meeting with the client d. *iscussing with the client the need for the program7s review d. )etting up a revised program after consulting with the client Solution: d 0>. 5hen there is the possibilit# of loss or no loss in an outcome/ it is a case of d. Gambling d. )peculative risk d. (ure risk d. )pecial risk Solution: c 00=. *uring the review process of the insurance plan/ the planner must d. educate the client about the need for additional cover in case of changed circumstances d. let the client know if an# new product will be more suitable for the client in place of the e%isting d. notif# the client of the risks faced b# him/ which are not covered b# his program Solution: d d. all of these 001. -he ;;;;;;; initiates the action with respect to maturit# claims under a life insurance polic#. d. planner d. polic# holder d. intermediar# who sold the polic# d. insurance compan# Solution: $ 00. -he claim will be pa#able to ;;;;;;; if the polic# owner and the insured individual are different. d. the polic# owner d. the spouse and children of the insured individual d. the legal heirs of the life assured d. the person nominated to receive the polic# mone# Solution: d 000. 2nder a disabilit# benefit polic#/ the waiting period is the period of time that must elapse d. before the issue of the polic# document d. before the polic# benefit will commence d. before the proposal can be considered Solution: d d. before the settlement of claim after submission 004. 5hen should one inform the insurer in case of a health insurance claim d. 5hen the insured person is hospitalied d. 5hen the health disorder is noticed d. 5hen the course of treatment for the insured person is complete d. 5hen the bills of the hospital/ where the insured individual was hospitalied/ are paid. Solution: a 00:. 5hich of these is applicable under propert# insurance d. -he amount pa#able is at the sole discretion of the emplo#er d. -he amount pa#able is guaranteed under the polic# d. -he amount pa#able is assessed according to the principle of indemnit# d. None of these Solution: c 00<. 5hich of claims is applicable under disabilit# benefit claims d. -he polic# holder has to undergo a medical e%amination b# an approved medical e%aminer d. -he polic# holder has to submit medical certificates from the attending doctor d. -he polic# holder has to undergo specific medical e%aminations d. All of these Solution: d 00?. -he insurance planner or intermediar# is responsible for;;;;;;;;;. d. 9ealth insurance claims d. *eath claims in life insurance policies d. *isabilit# claims in personal accident policies d. All of these Solution: d
00. ;;;;;;; is the regulator for the insurance industr# in India d. "ontroller of Insurance d. Insurance Regulator# and *evelopment Authorit# d. General Insurance and Reinsurance Business d. -ariff advisor# committee Solution: $ 00>. "onsider the two statements below I. In life insurance/ where the proposer was born would be deemed a material fact. II. In personal accident insurance/ medical histor# would be deemed a material fact. d. Fnl# statement I is wrong. d. Both statements I ! II are correc t d. )tatement I is correct/ while II is wrong. d. Both )tatements I ! II are incorrect. Solution: d 04=. 5hich of these transactions are allowed b# an Indian Insurance compan# d. Life insurance and Reinsurance business d. Life and general insurance business d. General Insurance and reinsurance business d. $ither life or general insurance or reinsurance business Solution: d 041. General insurance business comprises d. 'ire insurance d. &arine insurance d. &iscellaneous insurance business d. All of these Solution: d 04. ;;;;;;; transacted general Insurance business before the IR*A act was passed in 1>>> d. General Insurance "orporation of India +G.I.", d. General Insurance "orporation of India along with its 4 subsidiaries d. Life Insurance "orporation +L.I.", d. All of these Solution: $ 040. 5hat is the minimum paid up capital reuired for establishing a new Life Insurance "ompan# d. Rs. == crore d. Rs. 1== crore d. Rs. := crore Solution: $ d. As fi%ed b# the IR*A 044. "onsider the two statements below I. Insurance companies reduce risk based on law of large numbers. II. -he increasing pool of resources accessible to an insurer reduces the risk of non pa#ments. d. )tatement II alone is correct d. Both )tatements I ! II are correct d. Both )tatements I ! II are incorrect d. )tatement I alone is correct Solution: $ 04:. &r. &athew is the owner of a large group of privatel# owned residential propert# units seeking cover from a general insurance compan# for 1. 'ire and other associated perils . *epreciation in the value of propert# 0. "omplete destruction of propert# from terrorist strikes for the ne%t si% months -he chances are that the insurance compan# will d. Fffer cover for 1/ / and 0 d. Fffer cover for 1 and 0 d. Fffer cover for 1 d. Fffer cover for 1 and Solution: c 04<. Ram and Raa are health#/ able bodied men working in mines. Ram lives on a flood plain and Raa lives on a hill ne%t town. 5hile talking out insurance/ the insurance compan# proposes a higher premium for Ram. 9ow would #ou discuss the present situation d. Both are health#/ so both should be charged the same premiums d. -he# should get a discount for being health# d. Living on a flood plain does not in an# wa# affect the premium d. Ram should understand that that the risk is higher so the premium is also higher Solution: d 04?. A propert# worth 1= lakhs has been preferred to have a cover of < lakhs b# its owner. "laim has been logged for a loss of lakhs. 9ow much does the insurance compan# usuall# pa# d. Rs. lakhs d. Rs.< lakhs d. Rs.1. lakhs d. Rs.1.: lakhs Solution: c 04. &r. &ani opted to have statutor# minimum cover on his car to avoid higher premiums. 5hile saving a child/ his car hit a parked car causing damage to it of Rs. :=== and then hit the wall causing further damage of Rs. :===J his own car suffered damages worth Rs. ===. 9ow much claim is admissible d. Rs. 1/=== d. Rs. 1=/===
d. Rs. :/=== d. None of the above Solution: $ 04>. "onsider the two statements belowD I )tatements made b# the proposer in the proposal form are representations. II All such statements are/ b# definition/ material facts. d. Both statements are correct d. )tatement II is incorrect d. Both statements I ! II above are incorrect d. )tatement II is correct Solution: a 0:=. -he ma%imum rate of commission pa#able to AgentsH Advisors b# the insurance companies for the first/ second and the third #ear are d. :/ 1= and ? d. 1:/ 1: and 1= d. =/ 1: and 1.: d. 0:/ ?.: and : Solution: d 0:1. -he sum assured received under an# polic# is ta%able if the premiums pa#able e, is more than = of the sum assured e, If it e%ceeds 0= e, If it e%ceeds 1: e, If it e%ceeds 1.: Solution: a 0:. Rearrange the seuence of the planner7s advises to the client for resolution of insurance complaints 1. Arbitration . Fmbudsmen 0. In house complaint handling call of the insurer 4. "onsumer (rotection forums a, 1//0/4 b, 1/0//4 c, 1/4//0 Solution: d d, 0//1/4 0:0. 'ollowing are the details of &r. Alok areD $arnings Rs.1 lakh per annum *ebts Rs.1//:? to support dependents ?: of pre3death salar# +if no debt,. Assuming simple interest of ? per annum/ how much per current annual salar# he needs for life Insurance/ if multiple method is used a, 1= times b, times c, 1 times d, 1< times Solution: c ?:=== Q 1== H ? O 1=?14> P 1:?O1====1 which is 1 times salar#. 0:4. &r. )ipp# submitted a proposal on his own life on 1.0.==0. It was completed b# the insurer and the (olic# Bond was received b# him on .0.==0. Fn =.0.==0/ he returned the (olic# Bond stating the reason for his refusal to accept some of the terms printed in the (olic# Bond and asked for refund of premiums paid. 9e is entitled to a, An# refund b, 9alf the amount c, ?: of the amount d, No refund Solution: a because there is a 1: da#s cooling period where in one can ask for refund of premium b# canceling the polic#. 0::. Identif# the element mentioned below which not a factor for pre mium consideration in Fverseas &edicalH -ravel insurance a, Age of the proposer b, (urpose of the trip c, *uration of the trip d, Amount of life insurance held Solution: d 0:<. -on# bu#s an annuit# from an insurance compan#/ under which the insurer will pa# him a certain sum periodicall# as long as he is alive. Bill# bu#s an annuit# from an insurance c ompan# under which the insurer will pa# annuities to him+ or his heirs, for a definite number of #ears/ whether he is a live or not. 1. -on# has purchased a life annuit# and Bill# has purchased an ann uit# certain. . -on# has annuit# certain and Bill# has variable annuit#. a, 1 is correct b, is correct c, Both 1 and are correct d, None is correct Solution: a 0:?. &anish and )heela/ a retired couple/ opted for a oint life survivor annuit#. 2nder this d, -he annuit# is pa#able as long as both of them are alive d, -he annuit# will cease on the death of the eldest of the annuities
d, -he annuit# is pa#able as long as either one of them is alive d, -he annuit# pa#ment will cease on the death of an# one of the annuitants Solution: c 0:. -he least important risk/ for dependent parents to be covered is d, Life Insurance cover d, 9ospitaliationH )ickness Insurance d, *isabilit# Insurance Solution: a d, Long -erm "are "over 0:>. "onsider the two statements belowD 1. -#pe of construction is considered for 'ire Insurance . *riving track record is a material fact for &otor Insurance a, Both 1 and are correct b, 1 is correct and is incorrect c, 1 is incorrect and is correct d, Both 1 and are incorrect Solution: a 0<=. "onsider the following two casesD After two #ears of taking out a life insurance polic#/ the assured dies after complications from emergenc# surger# after an acute attack of duodenal ulcer. $nuiries reveal that he had periodic stomach aches in childhood. "laimant argued that the assured did not disclose this in the proposal/ as he did not consider it a serious enough condition. A doctor applies for life insurance soon after a series of seiures/ which he does not disclose in the proposal papers. +A, -he first is a case of innocent non3disclosure/ while the second is one of deliberate disclosure. +B, -he first is a case of innocent misrepresentation and the second one of deliberate misrepresentation. a, Both statements A ! B are correct b, )tatement A is correct c, )tatement B is correct d, None of the above Solution: c 0<1. "onsider the following two casesD 'amous paintings were destro#ed in a fire accident in an art galler#. A cargo ship carr#ing 1=== ton grain was partiall# ruined b# dampness while in transit. In both cases the items were insured as valued policies +1, -he claims under both instances would be settled for the full value at r isk. +, -he claims in the first case will be settled for the full value at risk while the second case will be settled on indemnit# basis. a, )tatement 1 is correct b, )tatement is correct c, Both cases will be settled on indemnit# value basis d, None of the above Solution: $ 0<. &r. )harma is 0= #ears old and plans to retire at the age of <=. 9e is emplo#ed as the ice (resident with Global "osmetic Ltd. at a monthl# remuneration of Rs.::/===. 9is life insurance premium is Rs.1=== with total sum assured as Rs.1/ ==/===. 9e pa#s an insurance premium of Rs.1=/:== and Rs.<:== for his wife and child respectivel#. 9e also pa#s a professional ta% of Rs.0=== and income ta% subect to allowable deductions of Rs.1/0/===. -he rate of interest assumed for capitaliation of future income is as . "alculate &r. )harma 9uman Life alue +9L, to recommend adeuate insurance cover. a, Rs.4 lakhs b, Rs.:= lakhs c, Rs.:: lakhs d, Rs 1 crore Solution: $ find pv given pmtO:/=?/===J nper O 0= J rate O total salar# <.< lakhs T 1.:0 M 1.0 P .=0 P .1CO :.=? lakhs pv O <1.<4 lakhs T 1 lakhs O 4>.<4 round off := lakhs.
