IC02 - LICENTIATE - Practice of Life Insurance 12
IC02 - LICENTIATE - Practice of Life Insurance 12
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Q 1. What does section 41 of the Insurance Act 1938 prohibit?
A) Minimum business requirements
B) Offering rebates to policyholders
C) Monthly report submission
D) Licensing process
E) None of the above
Q 2. How can insurance agents be remunerated?
A) Through salary only
B) Through commission only
C) Through a combination of salary and commission
D) Through bonuses based on customer satisfaction
E) Through stock options in the insurance company
Q 3. What does the premium paid by the insured cover?
A) Administrative expenses of the insurance company
B) Bonuses paid to the policyholder
C) Returns on investments made by the insurance company
D) Claims made by the insured (sum assured) and other expenses
E) Infrastructure costs of the insurance company
Q 4. What is the role of actuaries in the insurance industry?
A) Selling insurance policies to customers
B) Calculating the sum assured for insurance plans
C) Analyzing the occurrence of risk and its impact
D) Managing the investment portfolio of the insurance company
E) Conducting mortality studies for insurance companies
Q 5. What is the total claim amount for Company XYZ in case of the death of 10 policyholders?
A) Rs 10,000
B) Rs 50,000
C) Rs 100,000
D) Rs 500,000
E) Rs 1,000,000
Q 6. What is adverse selection in insurance?
A) Charging high premiums to healthy individuals
B) Encouraging healthy individuals to join the insurance plan
C) Attracting unhealthy individuals with high premium amounts
D) Adjusting premiums based on the mortality tables
E) Calculating risk profiles based on experience
Q 7. Why do insurance companies load net or pure premiums?
A) To generate higher profits for the company
B) To compensate for administrative and infrastructural expenses
C) To discourage policyholders from opting for higher coverage
D) To provide additional benefits to policyholders
E) To reduce the overall premium amount for policyholders
Q 8. What is the impact of the monthly premium payment mode on administrative expenses?
A) Administrative expenses are higher due to monthly tracking and receipts
B) Administrative expenses are lower as the premium is paid in installments
C) Administrative expenses remain the same regardless of the payment mode
D) Administrative expenses increase if the premium payment is delayed
E) Administrative expenses decrease as the premium amount is smaller
Q 9. What is the total premium amount after adding the extra premiums for benefits and administrative expenses?
A) Rs 31
B) Rs 32
C) Rs 33
D) Rs 33.50
E) Rs 34
Q 10. When is the interim bonus declared?
A) At the start of the policy term
B) Annually on the policy anniversary
C) Upon the death of the policyholder
D) Only on the maturity of the policy
E) After valuation as on 31st March every year
Q 11. What does Rahul want the insurance plan to help him with?
A) Maximizing his investment returns
B) Acquiring luxurious assets
C) Paying off existing debts
D) Ensuring his family's financial security
E) Funding extravagant vacations
Q 12. Which plan provides financial security to Rahul's family in case of his premature death?
A) Term plan
B) Endowment plan
C) ULIP
D) Money Back plan
E) Pure Endowment plan
Q 13. What is a characteristic feature of term insurance premiums?
A) They are the highest among all life insurance plans
B) They are adjusted annually based on the policy performance
C) They remain fixed throughout the policy term
D) They decrease over time as the risk decreases
E) They can be paid in monthly installments
Q 14. What is the coverage period of a whole life insurance plan?
A) The specified period is chosen by the insured
B) Term until the insured reaches a certain age, usually 100 years
C) Term until the insured dies
D) Term until the insured's children reach adulthood
E) Term until the insured's retirement age
Q 15. What is the advantage of a convertible plan for increasing income?
A) The ability to convert to a term plan with lower premiums
B) The ability to convert to an endowment plan with higher premiums
C) The option to switch to a plan with guaranteed returns
D) The opportunity to increase the sum assured without underwriting
E) The flexibility to choose the premium amount at any stage