IC02 - LICENTIATE - Practice of Life Insurance 05
IC02 - LICENTIATE - Practice of Life Insurance 05
Q 1. Why do insurance companies charge level premiums?
A) To encourage policyholders to pay premiums on time
B) To adjust premiums based on the risk profile of the insured
C) To make premium payments challenging for the insured
D) To administer annual changes in premium
E) To spread the risk premium over the entire policy term
Q 2. What is the term used for the expenses that include administrative and infrastructural costs?
A) Net premium
B) Pure premium
C) Loading premium
D) Contingency charges
E) Administrative expenses
Q 3. What is a disadvantage of the monthly premium payment mode?
A) Higher administrative expenses for the company
B) Lower interest earnings on the premium amount
C) Increased risk of default in payment
D) Limited flexibility for policyholders
E) Higher overall premium amount for policyholders
Q 4. What is the premium for a policyholder with a sum assured of Rs 60,000, considering the given rebates?
A) Rs 31
B) Rs 32.50
C) Rs 33
D) Rs 33.50
E) Rs 34
Q 5. How is the compound reversionary bonus calculated?
A) It is a fixed amount added to the sum assured.
B) It is a percentage of the basic sum assured added to the sum assured.
C) It is calculated based on compound interest.
D) It is determined by the insurance company.
E) It depends on the policy term and age of the policyholder.
Q 6. What is Rahul's perception of insurance policies?
A) They provide high returns on investment
B) They are unnecessary expenses
C) They offer comprehensive coverage for financial needs
D) They are only beneficial for the elderly
E) They provide immediate cash benefits
Q 7. What is the main difference between a term plan and an endowment plan?
A) Term plan provides coverage only in case of survival, while endowment plan provides coverage in case of both survival and death.
B) Term plan provides coverage only in case of death, while endowment plan provides coverage in case of both survival and death.
C) Term plan provides higher sum assured than an endowment plan.
D) Endowment plan provides higher premium payments than a term plan.
E) Endowment plan provides coverage for medical expenses, while term plan does not.
Q 8. What is the main benefit provided by a term insurance plan?
A) Lump sum payment to the insured person on maturity
B) Regular income payments to the insured person
C) Death cover with a specified sum assured to the beneficiary
D) Accumulation of savings over the policy term
E) Refund of premiums paid at the end of the policy term
Q 9. What is the main benefit of an Endowment Assurance Plan?
A) The plan offers only death cover with no maturity benefit
B) The plan offers only maturity benefit with no death cover
C) The plan pays the death cover amount if the insured dies during the term or the maturity benefit if the insured survives the entire tenure
D) The plan provides higher returns on the premium investment
E) The plan offers flexible premium payment options
Q 10. What are the advantages of convertible insurance plans?
A) Lower premium payments in the beginning and no underwriting at the time of conversion
B) Higher sum assured and extended policy term
C) Guaranteed returns and increased coverage over time
D) Flexibility in premium payments and additional riders
E) Partial withdrawals and bonus additions during the policy term
Q 11. What is the deferment period in a child insurance plan?
A) The period during which the child is not covered by insurance
B) The period during which the premium is paid by the parent
C) The period after the child turns 18 years old
D) The period during which the policy ownership is transferred to the child
E) The period during which the insurance cover is applicable to the child
Q 12. What is the maximum sum assured for the Endowment Insurance Plan offered by Postal Life Insurance (PLI)?
A) Rs. 5 lakhs
B) Rs. 10 lakhs
C) Rs. 20 lakhs
D) Rs. 50 lakhs
E) No maximum limit
Q 13. Which section of the Income Tax Act allows tax deduction on the premium paid for riders?
A) Section 80A
B) Section 80B
C) Section 80C
D) Section 80D
E) Section 80E
Q 14. What was the aim of life insurance companies in providing special need-based plans?
A) Maximize profits
B) Provide insurance cover to a maximum number of individuals
C) Innovate and come up with new products
D) Cater to the needs of different sections of society
E) All of the above
Q 15. Can a divorced man purchase the MWP policy?
A) Yes, only for himself
B) Yes, for his children only
C) No, only married men can purchase the policy
D) Yes, for both himself and his children
E) No, divorced men are not eligible for the MWP policy