'-'. Calculate te !earl! premium for te data gi2en $elo+:
*ate of BirthD 1>H=>H1>?> *ate of "ommencement of "overD 1H=H==: (lan -ermD $ndowment with profits : #ears )um AssuredD Rs.1/==/=== &ode RebateD Eearl#30/ 9alf3#earl#31.: )um Assured RebateD 2pto Rs.4>/>>> 3 Re. 1 per thousand Rs. :=/=== and above 3 Rs. per thousand -abular premiumD Age 4 3 Rs. 4>.:= Age : 3 Rs. :1.?: Age < 3 Rs. :.:= a, Rs. 4/>= b, Rs. 4/>> c, Rs. :/== d, Rs. :/=1= Solution: 4= X.:1.?: T 1.::: O:=.1>?: 3 O 4.1>?: per thousand for 1 lack O 4.= Q 1== O 4=
• •
• • •
'-). *at +ould $e te paid
*ate of "ommencement of "overD =.=0.1>>: (lan -ermD $ndowment = #ears with profit )um AssuredD Rs. =/=== &odeD 9alf3#earl# Bonus AccruedD Rs. == per thousand )A for 1= #ears duration )'D :1. a, Rs.
'-,. Brom te follo+ing data calculate te amount of claim pa!a$le if te insured dies on /.16.66,.
*ate of "ommencementD 10H=>H1>> )um AssuredD Rs.1/==/=== (lan -ermD &one# back +with profit, : #ears Last premium paid dueD 10H=>H==4 -hree installments of Rs.=/=== each have been paid in 1>>4/ 1>>> and ==4 Assume that bonus declared is Rs.<== per thousand )A/ Assume premiumD Rs./=== d, Rs. 1/==/=== d, Rs. <4/=== d, Rs. 1/4/=== d, Rs. 1/:
'--. Calculate te premium from te follo+ing data:
(lanD &one# Back = #ears )um AssuredD Rs.1/==/===J rebate for large sum assured Rs. per thousand &odeD 9alf3#earl#J rebate3 1.: AgeD 0< #ears (roposal accepted at ordinar# rates with double accident benefit -abular premiumD Rs. <>.:/ (remium for double accident benefit is Re. 1 per thousandper annum a, Rs. 0/0<1 b, Rs. 0/4<1 c, Rs. 0/4<0 d, Rs. 0/<1 Solution: a <>.: T 1.: 3 .== P 1 O *ate of &aturit#D 1:.=>.=0< -ermD : #ears *ouble Accident BenefitD Re. 1 per thousand &ode 9alf3#earl# -abular premium o Age 4D Rs. 4>.:= o Age :D Rs. :=.<= o Age
.:= P 1 O:=:= H Q 0== O ?:?: 0<. "alculate surrender valueD )AD Rs. 1/==/=== *ate Ff BirthD .=0.1>: Last (remium (aidD .=0.1>>> -ermD 0= #ears BonusD Rs. == per thousand )A )urrender alue 'actorD o ? +for 14 #ears, o ? +for 1: #ears, o = +for 1< #ears, &ode of (a#mentD Kuarterl# *ate of "alculationD .=<.1>>> a, 0/>1< b, /<=
c, /<== d, >1/== 0<>. 'rom the following data/ calculate the loan amount that can be givenD *ate of "ommencementD =.=.1>>= (lan -ermD $ndowment with profit/ : #ears )um AssuredD Rs. 1/:=/=== Last premium paid =.=.==0 )urrender alue 'actor :: Bonus Accrued Rs. 1/===H1/=== a, Rs.1/1/>== c, Rs.1/=/:== d, Rs.1/1:/== Solution: d 1:==== Q 14H: O 4=== P 1:==== M bonusCO04=== Q ::H1== 1?== Q >= H 1== M loan at >= of ) CO 1/1:/0=. 0?=. 'rom the following data/ calculate the #earl# installmentD )um AssuredD Rs.1/==/=== (lan -ermD $ndowment (lan = #ears *ate of &aturit#D 0.1.= *ate of BirthD .=<.1>?4 -abular premium o Age ?D Rs. <.>0 per thousand o Age D Rs. ?.0 per thousand o Age >D Rs. .0? per thousand (remium AdustmentD o : e%tra for monthl# mode o Re. 1.== less for half3#earl# mode o Rs. 1.:= less for #earl# mode Rebate of Rs. 1.:= for sum assured of Rs. :=/=== and above
Assume premium will be paid annually
a, Rs. 1/41 b, Rs. 1/4 c, Rs. /40 d, Rs. /40 Solution: c ?.0 T 0 M 1.: disc for #earl# mode P 1.: )A discountCO 4.0 0?1. 'inancial Kuantifiable Loss is termed as ;;;;;;;;;;;;;. a, )peculative Risk b, 'inancial Risk c, (ersonal Risk d, &onetar# Risk Solution: $ 0?. -he direct advantage of insurance is a, Indemnification for une%pected losses b, Indemnification for e%pected profits c, )afet# of funds d, $limination of occurrence of insured risk Solution: a 0?0. &r. )hah took a Life Insurance (olic#/ which he continued for 0 #ears. 9e died within a night thereafter/ suffering from cancer. &rs. )hah lodged the claim as Nominee. -he sum assured was Rs.1= lakh. -he insurer had indisputable evidence that &r. )hah was hospitalied for = da#s earlier to his taking the proposal which was not disclosed in the proposal form. -hough no fraudulent was established/ the insurer repudiated the claim because ;;;;;;;;;;;;;;;;;. a, Repudiation is in keeping with Law. b, Repudiation is not in keeping with the Law . Solution: $ 0?4. &alhotra 9eart "entre has a great marketing centre and a full business. *r. Vohli/ the "hief 9eart )ur geon is held in high esteem nationwide for his e%pertise and success rate in surger#. 9e has made an outstanding contribution for the last #ears to enable market leadership for &alhotra 9eart "entre. -he most appropriate polic# that the owners ma# take in the interests of business on the life of *r. Vohli would be ;;;;;;;;;;;;;. a, (ersonal Accidental Insurance b, -erm Insurance c, Ve# &an Insurance d, &ediclaim Insurance Solution: c 0?:. )hah ! )ons had a 'idelit# Guarantee cover for its cashiers. -he cashier c ommitted a fraud in April ==. -he polic# e%pired in the month of &arch ==0. Neither was it renewed. 'raud was detected in *ecember ==0. "laim was lodged. -he claim is ;;;;;;;;;;;;;. a, (a#able b, Not (a#able c, (a#able partiall# Solution: $
0?<. A (rospect and (lanner agreed for an $ndowment Assurance (olic# for Rs. 4 lakhs/ limited pa#ment for 1= #ears with the term of = #ears. If Reversionar# bonus is taken as ?.: p.a and terminal bonus as Rs. 1:=H3per 1===H3. -he maturit# value would be ;;;;;;. g, Rs. 1=/ :=/ === g, Rs. 1=/ <=/ === g, Rs. 1=/ ?=/ === g, Rs. 1=/ =/ === Solution:$ Revisionar# Bonus O 0=/=== Q = O <.== lakhs -erminal Bonus =.<= lakhs )A 4.== lakhs 3333333333333333 &aturit# value 1=.<= lakhs 0??. &r. Vhanna will retire < months from now completing <: #ears. 9is daughters are residing abroad. 9e and his wife both have good health and live in a flat. Liabilities are insignificant and post retirement benefits substantial. -he flat is ver# well decorated with valuable movable and immovable items. 9e purchased a car last #ear. 9e does not have an# insurance cover e%cept for the car/ as of now. -he most relevant cover for him would be ;;;;;;;;;;. d, $ndowment Assurance d, &one# Back d, 9ousehold Insurance d, -erm Insurance Solution: $ 0?. -he correct priorit# seuence in steps of review are;;;;;;;;;. 1. $stablish a freuenc#. . $stablish change in client7s circumstances. 0. *evelop revised program. 4. -ake approval of the client to revised r evised program a, 104 b, 104 c, 104 Solution: a d, 140 0?>. -he advantage of insurance mechanism include a, Indemnification for une%pected losses b, Indemnification for e%pected profits c, )afet# of funds d, $limination of chance occurrence of insured risk Solution: a 0=. 9imanshu owns a flat worth Rs./==/=== +market value,. 9e has insured it onl# for Rs.1/:=/===. -he flat is damaged b# an earthuake/ and loss is assessed at Rs.1/==/===. Assuming the insurer applies the principle of Aver age to the loss the insurer will get a claim pa#ment of ;;;;;;;;;. a, Rs. ?:/=== b, Rs. ?=/ === c, Rs. 0?/ >== d, Rs. 1/==/=== Solution: a because under insured b# : 01. -he principles of Risk management are applicable to a, Individuals b, )mall $nterprises c, 9uge "ommercial enterprises Solution: d d, All the above 0. -he two elements involved in evaluation of risks includes probabilit# a, of loss producing events occurr ing and potential losses b, of occurrence of events. c, of rising inflation on future income and cost of assets. d, of increasing cost of operation and emplo#ment Solution: a 00. 5hat is risk control a, Anticipation/ ascertaining and increasing the chances of occurrence of loss producing events b, Avoiding/ eliminating and reducing the chances of occurrence of all events. c, Avoiding/ eliminating and reducing the chances of occurrence of loss producing events or d, Anticipating/ asserting and increasing the chances of occurr ence of loss. Solution: c 04. 5ho normall# makes the offer in case of Insurance d, Agent d, Insurer d, (rospective bu#er d, An#one Solution: c 0:. -he insurance contract promises to a, "ompensate in case of insured contingenc# c ontingenc# b, (a# in case of an# event c, (a# on demand d, (a# the premiums Solution: a
0<. -he insurance contract is between a, Insurance compan# and an# person. b, Insurance compan# and its agent c, Insurance agent and the Insured client. d, Registered insurer and the insured +individual or firm, who is competent to contract. 0?. 5hat time does Insurable interest e%ist/ in the case of propert# Insurance a, At the time of entering contract b, At the time of loss occurring occurr ing c, At an# time d, Both at the time of entering into the contract and at the time of loss 0. Insurable interest is not satisfied between whom under the Life Insurance contract a, 9usband35ife b, (arent3"hild c, 'riends d, $mplo#er and $mplo#ee 0>. 5hat does a (ure Risk involve a, Loss or No Loss b, Loss and Gain c, Gain d, All the above 0>=. 9ow much amount can the insurer recover under the e%isting subrogation rights a, $uivalent to the claim. b, $uivalent to the sum insured c, Not more than 1 lakh d, = of sum insured 0>1. &aterial fact has been defined as the fact that would a, Influence the mind of insured b, Influence the mind of underwriter in declining or accepting the risk c, Influence the mind of other polic#holders d, Not affect the insurance contract 0>. An e%ample of material fact under Life insurance is a, Fccupation/ health and habits of the person to be insured b, (articulars possessions of the person c, (articulars about the vehicle owned d, None of the above 0>0. Insurance a, (rotects the loss of an asset due to peril b, "ompensates the loss caused b# a peril c, )afeguards the loss of an asset due to peril d, None of the above 0>4. iolation of 2tmost Good faith gives the aggrieved part# d, -he right to avoid the contract d, -he right to nondisclosure of breach d, -he right to honour the contract d, None of the above 0>:. -he term used to alter the insurance contract is ;;;;;;;;;. a, *eductibles b, (olicies c, $ndorsements d, All of the above. 0><. In co3insurance/ the claims of the polic# is shared b# a, All insurers in the same proportion as their share bears to the total value insured b, Insured and insurers c, -otal value insured will be shared b# main insurer d, &ain insurer and the insured 0>?. Insurance means a, )haring of risks b, )haring of liabilit# c, )haring of responsibilit# d, None of the above 0>. Life insurance is primaril# a, An investment tool b, A financial securit# tool c, A ta% saving tool d, None of the above 0>>. ;;;;;;;;;;;;; are insurable. a, )peculative Risk
Solution: d
Solution: d
Solution: c
Solution: a
Solution: a
Solution: $
Solution: a
Solution: $
Solution: a
Solution: c
Solution: a
Solution: a
Solution: $
b, 'inancial Risk c, Gambling Risk d, (ure Risk 4==. -he insurance mechanism is used to a, "ontrol the risk b, -ransfer the risk c, Retain the risk d, All of the above 4=1. Insurance covers a, *#namic Risk b, )peculative Risk c, (ure Risk d, 'undamental Risk 4=. (eril refers to a, 5ear and tear of assets b, Natural calamities c, Accidental occurrences d, $ither B or " 4=0. -he mechanism of insurance is a, Reimbursement of losses b# the Government b, "hanneling of savings into investments c, "harring of risk b# the communit# to minimie impact on a single member d, None of the above 4=4. &aterial facts should be disclosed during a, (roposal stage b, Revival stage c, Alteration d, An# of the above 4=:. 2berrima fides means a, 2tmost Good 'aith b, Ad idem c, "aveat $mptor d, *octrine of warrant# 4=<. 5ithout insurable interest/ an insurance contract would be a, oid3ab3initio b, 5agering contract c, oid contract d, "ommercial contract Solution:$ wagering is basicall# betting H gambling . 4=?. 5hich of these is not an e%ample of automatic insurable interest a, 9usband and wife b, Brother and sister c, "ompan# and a ke#3e%ecutive d, An# of the above 4=. 5hich material facts need not be disclosed a, 'acts of law b, 'acts of common knowledge c, 'acts known onl# to the proposer d, Both A and B 4=>. In order to be insurable/ the risk should be a, "apable of financial measurement b, )imilar to a large number of homogenous risks c, Not against public polic# d, All of the above 41=. -he components of (ersonal Risk that are faced b# the individual isHare a, *eath b, *isabilit# c, &edical d, All the above 411. A material fact is a, A fact that would influence the udgment of a prudent insurer in fi%ing the premium or determining b, A matter of common knowledge c, A fact that will reduce the premium d, A fact that will increase the premium 41. In case of whole life insurance/ the sum assured is normall# paid to the a, Life assurer b, Nominee
Solution: d
Solution: $
Solution: c
Solution: d
Solution: c
Solution: d
Solution: a
Solution: $
Solution: d
Solution: d
Solution: d
Solution: a
c, Legal heir d, An# of the above Solution: $ 410. -he premium charged b# the life insurer is calculated on the basis of a, &ortalit# Rate b, Interest c, $%penses Solution: d d, All of the above 414. 5hich of the following are t#pes of annuit# a, Immediate b, *eferred c, 'le%ible d, All of the above Solution: d 41:. 5hat is Reinsurance a, *istribution of insurance business made b# the insured. b, An agreement concluded b# one insurer with another. c, -he other name given to coinsurance d, -he action of insured in getting the same risk insured b# ano ther insurer. Solution: $ 41<. Name the area+s, under which legal liabilit# risks ma# arise. a, 2nder )tatus b, 2nder "ontract c, At "ommon Law d, All of the above. Solution: d 41?. -he damages that are awarded during personal inur# claims include a, )pecial damages and General damages b, )pecial damages onl# c, *amages to third parties onl# d, None of the above Solution: a 41. 5hat is the liabilit# that arise due to failure of one of the parties not fulfilling the provisions of contract which it had entered into with another part# a, icarious Liabilit# b, )pecial *amages c, "ontractual Liabilit# d, )trict Liabilit# Solution: c 41>. Life Insurance is a, -otal loss cover b, Indemnit# cover c, )ubstitute for loss of income Solution: c d, All of the above 4=. $conomic value of an individual includes a, )elf b, )elf and dependents c, 'amil# +$conomic unit, d, Fnl# dependents Solution: c 41. Insurable Risks are categoried into a, (rivate and Ffficial Risk b, (ersonal and (ropert# and Liabilit# Risks c, Ffficial and (ropert# Risks d, (rivate/ Ffficial and (ropert# Risks Solution: $ 4. 9uman Life alue in general is a, -otal income of an individual b, -otal wealth of an individual c, $arning capacit# d, None of the above 40. 9uman Life alue amounts to a, -otal savings b, -otal investments c, Assets P $stimated future economic value of an individual his famil# d, (ast income 44. 5h# does an office conduct a special enuir# in the case of death claim which arose after 4 #ears a, As a precaution b, for a large sum assured c, As a routine d, Fn suspicion of suppression of facts Solution: a 4:. 5hich of the following statements isHare -rue )tatement AD -he fact of having been on a sick leave must be disclosed even if there were no sickness and the certificate of sickness was false. )tatement BD &ost plans of insurance are a combination of two ba sic plans.
a, Fnl# statement A b, Fnl# statement B c, Both statements Solution: a d, neither of the statements 4<. Bringing a polic#/ which has lapsed/ back to force is called;;;;;;;;;;; a, Recover# b, Renewal c, Revival d, Relapse Solution: c 4?. 5hich of the following statement+s, is are -rue )tatement AD Life insurance policies are available through the 2nit -rust of India also. )tatement BD In a oint life polic#/ death claim is pa#able onl# when both the insured die. a, Fnl# statement A b, Fnl# statement B c, Both statements d, Neither of the statements 4. A person7s insurable interest in his own life is ;;;;;;;;;;; a, 2nlimited b, 1= times his salar# c, $ual to his assets d, Fbligation for famil# Solution: a 4>. 5hich of the following statement+s, isHare -rue )tatement AD )ick people ma# be considered for grant of insurance on special terms. )tatement BD Insurance cover begins as soon as the premium is received in the office along with the proposal. a, Fnl# statement A b, Fnl# statement B c, Both statements d, Neither of the statements Solution: c 40=. -he behaviour of an agent who tells his client that the advice given b# another agent is wrong is ;;;;;;; a, Non3professional b, Interfering c, "hildish d, *ominating Solution: a 401. 5hat risk is covered b# an annuit# a, )ickness b, Accident c, Living too long Solution: c d, *eath 40. 5hat measures are taken to reduce or eliminate the chances of occurrence of loss a, "ontrol &easures b, "ost &easures c, Administrative &easures d, All the above Solution: a 400. -he impact of the death of one sole breadwinner of the famil# 6over 4=s famil# 6 would be severe in the area of a, &eeting outstanding debts b, &eeting basic needs c, &eeting medical needs d, &eeting educational needs Solution: $ 404. @EU Ltd has a proect that is insured for 1= crores. <= of its risk is covered b# Insurance compan# A while 4= of the balance risk is covered b# Insurance compan# B. -he insurance polic# is issued b# Insurance compan# A. It has a collective insurance clause setting out the liabilit# of both the insurance companies. -his case is one of a, "o3insurance b, Reinsurance c, Both +a, and +b, d, None of the above Solution: a 40:.Rahul and (ri#a +husband and wife, were born in 1>:= and 1>: respectivel#. Rahul7s life e%pectanc# at birth is <: #ears while (ri#a7s life e%pectanc# at birth is ? #ears. Rahul is planning to bu# an annuit# that will be paid to him or his wife till an# one of them is alive. 'or how long should he purchase this annuit# for a, 1= #ears b, 1 #ears c, 1? #ears d, #ears Solution: d 40<. enkat proposes an insurance cover for his farmhouse which is occupied at intervals dur ing the #ear. 5hich of these ma# be e%cluded from coverage b# the insurance compan# a, 'ire b, -heft c, -hird part# liabilit#
Solution: $ d, Loss of rental income 40?. Naresh is a car driver b# profession and drives 9arish7s car. Naresh is involved in a collision with the boundar# wall of a neighbour7s house and inures the neighbour as well. 9arish was also in the car during the collision. It was later discovered that Naresh was under the influence of alcohol. 5hile setting the claim/ which of these perils will not be covered a, Repair charges to 9arish7s car b, Boundar# wall repair charges to the neighbour7s house c, &edical treatment charges of 9arish d, &edical treatment charges of Rahul Solution: c 40. ikram/ an insurance advisor advises his client/ &r. )ingh about the purchase of insurance plans for ta% e%emptions which will earn &r. )ingh a := rebate. 9owever/ &r. )ingh was unable to obtain this ta% redemption and plans to sue ikram for giving him misleading advice. 5hich of these methods can ikram adopt as recourse a, Asset Insurance b, Legal Liabilit# Insurance c, "omprehensive Insurance d, (rofessional negligence cover Solution: d 40>. ictor is 4 #ears old and a #oung e%ecutive who has begun his career. 9e plans to start a famil# in 034 #ears. 9e travels e%tensivel# b# road and out of the cit#. 5hat kind of life insurance cover would #ou recommend for him a, $ndowment insurance polic# b, &one# back polic# c, 2nit linked polic# d, -emporar# insurance polic# with convertibilit# and renewabilit# option Solution: d 44=. &r. )harma takes out a polic# for his son Rahul7s higher educational needs after Rahul reaches 1 #ears of age. 2nfortunatel#/ after pa#ing a premium for : #ears/ &r. )harma passes awa#. 9ow can the polic# be enforced without pa#ing future premiums so that the intended benefits are preserved a, Accident benefit premium b, Line on polic# c, (remium waiver facilit# Solution: c d, None of the above 441. &r. irendra -ripathi is an e%ecutive in an Indian compan#. 9e is in his earl# 0=s and has a bab# girl. 9e plans to sign up for a flat immediatel#. 9is spouse is not working. &r. -ripathi has no life insurance #et. 5hich of these combinations would #ou recommend for his case a, Limited pa#ment endowment assurance/ oint life/ "hildren7s deferred/ 9ealth b, -erm insurance/ oint life/ "hildren7s deferred/ &ortgage redemption c, 5hole life with term assurance for spouse/ $ducational annuit# with pr emium waive d, &one# back polic#/ "hildren7s deferred polic#/ oint life polic#/ &ortgage redemption Solution: c 44. -he principle of insurance is based on a, )haring of Resources b, )haring of Losses c, )haring of "apital Solution: $ d, )haring of Investments 440. (lease see the following data about life e%pectanc# at birth of men and women during the last three decades in India3"ensus Eear &ale 'emale 1>?1 4<.4= 44.?= 1>1 :4.1= :4.?= 1>>1 :.1= :.<= ==1 <.0= <<.? "ertain conclusions are drawn below based on this stud#. 5hich of these conclusions CADT be deduced from this data a, -oda#/ female children eno# longer lives than those born three decades ago b, 5omen7s mortalit# has improved more than the mortalit# e%perience of men during the last c, -he same trend as above is seen in the last two decades as well d, -he mortalit# e%perience of men has improved in comparison to women in the last decade Solution: d 444. "onsider the following situations3 1. &r. )inha/ aged 0=/ is a &aor in the Indian Armed forces. 9is proposal and famil# histor# reveal that he suffered from t#phoid at the age of 1 #ears. 9is father passed awa# a #ear ago at the age of ?= due to a heart attack. -he underwriter will not consider an# of these features as adverse. . &r. Baa/ aged 0:/ is overweight b# 1= and consumes one litre of beer ever# alternate da#. 9is parents are alive. -he underwriter is likel# to ignore these features. a, Fnl# )tatement A is correct b, Fnl# )tatement B is correct c, Both statement A and B are correct d, Both statement A and B are incorrect Solution: d 44:. Read the following two statementsD +I, *eath of the breadwinner is a 6'inancial Risk8 +II, It is a [(ure Risk8 a, I ! II are correct
b, I ! II are incorrect c, I is correct d, II is correct Solution: a 44<. Ram lost his life7s savings when the owners of the private financial compan#/ where he deposited it/ went bankrupt due to uestionable practices and defaulted on repa#ment. It is the case of loss under ;;;;;;;;;;;. a, Investment Risk b, )peculative Risk c, Regulator# Risk d, None of the above Solution: a 44?. 9illar# had a choice of investing her retirement dues in post office savings or bank deposit or with private fund raiser. )he barel# manages to get her funds back when she opted for the third option. -his is the case of ;;;;;;;;;;;. a, Not understandings the risks b, -aking a gamble for high returns c, )uccumbing to greed d, $%ercising poor udgment Solution: a 44. &r. ain has suffered several da mages to his propert# +uninsured, because o f fire. -hereb# he suffered several financial losses. -his happened because he did not cover ;;;;;;;;;. a, -he Investment plan b, -he (ure Risk c, -he )peculative Risk d, None of the above Solution: $ 44>. -arun/ a driver/ caused inuries to a pedestrian b# rash driving of car. -he inured victim had to spend Rs.1=== in treating his inuries. -arun7s act has created liabilities under ;;;;;;;;;. a, "ommon Law b, "ontract c, )tatute and "ommon Law d, )tatue onl# Solution: c 4:=. &r. Ro# took a business premises on lease with the provision that he himself had to pa# the insurance premium for fire and other perils and not the owner of the premises. -his would be an instance of ;;;;;;;;;;. a, Risk "ontrol b, Risk -ransfer c, Risk Retention d, Risk Reduction Solution: $ 4:1."ase 1D An insurer receives an application for insurance which contains an incomplete or missing answer. -he insurer does not contact the applicant for the missing information and the polic# is issued/ subseuentl# when claim arose under the polic#/ pa#ment was denied on the basis of the earlier incomplete information. "ase D In another case an insured7s car insurance renewable premium was about to fall due. Fn enuir# with the compan#/ the# told him that there was 1: da#s grace period from that da# during which time period he could pa#. )ubseuentl#/ the car met with an accident ne%t da#/ the compan# denied the claim on the ground that the premium was not paid on time. +I, -he principle of estoppel and that of waiver in the first and second case respectivel# makes the denial of claim untenable. +II, In the former/ the principle of waiver and in the latter/ the principle of estoppel were violated/ because of which the denial of claims were set aside b# courts. a, A is correct b, B is correct c, A ! B are cases of aleator# contact d, None of the above Solution: $ 4:. An insurable loss must not be a, "atastrophic b, 'ortuitous or accidental c, *efinite Solution: a d, None of the above 4:0. After two #ears of taking out of life insurance polic#/ the assured dies after complications from emergenc# surger# after an acute attack of duodenal ulcer. $nuiries revealed that he had periodicall# stomach aches in childhood. "laimant argued that the assured did not disclose this in the proposal/ as he did not consider it as a serious thought enough condition a doctor applies for life assurance soon after a series of seiures/ which he does not disclose in the proposal papers. +A, -he first case of innocent non3disclosure/ while the second is of deliberate non3 disclosure. +B, -he first is a case of innocent misrepresentation and second one of deliberate misrepresentation. a, A ! B are correct b, A is correct c, B is correct d, None of the above Solution: $ 4:4. A fire insurance covered premises was housing a constructor7s office. In between/ the constructor vacated the premises and the space was rented out as a clothing store. -he insurance compan# was not informed about the change
of the tenant. -he grounds on which the insurer refuses to entertain the claim/ if the premises suffer a fire would be ;;;;;;;;;;. a, *octrine of utmost good faith. b, *octrine of adheres ion. c, (rinciple of dut# of disclosure d, (rinciple of indemnit# Solution: c 4::. )howroom of Raesh ! )ons/ *r#cleaners caught fire in an accident where man# items of c lothing of customers were destro#ed. -he contents were insured. -he owner7s claim for damage of clothes etc. will be considered b# the insurance compan# under ;;;;;;;;;. a, (ropert# Liabilit# b, 'inancial Liabilit# c, Legal Liabilit# d, None of the above Solution: c 4:<. 5hich of the following contracts do not adhere to the application of law contract , Insurance , )tock &arket , (ropert# *eals , None of the Above Solution: d 4:?. Insurance contracts can be ;;;;;;;;;; contracts. d, Indemnit# d, Negotiated d, None of the above d, $ither A and B Solution: d 4:. (eter has insured his two3wheeler for a propert# risk. 9e wears a helmet while he drives but does not have an Accident Insurance. 9e has ;;;;;;;;;;;;;;. d, -aken a grave risk b# not taking accidental insurance. d, &ade a mistake/ he should have taken Accidental Insurance instead of propert# risk insurance. d, -ransferred his propert# risk/ controlled some of the risks and retained the rest. Solution: c d, *one a good thing b# reducing his premium pa#out personal b# not taking Accidental Insurance. 4:>. &ark is an advocate having a roaring practice consisting of highl# valued intricate cases of companies. 9e has 0 #oung uniors. "ash transactions do not take place in office. 9e maintains his office with modest furnishings. -he most necessar# cover for him is d, 'idelit# Guarantee d, (rofessional Indemnit# d, (ublic liabilit# d, Burglar# Solution: $ 4<=. An insurance part# reinsures the risk with a re3insurer/ this happens in the case of d, Risk retention d, Risk -ransfer d, Both A and B Solution: $ d, None of the above 4<1. &r. &anish insures his home worth Rs.:= lakhs for Rs. 0= lakhs. -he house was destro#ed in fire and he suffers loss worth Rs. = lakhs. 9ow much will he receive from the Insurance "ompan# d, = lakhs d, 1< lakhs d, 1 lakhs Solution: c d, 0= lakhs 4<. An insurable loss must be d, "ertain d, 'ortuitous or accidental d, Indefinite d, Impossible to happen Solution:$ 4<0. &r. &ohammed/ 0= #ears and married/ works for a firm which provides him with medical cover. 9e alread# has his own home and savings of Rs.4 lakhs which are well invested. In the ne%t twent# #ears/ he will be able to save enough to fund his retirement and his children7s education. 5hich of the following might be the most important insurance for him d, &edical "over d, -emporar# -otal *isablement "over d, (ropert# insurance d, Life "over Solution: d 4<4. )am got some inuries at the building site when the building contractor7s car ran over his toe. 9e was unable to attend work for < weeks. 5hat are the options available to )am d, )am and the contractor get the Accident Insurance. d, )am gets Accident Insurance. -he contractor gets third part# Liabilit# Insurance d, )am gets *isabilit# Insurance/ if he has one. -he "ontractor gets a third part# Liabilit# Insurance Solution: $ d, )am gets *isabilit# Insurance/ and the contractor gets Accident Insurance. 4<:. &ark/ a &anager earning 4=/:=/=== p.a has the following detailsD
$lectronic items market value 0/ ?:/=== Acuisition value 0?/:== 'urniture replacement cost 1/==/=== 9ouse market value >?/:=/=== "ost of building house /:=/=== P cost of the land *aughter7s marriage 0/?:/=== "hildren7s education /:/=== Retirement funding . Insured *eclared alue +I*, does not appl# to ;;;;;;;;;;;;;;;. d, (ropert# damage in motor accident d, "urios/ old eweller# d, -hird part# liabilit# claim Solution: c d, (ropert# insurance 4?=. &r. *utta lives in Verela/ which is not earthuake prone. 9e decides to take out insurance on his propert#. As an insurance advisor/ #ou would advise him that ;;;;;;;;;. d, 9e should not take out propert# insurance since he does not need it. d, 9e should not take the earthuake option/ since it will be e%pensive d, 9e should not take out propert# insurance/ since it will be e%pensive d, 9e can take out propert# insurance as the premium will depend on the risk and will therefore Solution: c 4?1. An insurance compan# makes a surplus/ due to ;;;;;;;;;;;;;;;;;;;;;;;. 1 &ortalit# of polic# . Investment rate 0. $%penses 4. Lapse/ surrenders :. Adverse loss ratio d, 1// 0 d, 1//0/4 d, 1//0/4/: Solution: a d, None of the above 4?. Because of the application of the doctrine of adhesion/ the courts construe the terms of insurance contract in favor of
d, -he insured d, -he insurer d, None of the above Solution: d d, *epends on circumstances 4?0. "onsider the following statementsD +A, (a#ment of the first premium is legal consideration +B, (a#ment of the first #ear7s pre mium as also the subseuent two #ear7s premium constitute legal consideration. d, Fnl# )tatement A is correct d, Fnl# )tatement B is correct d, None of the above. d, )tatements A and B are both incorrect Solution: d 4?4. "onsider the following statementsD +A, -he proposer has to demonstrate utmost good faith while proposing for insurance +B, &ere good faith is enough. d, )tatements A ! B both are correct d, )tatement A ! B both are incorrect d, )tatement A is incorrect/ while B is corr ect d, )tatement A is correct ! B is incorrect Solution: c 4?:. Risks must be ;;;;;;;;;; before the# can be ;;;;;;;;; d, severe/ assessed d, identified / measured d, measured/ identified d, none of the above Solution: d 4?<. -here is an $%cess "lause of Rs :=== in a health insurance polic#. )o when a genuine claim is filed for Rs :====/ In such case the insurance compan# will pa# ;;;;;;;;;. d, Rs :=== d, Rs 4:=== d, Rs :==== d, Rs ::=== d, None of the above Solution:$ 4??. A person has e%penses relating to a loan of Rs lakh/ medical e%penses of Rs :====/ education e%penses of Rs lakh and other domestic e%penses relating to 1 lakh. 5ith an annual income of Rs ? lakh and a : time income multiple the insurance need according to the income method is a, Rs 4:==== b, Rs :===== c, Rs ?===== d, Rs 0:===== Solution: d 4?. In the above case the reuirement as per the income plus e%pense method is a, Rs 0====== b, Rs 0:===== c, Rs 4=:==== d, Rs 4:===== Solution: c 4?>. &r. Raan has an outstanding debt of Rs lakh/ medical e%penses of Rs =.:= lakhs per annum/ education e%penses of Rs lakh per annum and other self maintenance e%penses of Rs.1 lakh per annum plus he earns an annual income of Rs ? lakh/ As a 'inancial (lanner find out his Insurance Reuirement as per 6Income Rule8 +Note D3 A 'ive time income multiplier is the accepted industr# norm, e, Rs ?/:=/=== e, Rs 1/:=/=== e, Rs 1=/==/=== e, Rs 0:/==/=== e, None of the above Solution: d 4=. Refer to the case above/ as a 'inancial (lanner find out his Insurance Reuirement as per 6Income (lus $%pense Approach8 e, Rs 0:/==/=== e, Rs 0>/:=/=== e, Rs 4=/:=/=== e, Rs 41/==/=== e, None of the above Solution: c 41. -o whom the principles of risk management are applicable a, Individuals b, )mall enterprises c, huge commercial enterprises d, all the above Solution: d 4. 5hich are the two elements involved in evaluation of r isks a, (robabilities of loss producing events occurring a nd potential losses b, (robabilities of occurrence of events c, (robabilit# of rising inflation on future income and cost o f assets
Solution: a d, (robabilit# of increasing cost of operation and emplo#ment 40. 5hich of the following is not an e%ample of Risk reduction when driving d, 5earing a seat belt d, *riving within speed limits d, *riving defensivel# d, Not driving Solution: d 44. 5hich of the following isHare considered to be pure risk d, (ropert# risk d, Liabilit# risk d, Risk from failure of others d, All the above Solution: d 4:. Rama owns a propert# worth Rs. 4: Lakh. )he could onl# afford to pa# a premium/ which can insure her propert# to the e%tent of Rs. 0: Lakh. -his is an e%ample of D e, Normal Insurance e, Fver Insurance e, *ouble Insurance e, 2nder Insurance Solution: d 4<. -he formula used to calculate the sum pa#able to the insured where a subect to average clause is mentioned in the contract isD d, LossQ+)um InsuredH actual value, O sum pa#able d, Actual alueQ+)um InsuredH loss, O sum pa#able d, )um pa#ableH+lossQsum Insured, O Actual alue d, All the above Solution: a 4?. Ram got an Insurance from a compan#/ which stood in his place in relation to a claim on a 0 rd part#. -his e%ample best relates toD d, utmost good faith d, un3insurable interest d, subrogation Solution: c d, non3indemnit# 4. Ra has insured his house with a well known insurer. 9e did not inform the insurance compan# that he has stored fire3works in his house. In this case he has failed to disclose d, relevant fact d, material fact d# known fact d# common fact Solution: $ 4>. 5hen evaluating a loss e%posure/ all of the following proections are made $@"$(-D , &onetar# value of a specific loss , -otal dollar loss of all losses during a particular time period. , 'reuenc# of losses during a particular time period. , Location of the loss. Solution: d 4>=. 5hich of the following statements concerning range isHare correct I. Range euals the highest value minus the lowest value. II. 2ses all values in the data set. d, I onl# d, II onl# d, Both I and II Solution: a d, Neither I nor II 4>1. ack was ver# bored on a rain# da#. 9e spent most of the afternoon randoml# drawing cards to see how often an ace appeared. 9e drew a total of 1/=:= cards. *uring that time/ an ace appeared 4 times. 5hat is the relative freuenc# of ackWs drawing an ace d, 1.: d, d, 1.: d, 1: Solution: $ 4>. 5hich of the following is an advantage of pre3 funding a loss d, &one# is free for other uses until needed for losses d, "osts can be spread over a period of time and limited to the e%act amount reuired to pa# for the losses d, &one# in reserves cannot be used to support other activities d, Reserves can be built up over man# budget periods Solution: $ 4>0. -he human life value approach is based on a, a person7s eligibilit# for social securit# income b, the amount of life insurance he or she owns c, the standard of living he or she wishes to have d, the capitalied present value of potential lifetime earnings Solution: d 4>4. 5hich of the following is a characteristic of an ordinar# life polic# a, It is the most e%pensive form of cash value insurance. b, It matures at age <:.
c, It has an increasing cash value and decreasing risk amount. d, Both the cash value and amount at risk increase annuall#. Solution: c 4>:. 5hich of the following statements concerning #earl# renewable term is correc t a, -he insurance compan# ma# e%perience some adverse selection at renewal time. b, -he premiums do not increase from #ear to #ear. c, $vidence of insurabilit# must be furnished at the time of each renewal. Solution: $ d, -he insured can renew the polic# each #ear b# completing a medical e%am. 4><. In case of insurance who should normall# make the offer a, agent b, insurer c, prospect d, an#one Solution: c 4>?. 5hat is the binding force of an# contract a, offer b, acceptance c, parties d, consideration Solution: d 4>. 5hat is consideration that insurer makes under insurance contract a, promise to compensate in case of insured contingenc# b, promise to pa# in case of an# event c, promise to pa# on demand d, promise to pa# the premiums Solution: a 4>>. 5hich insurance contracts are not contracts of indemnit# a, 'ire b, &arine c, Life Insurance d, &otor Solution: c :==. A warrant# in insurance contracts are a, Guarantee b, )tipulations imposed b# insurer because he wants to ensure that the risk remains same throughout the contract and does not increase c, Guarantees to increase the risk in case of default on part of insurer d, Guarantee to pa# the loss to the insurer in case of the loss being higher than the sum insured. Solution: $ :=1. 5hat are used when the terms of insurance contracts are to be altered a, deductibles b, endorsements c, policies Solution: $ d, all the above :=. ;;;;;;;;;; are the provisions under insurance contracts that stipulate deduction of a pre3specified amount from the claims pa#able under the polic# a, endorsement b, rules c, deductibles Solution: c d, none of the above :=0. ;;;;;;;;;;; is a compulsor# deductible from each and ever# claim that the insurer pa#s to the insured a, premiums b, e%cess c, premiums and e%cess d, franchise Solution: $ :=4. A condition that increases the chance of loss is called a +n, , *irect loss. , (eril. , Indirect +conseuential, loss. , 9aard. Solution: d :=:. A publishing compan# solicits manuscripts for publication. -he publishing compan# is concerned that an author might plagiarie material and that the person who was plagiaried might sue the publisher. -o address this risk/ the contract with the author includes a hold3harmless agreement. -hrough this agreement/ the author/ rather than the publisher/ is held liable for plagiarism. In this situation/ the publisher is using the hold3harmless agreement as what t#pe of risk treatment measure d, Risk selection d, Risk avoidance d, Risk transfer d, Risk retention Solution: c :=<. A risk that affects the entire econom#/ or a large number of persons or groups within the econom#/ is called a +n, d, Fbective risk. d, (articular risk. d, )peculative risk.
Solution: d d, 'undamental risk. :=?. All of the following are burdens of risk on societ# $@"$(d, Risk forces individuals to practice loss control. d, Risk reuires reserve funds to be set3aside in case a loss occurs. d, Risk creates fear and worr#. d, Risk deprives societ# of certain goods and services. Solution: a :=. *ean7s *iscount )tore has been e%periencing problems with shoplifting losses. *ean decided to install a camera monitoring s#stem and to use magnetic price tags on products. If a tag is not demagnetied before the product bearing the tag leaves the store/ an alarm bell sounds. -hese measures are e%amples of d, Risk transfer. d, Loss control. d, Risk avoidance. d, Risk retention. Solution: $ :=>.-he spreading of losses incurred b# a few individuals over a larger group/ so that average loss is substituted for actual loss/ is known as d, 'ortuitous loss. d, (ooling of losses. d, -ransfer of risk. d, Loss indemnification. Solution: $ :1=. All of the following are ideal reuirements that must be met for a risk to be privatel# insurable $@"$(d, -here must be a large number of similar e%posure units. d, -he chance of loss must be calculable. d, Losses should not be catastrophic. d, -he loss should be within the insured7s control. Solution: d :11. 5hich of the following statements is +are, true with respect to insurance and gambling . Insurance is simpl# a wager that if a loss occurs/ #ou7ll be paid for the loss. . Both gambling and insurance are sociall# productive. d, Both I and II d, II onl# d, Neither I nor II d, I onl# Solution: c :1."ha#a does not own health insurance. 'or the past two weeks/ she has been e%periencing sharp abdominal pain. Given her condition/ she would like to purchase health insurance. 5hen higher3than3average risks +like "ha#a, ar e insured at average premiums/ losses are higher than anticipated. 5hat is this problem called d, Adverse selection d, &orale haard d, )peculation Solution: a d, &oral haard :10. -he first step in the risk management process is to d, Implement and administer the program. d, )elect the appropriate techniues for handling losses. d, Identif# potential losses. d, $valuate potential losses. Solution: c :14. All of the following risk treatment techniues are classified as risk control methods $@"$(d, Avoidance. d, Loss prevention. d, Loss indemnif#. d, Loss reduction. Solution: c :1:. 5hich of the following statements is +are, true with respect to the obectives of risk management ii.A pre3loss obective of risk management is the reduction of uncertaint#. ii.A post3loss obective of risk management is the stabiliation of earnings. d, Neither I nor II ) d, Both I and II d, I onl# d, II onl# Solution: $ :1<. Baa "ompan# manufactures electronic components. &anagers of the compan# are considering several diversification options. Fne possibilit# is production of prescription drugs. 5hen Baa "ompan# managers learned of the potential legal liabilit# that could result from the manufacture and sale of prescr iption drugs/ the managers reected the idea and decided to consider other diversification options. 9ow did Baa "ompan# choose to deal with the risk of legal liabilit# arising from the manufacture and sale of prescription drugs d, Loss control d, Risk transfer d, Risk retention d, Risk avoidance Solution: d :1?. All of the following are methods used to pa# retained losses $@"$(d, Borrowed funds. d, Insurance.
d, "urrent net income. d, 'unded reserve. Solution: $ :1. 5hich of the following is most likel# to occur in a 6hard8 insurance market d, Low insurance premiums and loose underwriting standards d, 9igh insurance premiums and tight underwriting standards d, Low insurance premiums and tight underwriting standards Solution: $ d, 9igh insurance premiums and loose underwriting standards :1>. onathan believes there is a relationship between the number of miles driven b# his compan#7s deliver# vehicles and the number of ph#sical damage claims that will occur. onathan collected data on the number of claims and the number of miles driven for the past 1: #ears. 2sing a computer/ onathan determined the coord inates of a line that best fit these data. Armed with this information/ he can predict how man# losses will occur ne%t #ear. -he t#pe of anal#sis that onathan emplo#ed is called d, Regression anal#sis. d, (robabilit# anal#sis. d, "ash flow anal#sis. d, -ime value of mone# anal#sis. Solution: a :=. In anal#ing the probabilit# that certain events will occur/ a risk manager knows that certain events cannot occur together because the occurrence of the first event precludes the occurrence of the second event. )uch events are called d, &utuall# e%clusive events. d, 2nconditional events. d, *ependent events. d, Independent events. Solution: a :1. Flivia is Risk &anager of AB" "ompan#. )he is tr# ing to determine if a loss control investment is ustified. Flivia calculated the present value of the future cash flows she e%pects the proect will generate. )he summed the present value of the future cash flows and then subtracted the cost of the loss control euipment. -he resulting value is called the proect7s , "apital budget. , Net present value. , Internal rate of return. , Loss distribution. Solution: $ :. All of the following are benefits of insurance to societ# $@"$(d, (rovides a pool of investment funds. d, $nhances credit. d, Reduces insurance compan# operating e%penses. d, Indemnifies losses. Solution: c :0. Vavita opened a sporting goods store. After a fire damaged the store/ Vavita was forced to close the business for four weeks while repairs were completed. -he loss of profits that could have been earned if the business had remained open is best described as a +n, d, 9aard. d, (eril. d, Indirect +conseuential, loss. d, *irect loss. Solution: c :4. An insurance contract must be accepted in its entiret# and an# ambiguit# in the contract is construed against the insurer. Because of these characteristics/ we can describe insurance contracts as d, Aleator# contracts. d, "ontracts of adhesion. d, Bilateral contracts. d, alued contracts. Solution: a ::. In which part of an insurance contract would #ou find information about the propert# or activit# to be insured "onditions Insuring agreement *eclarations $%clusions Solution: c :<. *eductibles are used for all of the following reasons $@"$(d. -o eliminate small claims. d. -o reduce premiums. d. -o reduce loss control efforts. d. -o reduce moral and morale haard Solution: c :?. 5hich of the following statements is +are, true with respect to endorsements and riders i. $ndorsements and riders are used to amend provisions of insurance contracts. ii. If the endorsement or rider conflicts with terms in the underl#ing contract/ the endorsement or rider takes precedence unless it conflicts with the law. d. I onl# d. Both I and II d. Neither I nor II d. II onl# Solution: $
:. itendra has an e%pected income stream over the ne%t 1: #ears at Rs : lakh. If the inflation adusted discount rate comes to 0 then what is the human life value when there is a lump sum reuirement of another 0 lakh to clear off his outstanding debt. +Assume the income stream per annum will remain at the same level for the ne%t 1: #ears, d, Rs 10=4<:4 d, Rs 1<=4<:4 d, Rs 1>=4<:4 Solution: c d, Rs =4<:4 :>. 5hich one of the following is not come under principal merit rating methodD , )chedule rating , $%perience rating , Retrospective rating , udgement rating Solution d Rating could be 1. Individual or udgmental . "lass or manual 0. &erit rating T )chedule / $%perience ! Retrospective :0=. As per the Income -a% Act/ 1><1 if Annual (remium paid is more than = of )um Assured/ then +d, )uch (remium is full# eligible for deduction uHs = " upto ma%imum of Rs. 1 Lakhs and the &aturit# alue/ )urrender alue is full# e%empt uHs 1=+1=*,. +d, )uch (remium is eligible for deduction uHs = " upto ma%imum of Rs. 1 Lakhs but onl# to e%tent of the first = of the )um Assured but &aturit# alue/ )urrender alue is not e%empt uHs 1=+1=*, with the e%ception of onl# *eath Benefit . +d, Both a ! b are false +d, Fnl# b is 'alse +d, None of the above Solution: $ :01. &Hs @EU Ltd is entering the "apital &arket to raise fresh funds+I(F, for its e%pansion/ this is an e%ample of ;;;;;;;;;;;; from &Hs @EU Ltd point of view. d. Risk Retention d. Risk Reduction d. Risk )haring d. Risk -ransfer d. A combination of all above d. None of the above Solution: c :0. 5hich of the following is the third step in 6 Risk &anagement )trateg#8 e, Identification of the Risks e, *evelop Alternative for handling risks e, "hoose and implement an appropriate )trateg#. e, Anal#e and $valuate risks + Risk &easurements, e, None of the above Solution: $ :00. As per )ec 1=+1=*, of the Income -a% Act/ an# sum received from Insurance "ompan# is e%empt full# for Income -a%. +e, -rue +e, 'alse +e, -rue onl# when Annual (remium paid is less than or eual to = of )um Assured +e, -rue for *eath Benefit without an# r eference to Annual (remium condition +e, Both " ! * are true Solution: e :04. (remium paid to Life Insurance for Basic )um Assured +*eath Benefit, is eligible for deduction under which section of the Income -a% Act/ 1><1. +e, )ec = " upto a &a%imum of Rs. 1 Lakh +e, )ec = " without an# &a%imum limit +e, )ec = * +e, None of the above Solution: a :0:. (remium paid to Life Insurance for alue Additions such as "ritical Illness Rider is eligible for deduction under which section of the Income -a% Act/ 1><1. +d, )ec = " upto a &a%imum of Rs. 1 Lakh +d, )ec = " without an# &a%imum limit +d, )ec = * upto a &a%imum of Rs.1:=== +d, )ec = * without an# &a%imum limit +d, None of the above Solution: c :0<. &r. A aged #ears has ust started working in a B(F earning Rs.=/=== per month and has no dependants and is not financiall# responsible to his famil#. As a 'inancial (lanner recommend the appropriate Insurance (lan. +e, -erm Insurance +e, -erm Insurance with (ersonal Accident and *isabilit# Insurance +e, Fnl# (ersonal Accident and *isabilit# Insurance +e, No Insurance reuired/ he should invest all his savings in 5ealth "reation Solution: c :0?. &r. Bhavesh aged 0 #ears the sole breadwinner with dependant )pouse and one child named Asha aged 0 #ears. As a 'inancial (lanner recommend the appropriate Insurance (lan. +Note Asha will complete her &BA b# her : age,
d, -erm Insurance with "ritical Illness Rider/ *isabilit# Rider ! 5aiver of (remium Rider for the ne%t #ears d, -erm Insurance with "ritical Illness Rider/ *isabilit# Rider with 5aiver of (remium for the ne%t : #ears d, 2LI( d, &one# Back (olic# for : #ears d, $ndowment (olic# for #ears d, No Insurance reuired/ he should invest all his savings in 5ealth "reation for Asha &BA $ducation Solution: a d, None of the above :0. &r. "hitale/ a practicing "hartered Accountant age 40 #ears provides Advisor# )ervices relating to &ergers ! Acuisitions/ "orporate *ebt Restructuring/ "apital 'inancing. As a 'inancial (lanner recommend the (riorit# Insurance (lan. +NoteD &r "hitale will retire at <= age, g, -erm Insurance with "ritical Illness Rider/ *isabilit# Rider ! 5aiver of (remium Rider for the ne%t 1? #ears g, 2LI( g, &one# Back (olic# for 1? #ears g, $ndowment (olic# for 1? #ears g, (rofessional Indemnit# Insurance g, None of the above Solution: e Risk and Insurance
:0>. As per the Insurance Act/ 1>0 an Insurance "ompan# has the r ight to uestion the claim on the basis of concealment of facts/ mis3statements and the like in the proposal form/ such r ight is covered under which clause f, Incontestabilit# "lause uHs 4: covering onl# the first two #ears form the polic# commencement date f, Incontestabilit# "lause uHs 4: covering onl# the first three #ears form the polic# commencement date f, Incontestabilit# "lause uHs 4: covering onl# the first five #ears form the polic# commencement date f, Refusal of "laim clause uHs 4: covering onl# the first two #ears form the polic# commencement date f, None of the above Solution: a :4=. &r. Raesh is worried about its child +)unita aged : #ears, education e%penses and he does not want to stop her child education due to lack of funds/ As a 'inancial (lanner recommend the Insurance (lan which will meets the need of 6securit# for children7s education8 e, -erm assurance plan covering period till the child completes her (rofessional $ducation e, "hildren *eferred Assurance (lan e, *eferred annuit# plan e, 9ealth insurance e, 2LI( e, None of the above Solution: $ :41. Industrial (lant Insurance (olic# has a 'ranchise "lause of Rs. :=/===/ the claim filed is Rs.?=/===. 5hat would be the claim amount pa#able b# the insurance compan# under the said polic# , Rs. :=/=== , Rs. ?=/=== , Rs. =/=== , Rs. 1/=/=== , None of the above Solution: $ :4. Boiler (lant Insurance (olic# has a 'ranchise "lause of Rs.0=/===/ the claim filed is Rs. >/=== 5hat would be the claim amount pa#able b# the insurance compan# under the said polic# e, Rs. 0=/=== e, Rs. >/=== e, Rs. :>/=== e, Rs. Nil e, None of the above Solution:d 'ranchise is a t#pe of deductible where in claim above franchise limit is full# paid and below which n othing is paid. :40. In &ediclaim/ what is the ma%imum amount of premium which is deductible under -he Income -a% Act/ 1><1 e, Rs.1=/===/ onl# if paid b# a cheue T )ec = ** e, Rs.1:/===/ onl# if paid b# cheue T )ec = * e, Rs.1:/===/ onl# if paid b# a cheue T )ec = ** e, Rs.1=/===/ onl# if paid b# a cheue T )ec = * e, None of the above Solution: $'ranchise is a t#pe of deductible where in claim above franchise limit is full# paid and below which n othing is paid :44. -he immediate "ash needs of an individual will come to Rs 0==== for the funeral +final cost, plus Rs 0 lakh as outstanding debt.. -he Net Income needs at a present value are Rs 4 lakh. 5ith an e%isting asset base of Rs lakh/ As a 'inancial (lanner compute the insurance reuired under 6Needs Approach8 f, Rs 00==== f, Rs :0==== f, Rs ?0==== f, Rs >0==== f, None of the above Solution:$ 4 P 0 P =.0= T O :.0= lakhs
:4:. An Insurance planner and prospect agreed for an endowment polic# for Rs. lakhs limited premium pa#ment for 1= #ears with a term of = #ears. If revisionar# bonus is taken as ?.: per annum and terminal bonus as Rs. 1:= per Rs.1=== sum assured/ what will be the &aturit# value e, Rs.1:/=/=== e, Rs.1/=/=== e, Rs.10/=/=== e, Rs.=/==/=== e, None of the above Solution:$ Revisionar# bonus O =====Q?.: H 1== O <==== Q = O 1===== -erminal bonus O 1:= Q == O 1==== &aturit# value O P 1 P 1. O1. lakhs :4<. -he following are statements made concerning contracts of insurance. Identif# the statementHs that isHare correc t. +i, 'or life insurance contracts/ misstatement of the insured7s age constitutes a voidable misrepresentation. +ii, An innocent misrepresentation b# an applicant for insurance constitutes fraud. e, onl# +i, is correct e, onl# +ii, is correct e, Both +i, ! +ii, are correct e, Neither +i, or +ii, are correct Solution: d :4?. -he ma%im 6bu# term and invest the balance8 ma# not be a feasible proposition for man# prospects for the following reasons $@"$(- forD d, it ma# be difficult to achieve sufficient diversification in the invested assets d, it ma# be difficult to achieve a suitable investment portfolio with the desired risk reward relationship d, it ma# be possible to consistentl# outperform the investment returns earned b# an established life office d, that the insurer offers capital guarantees o n cash values d, None of the above Solution: c :4. An individual ma# prefer investment3linked assurance to conventional assurance policies for the following reasons $@"$(e, he has some direction over the investment of his premiums e, he is informed of the e%penses charged for the services provided e, he is attracted b# the guaranteed surrender values offered under these contracts e, he prefers the switching facilities available under such contracts Solution: c e, None of the above :4>. 5hich of the following does not constitute a valid charge on the premiums paid for an investment3linked life assurance polic# e, bid3offer spread e, front3end charges e, recurrent fund related charges e, surrender penalt# e, None of the above Solution: d ::=. &r. Ankush is in ver# good health without an# background of e%isting diseases/ he needs a temporar# assurance "over/ as a 'inancial (lanner recommend an ap propriate insurer e, Insurer with a stringent underwriting polic# e, Insurer with a la% underwriting polic# e, Insurer with ver# few causes of death e%cluded e, Insurer with e%tensive causes of death e%cluded e, None of the above Solution: a ::1. Identif# the class of assurance for which an insurer/ in a costing e%ercise/ must provide for future anticipated improvements in mortalit# d, investment3linked endowment assurance d, conventional endowment assurance d, group life assurance d, life annuities Solution: d d, none of the above ::. &r. )uresh has come with the following risk matri%/ which he is e%posed to/ As a 'inancial (lanner advise him an appropriate Risk &anagement )trateg#. Sr.o.
BreEuenc! of F2ent
Se2erit! of Binancial 5oss
1. Low 9igh . 9igh 9igh 0. Low Low 4. 9igh Low e, Risk -ransfer/ Risk Avoidance/ Risk Retention ! Risk Reduction e, Risk Avoidance/ Risk "ontrol/ Risk Retention ! Risk Reduction e, Risk -ransfer/ Risk Retention/ Risk Avoidance ! Risk Reduction e, Risk -ransfer/ Risk Reduction/ Risk Avoidance ! Risk Retention e, None of the above Solution: a ::0. (rofessional Indemnit# Insurance polic# protects a financial planner who has been negligent in giving investment adviceD e, Fnl# if the financial planner is liable under statute
e, Fnl# if a contract e%ists between the financial planner and the investor e, Fnl# if the investor relies on the advice e, Fnl# if the financial planner has not included a disclaimer clause in the contract with the investor e, Fnl# if the financial planner is a Kualified 6"ertified 'inancial (lanner8 e, None of the above Solution: c ::4. W"onsiderationW under the law is a written promise to ;;;;;;;; +i, *o certain things +ii, Abstain from doing certain things +iii, 'orbear some acts +iv, Accept an offer f, +i,/ +ii,/ and +iii, onl# f, +i,/ +ii,/ and +iv, onl# f, +i,/ +iii,/ and +iv onl# f, +ii,/ +iii,/ and +iv, onl# f, None of the above Solution: a :::. &r. 'rank has an 6Indemnit# (olic#8 in respect of his owned house. -he house was valued when he first took out the polic# three #ears ago at Rs.=/=== and insured for that amount. -he polic# has been renewed each #ear since/ without an# alteration or modifications. In the current #ear/ the said house was completel# destro#ed b# fire and the cost of rebuilding it was Rs.11=/=== +&arket alue, plus he paid Rs. 0:/=== to his neighbour whose house was accidentall# burnt to some e%tent due to the fire. As a 'inancial (lanner compute his claim amount which will be paid b# the Insurance "ompan#. e, Rs.:/1 e, Rs.=/=== e, Rs. >0/1 e, Rs.1/4:/=== e, None of the above Solution: a ==== Q ====H 11==== O :1. ::<. &rs. (arab e%plains that she needs a life insurance polic# that will cover her famil# against financial risk over the ne%t five #ears/ while she still has dependent children and a large home mortgage. It is unlikel# her income will increase over the covered tenure. As a 'inancial (lanner advise her about her Insurance (olic#. e, "hildren Benefit (olic# for : #ears e, -erm insurance with a level premium for : #ears e, )ingle premium &one# Back (olic# maturing after : # ears e, &ortgage Redemption Insurance for : #ears e, 5hole of life assurance to be made paid up after five #ears e, 2LI( to be redeemed after : #ears Solution: $ e, None of the above ::?. &r. )ana# aged :>/ presentl# in his retirement phase/ has maintained a high level of life insurance/ the reason being +i, (a# estate dut# +ii, (rovide succession or dependent income +iii, Repa# outstanding debt +iv, Build cash value g, Fnl# +i, and +ii, g, Fnl# +iii, g, Fnl# +i,/ +ii, and +iii, g, All of the above g, None of the above Solution: $ ::. -erminal Bonus is to be paid ;;;;;;;;;;;;;;;; e, "ompulsor# b# the Insurance "ompan# as per the Insurance Act/ 1>0 e, Is paid as a of sum assured ever# #ear e, -he Insurance "ompan# usuall# pa#s it voluntar# for being disciplined in regular premium pa#ment e, None of the above Solution: c ::>. )helar ! )uvarna are married couple who are 44 ! 4= #ears respectivel#. -he# want a regular series of pa#ments in their )unset Eears covering both of their lives. )helar wish is that )uvarna should ge t the regular pa#ment even if he becomes a departed soul / the same is the wish of )uvarna/ that )helar should get the regular pa#ment even if she becomes a departed soul. As a 'inancial (lanner address their concerns b# giving them an appropriate advise/ i.e. the couple should select e, Life time Annuit# e, Immediate Annuit# e, *eferred Annuit# e, Annuit# "ertain e, Annuit# "ertain with Life -ime Annuit# e, oint3and3)urvivor Annuit# Solution: f e, None of the above
:<=. Rupali purchased a 9ealth Insurance. -he polic# has a calendar3#ear deductible of Rs.:== and =D= co3 insurance. Rupali was hospitalied with a covered illness on anuar# 0rd. -his hospitaliation was her first claim under the said polic# for the calendar #ear. 9er covered medical e%penses were Rs.=/:==. 9ow much of this amount will the insurer pa#/ and how much will Rupali be reuired to pa# to the 9ospital g, -he insurer will pa# Rs.1.: d, Rs. 14:.: d, Rs. 14<=.: d, Rs.1>.?: d, None of the above Solution: a Inflation adusted return O .< .But the cost of living increasing b# and hence effective increase would be =.< . 'ind pv given pmt O 1== J rate O =.< nper O = #ears. (v O 1><0. Now find pv given nperO0: rate O fv O 1><0 pv O 14: :<. &r. Ramesh aged = / wants a regular series of pa#ments of Rs. 1/== per annum in accrued form from his age :: without an# interruption where he want its certain for the first 1= #ears and thereafter if he survives he wants the same till he becomes a departed soul. -o achieve the aforesaid retirement goal he is read# to invest in a )ingle pa#ment a ma%imum of Rs.:== now in accrued form/ &r. Ramesh left for heavenl# abode on his ?: th birthda#. If the annual rate of earnings is taken as < per annum compounded annuall# throughout the working life ! sunset # ears. As a 'inancial (lanner find out the IRR+Ignore impact of -a%es, e, 4. e, . e, 0. e, . e, None of the above Solution:$ find fv given rate O < J nper O 0: J pv O :== J fvO 1>1: Now find rate given pvO1>1:J nper O =J pmt O 1== IRRO. :<0. &r. )hreekant aged 0= #ears took a (ure Risk "over +-erm Insurance, bearing a sum assured of Rs.1= Lakhs for a term of : #ears costing an annual premium of Rs. 0/:== per annum. After pa#ing the said premium for a period of = #ears well on time/ he wants to surrender the polic#. +NoteD3 It7s the Insurance "ompan# official standard to pa# )urrender alue \ ?: of Accumulated (remium if the polic# has been serviced for 1> #ears and more, As a 'inancial (lanner find out the )urrender alue of the said polic# if an# e, Rs. Nil e, Rs. ::== e, Rs. 4>/?: e, Rs. ?=/=== Solution: a e, None of the above :<4. 6"o3Insurance8 means ;;;;;;;;; +i, Loss is shared in proportion of Insurance +ii, -he goal is to provide euit# in premium pa#ment +iii, -he Insured "o. will again insure it with some other Insurer. e, Both +i, ! +ii, e, Fnl# i e, Fnl# ii e, All of the above e, None of the above Solution: a :<:. &aggi ! )avio are co3applicants of a mortgaged house/-he# are on the verge of a divorce/ however the# are spectical about the action that ma# be initiated b# the 9ousing 'inance "ompan# +9'", once the# are divorced. As a 'inancial (lanner address their concerns b# giving them an appropriate advise about the action of the 9ome Loan Lender. e, 9'" will not interfere as long as the $&Is are being paid on time e, 9'" will repossess the house after divorce e, 9'" will insist on the house being transferred to onl# one of them e, 9'" will appoint a "ounselor for reconciliation between the couple. e, 9'" will increase the interest rate in order to compensate for the increased risk e, 9'" will appl# the 6'orfeiture "lause8 immediatel# on divorce e, None of the above Solution: a
:<<. $dward a Roman "atholic got married on :th *ecember ==: in the &arriage "ourt under )pecial &arriages Act. Fn th *ecember ==: does his wife Anita a 9indu have an insurable interest in the life of $dward +Note D3 Anita after &arriage won7t get converted to "hristianit#, g, No/ Insurable Interest is acuired onl# after a #ear of marriage g, Ees/ Anita has an automatic insurable interest in the life of $dward soon on marriage and the likewise for $dward g, No/ onl# $dward has an insurable interest on the life of the Anita and not the other wa# round. g, No/ Insurable Interest is onl# among the same caste Solution: a g, None of the above :1 e, Rs.1/>? e, Rs.1:/444 e, Rs.14/:?= e, None of the above Solution: c find pmt given pv O 1:====J rate < J nper O 1: :<. -he proceeds of Rs.:=/=== from a life insurance polic# is to be disbursed under a settlement option using an 6annuit# accrued8 with term certain of 1: #ears. Assuming that a per annum interest compounded monthl# is appropriate/ As a 'inancial (lanner find out the level annual pa#ments arising under this arrangement e, Rs.0?0 e, Rs.0> e, Rs.?=40 e, Rs.>=? e, None of the above Solution: $ find pmt given pv O :==== rate O H1 and nper 1: Q 1 :<>. Rupesh aged 00 and )unita aged > +&arried "ouple, approach #ou a 'inancial (lanner with the following dataD3 'unds for Investment are Limited ! Needs are in ample as followsD3 :, -o start an investment plan for funding the $ducation of their child Aksha# age 0 :, -o set up a -estamentar# -rust for their childJ :, -o set up a contingenc# fund amounting to 0 months of living e%penses :, -o start saving for retirementJ :, -o purchase life and health insurance policies. As a 'inancial (lanner address their concerns b# giving them an appropriate advice b# seuencing there needs in the order of priorit#. e, 0/:/1/4/ e, :/1//4/0 e, :/0/1/4/ e, 0/://1/4 e, None of the above Solution: a :?=. &r. Andrew recentl# purchased a B9V 'lat worth Rs. 0= Lakhs and wants to Insure it/ As a 'inancial #ou advise him #es/ the flat can be insured b# giving the following reason ;; e, Insurable interest has been created b# "ommon Law e, Insurable interest has been created b# "ontract e, Insurable interest has been created b# )tatute e, Insurable interest has been created b# Fwnership e, None of the Above Solution: d e, All of the Above :?1. In the event of a claim/ an Insurance contract governed b# Indemnification clause pa#s to the insured a claim amount eual to ;;;;;;;; f, the sum insured f, the e%tent of loss admitted subect to a ma%imum eual to the sum insured f, the e%tent of loss admitted without an# limits f, a previousl# agreed amount f, Negotiable amount between the Insured ! Insurer f, None of the above Solution: $ :?. &r. )unil has an $ndowment Life Insurance (olic# where he has dul# paid his premiums for the past 1: #ears out of a term of = #ears/ he is in urgent needs of funds onl# for a short period in order to marr# off his son (aras/ As a 'inancial (lanner advise him the ma%imum loan he can avail on the said polic# f, : of )urrender alue f, >= of (aid up alue f, >= of )urrender alue f, >= of all premiums paid f, ?: of all premiums paid f, None of the above Solution: c :?0. -he characteristics of Insurable Risks are D3 <. Large Number of 9omogenous 2nits <. *efinite and &easurable
<. 'ortuitous or accidental <. Not "atastrophic d, 1 ! d, / 0 ! 4 d, 1/ ! 0 d, 1//0 ! 4 Solution: d d, None of the above :?4. &r. (raful has given his data as follows/ "urrent Age 0: #ears/ 5ill retire at :: Retirement 'und D3 Reuired H0 of his last drawn )alar# per annum in due form Life e%pectanc# T = #ears on retirement 9is current annual salar# is Rs. <=/=== and this escalates b# < per annum throughout his working career/ 9is $mplo#er gives the annual escalations on his birthda#s. Assume the rate of earning of per annum compounded annuall# throughout the overall period/ As a 'inancial (lanner answer Kuestion No. <1/ < ! <0 :?:. "alculate his last drawn annual salar# on the eve of retirement e, Rs.1/4== e, Rs.11/:0< e, Rs.1>/4 e, Rs.10/=== e, None of the above Solution: $ find fv given pv O <==== rate O < nper 1> fvO 11:0< :?<. "alculate the present value of the retirement income as on the "urrent age of 0: #rs e, Rs./:/== e, Rs./:4/>00 e, Rs./?:/0 e, Rs.0/=:/?= e, None of the above Solution: c 11:0< Q H 0 O 11=4 is pmt rate nper = pvO 10>= Again find pv given fvO 10>= rate nper = pvO ?:0 :??. "alculate the level annual amount that he must deposit during h is working life/ assuming that the first is due now/ to eno# the stated retirement income during his sunset #ears. e, Rs./=4 e, Rs.:/><: e, Rs.4/=4 e, Rs./>= e, None of the above Solution: $ find pmt given fvO 10>= rate O nper O = and t#pe 1 :?. (articipating ordinar# life policies with a sum assured of Rs. 1=/=== are issued b# two Life Insurance "ompanies/ Lic and I3(ru/ to )uresh aged 0: with the following cost dataD
?ata
5IC "Rs.#
I
Annual premiums 0= >= Accumulated value of -otal bonuses for = #ears at < pa 1<10 1?== "ash value at end of = #ears 0<= 4=== Based on the above information and assuming a < per annum interest rate/ the annual surrender cost index for each Rs.1/=== sum assured at the end of = #ears ;;;; e, 'or Lic is greater than I3(ru e, 'or Lic is eual to I3(ru e, 'or I3(ru is greater than Lic e, Is not determinable/ since data is insufficient e, None of the above Solution: c :?>. &s. Vavita has an $ndowment Life Insurance (olic# where s he has dul# paid the premiums/ she is in urgent needs of funds which she doesn7t want to repa# back in order to marr# off her onl# daughter )anivani/ As a 'inancial (lanner advise her the ma%imum amount she can avail on the said polic# on its due surrender *ate of commencement T :th Fctober/ 1>>= *ate of last premium T :th April/ === *ate of birth T 1st &a#/ 1><: &ode of premium pa#ment T 9alf Eearl# (remium T Rs. = per annum for Rs. 1=== sum assured (lan T $ndowment with profit T -erm : #ears )um assured T Rs.1/ =/=== Bonus accrued from 01st &arch 1>>1 to 01st &arch === is Rs.?= per Rs. 1/=== sum assured Accidental benefit T Rs. per annum for Rs. 1=== sum assured ).. factor T ?: of Accumulated alue e, 4=== e, 1/1= e, =/1=
e, =/1== e, None of the above Solution: e paid up value O 1====Q1H:= O :=4== bonus ?=Q1=Q1= O 4=== Accumulated value O 1044== Q ?:H1== O 1==== is ). :=. Lic (remium -able depicts the following data for a cer tain polic# in which #our client &r. )ana# is interested -abular premiumD Rs.00.1= per Rs. 1=== sum assured. Rs. less for #earl# mode. Re.1 less for half #earl# mode. Rs.0 less for sum assured of Rs.1/ ==/=== and above. *ouble accident is allowed up to a ma%imum of Rs.1= lakhs sum assured on pa#ment of Re.1 per 1=== sum assured. As a 'inancial (lanner calculate the #earl# premium for Rs.1: lakhs sum assured with occupation e%tra of Rs.4 per thousand sums assured e, Rs. 4>/1:= e, Rs. 4/1:= e, Rs. 4/<:= e, Rs. :/0:= e, None of the above Solution: $ 00.1= T T 0 P 4 O 0.1 Q 1:== O 41:= :1. &r. agadish has given his pers onal details as followsD3 "urrent Age 0= #rs / (lans to Retire at age <:. ob (rofile D3 )enior &anager in -elco Ltd with Annual )alar# of Rs.1=/==/===
Annual Cash Outflow
(rofessional ta% of Rs.:/=== Income ta% Rs. 1/>:/=== Reasonable self3maintenance e%penditure Rs.1/==/=== p.a. Life insurance premium for self Insurance Rs. =/=== having sum assured Rs. = Lakhs Life insurance premium for )ulekha +wife, Rs. 10=== having sum assured Rs. : Lakhs Life insurance premium for Adit#a +son, Rs. ?=== having sum assured Rs. Lakhs AssumeD3 Rate of interest for capitaliation of future income is at 1=. As a 'inancial (lanner recommend the Insurance "over using 69L ðod8 e, Rs.4< lakhs e, Rs.< lakhs e, Rs.4 lakhs e, Rs.<< lakhs e, None of the above Solution: $1=.== T 0.= M P 1P =.C O <.= lakhs find pv given pmt O <. lakhsJ rate O 1= J nperO0: pvO ? lakhs T = lakhs Mpresent coverCO : lakhs :. &r. )helar invests Rs.:=== in a Bank *eposit toda# \ p.a compounded monthl#. 9e hopes that this nvestment will enable him to fund his college education +estimated to cost Rs.>===, which commences after 4#ears. As a 'inancial (lanner compute the end value of this investment after four #ears +Ignore the impact of Inflation ! the rise in $ducation cost, e, Rs. <= e, Rs. <?= e, Rs. <? e, Rs. <>: e, None of the above Solution: c find fv given pv O :===J rate H1 and nper 4 :0. Vavita invests Rs.:=== per #ear at the beginning of each #ear for : #ears \ : p.a. in a bank deposit. )he then withdraws the accumulated sum over a period of 0 eual annual installments at the end of the said each period. As a 'inancial (lanner compute the value of the deposit at the end of : #ears and the uantum of withdrawal each #ear thereafter e, Rs.?</ Rs. 1=14: e, Rs. >=1=/ Rs. 1=14: e, Rs. >:</ Rs. 11=:4 e, Rs. >=1=/ Rs. 1=<:0 e, None of the above Solution: d 'ind fv given rateO : J nper O : pmtO:=== t#pe O1 fv O >=1= Now find pmt given pvO >=1= J rate O : J nper O 0 J (mt O 1=<:0 :4. &r. and &rs. Noronha/ aged 4= and 0< #ears/ both have a life e%pectanc# of another 4= #ears. -heir *ata )heet depicts the following informationD3 &r. Noronha is the sole breadwinner of the famil# and the famil# has no children "urrent investments has a &arket alue of Rs.=/==/=== Annul $%penses Rs.4 Lakhs +including Rs. 1 Lakh of &r. Noronha personal $%ps, &r. Noronha income post ta% Rs. 0.: lakhs.
