Samplequestionon

RiskAnalysis&InsurancePlanning

PARTI(LIFEINSURANCE)
Section1
Marks120=20
Choosethemostappropriateanswerfromthealternativesgiven:

1. Whatarethetwomaintypesoflifeinsurancepremiums?
a) LevelandStepped
b) UnevenandLevel
c) EvenandStepped
d) VariableandFlat

2. Whatisthetermusedfortheinsured'srighttorenewtheirlifeinsurancepolicyregardless
ofchangestomedicalstatus?
a) Righttorenew
b) Guaranteedrenewable
c) Righttocontinue
d) Guaranteedcontinuance

3. For a young person with low income who has just started his career and expects bright
future,thesuitableplanmaybe
a) TermAssurance
b) MoneyBack
c) EndowmentPolicy
d) Convertiblewholelifepolicy

4. A fixed date on which benefits may become payable either absolutely or contingently in a
lifeinsurancepolicy,iscalled
a) death
b) disability
c) survival
d) allofthese

5. Forthesameageandbenefits,thepremiumunderaLimitedPaymentpolicy
a) willbelessthaninanonlimitedplanpolicy
b) willbemorethaninanonlimitedplanpolicy
c) maybemore,lessorsameasinanonlimitedplanpolicy
d) willbethesameasinanonlimitedplanpolicy

6. Thepremiumchargedfromthepolicyholderiscalledthe
a) Riskpremium
b) Purepremium
c) Officepremium
d) Anyoneoftheabove

7. Hazardsisthefactorthat.therisk
a) enhances
b) doubles
c) halves
d) reduces
Page 2 of 10 P.T.O

8. Insuranceispossible
a) Whenanadversehappeningislikely
b) Whenanadversehappeningiscertain
c) Whenanadversehappeningisunlikely
d) inalltheabovethreesituations

9. Whichoneofthefollowingstatementsiscorrect
a) Section45oftheInsuranceAct1938makestheprincipleofgoodfaithpartlyredundant
b) Theincontestableclauseappliesfromthecommencementoflifeinsurancecontract.
c) Boththestatementsarecorrect
d) Boththestatementsarewrong

10. Riskonchild'slifeunderChildrenDeferredAssuranceplanstartson.
a) Deferreddate
b) Dateofcommencement
c) Dateofvesting
d) Dateofmajority

11. Ahumanbeingis
a) aneconomicasset
b) aperishableasset
c) Bothoftheabovearetrue
d) Noneoftheaboveistrue.

12. Theprobabilitydistributionofcaraccidentsisasunder
NumberofAccidents CumulativeRelativeFrequency.
0 0.40
1 0.65
2 0.75
3 0.90
4ormore 1.00
Findtheprobabilityofonecarhavingmetwithatleast2accidents.
a) 0.25
b) 0.75
c) 0.10
d) 0.35

13. Ifl30is9,83,989;andl31is982838,thencalculatetheriskpremiumforagroupof5000
personsforaSAofRs10,00,000each.
a) 58,55,492
b) 5,85,549
c) 58,48,643
d) 5,84,864

14. Calculateriskpremiumattheageof29yearsforaSAofRs.10,00,000fromthedatagiven
below:
Agex lx

28 986292
29 985142
30 983989
a) Rs1169.02
b) Rs1167.34
c) Rs1170.39
d) Rs1171.76
Page 3 of 10 P.T.O

15. If expenses are 20% of the gross (office) premium and the pure premium is Rs5000, then
whatwouldbetheofficepremium?
a) 6000
b) 4167
c) 6250
d) Noneoftheabove
16. Apersonwhotakesthedecisiontoaccepttheproposalinaninsurancecompanyiscalled
a) Accountant
b) Actuary
c) Underwriter
d) Director

17. Avoidablecontractisacontractenforceableattheoptionof
a) Boththepartiestothecontract
b) Onlyonepartytothecontract
c) Boththeabovearecorrect
d) Noneoftheaboveiscorrect

18. Whichofthefollowingisnotrelevantelementforavalidcontract
a) Proposalandacceptance
b) Consideration
c) Indemnity
d) Consensusadidem

19. Acontractwherebyoneofthepartiesisboundtocomplywithhispromiseandthereisno
suchbindingontheotherpartytodosoinfutureiscalledacontractofthenatureof
a) Aleatory
b) Unilateral
c) Conditional
d) Contingent

20. Ms Neelam runs her own business at a small level where she finds that there exists a risk
thatoccursfrequentlybutitsseverityisverylow.Whichdeviceofriskmanagementshould
sheusetohandlesucharisk?
a) Avoidance
b) Coinsurance
c) Retention
d) UnderInsurance

Section2
Marks210=20
Choosethemostappropriateanswerfromthealternativesandgivereasonsthereof.

21. Apersonaged60hasawholelifeplanwithahighleveloflifeinsuranceforthereasonhe
wantsto
(i)Payestateduty
(ii)Providesuccessionordependentincome
(iii)Repayoutstandingdebt
(iv)BuildCashValue

a) Only(i)and(ii)
b) Only(i)and(iii)
c) Only(i),(ii)and(iii)
d) Alloftheabove

Page 4 of 10 P.T.O

22. Which of the following does not constitute a valid charge on the premiums paid for an
investmentlinkedlifeassurancepolicy?
a) bidofferspread
b) frontendcharges
c) recurrentfundrelatedcharges
d) surrenderpenalty

23. The following are statements concerning contracts of insurance. Identify the statement/s
thatis/arecorrect.
I. Whenever the wording in an endorsement or rider is in conflict with the terms of the
policytowhichitisattached,theendorsementorridertakesprecedence.
II. One reason for exclusions in insurance policies is that the risks are covered by other
insurance.
a) Ionly
b) IIonly
c) IandII
d) NeitherInorII

24. The following are statements made concerning contracts of insurance. Identify the
statement/sthatis/arecorrect.
I. For life insurance contracts, misstatement of the insureds age constitutes a voidable
misrepresentation.
II. Aninnocentmisrepresentationbyanapplicantforinsuranceconstitutesfraud.
a) Ionly
b) IIonly
c) IandII
d) NeitherInorII

25. The maxim buy term and invest the balance may not be a feasible proposition for many
investorsforthefollowingreasonsEXCEPTfor:
a) itmaybedifficulttoachievesufficientdiversificationintheinvestedassets
b) it may be difficult to achieve a suitable investment portfolio with the desired risk
rewardrelationship
c) it may be possible to consistently outperform the investment returns earned by an
establishedlifeoffice
d) thattheinsurerofferscapitalguaranteesoncashvalues

26. Identifywhichamongstthefollowingis/arethebasicaim/sofunderwriting:
I. totreatequitablythelivesproposingforinsurancecoverage
II. todesignanappropriateloadingstructureforsubstandardlives
a) Ionly
b) IIonly
c) IandII
d) NeitherInorII

27. Aregularpremiumlifeassurancepolicyistobeissuedtoalifewithadecreasingextrarisk.
Thisextrariskisusuallyhandledby:
a) Chargingalevelpercentageextrapremiumforthepremiumpaymentduration
b) Charging a level percentage extra premium for a shorter period than the premium
paymentduration
c) Age ratingthe life and charging the premium appropriate to a standard life having the
ratedage
d) Chargingadebtorimposingalien

28. Whichofthefollowingistrueregardingtheownershipoflifeinsurancepolicy?
a) Apolicycanonlybeissuedtotheinsured
Page 5 of 10 P.T.O

b) Generally,assigningapolicyrequiresproofthattheinsuredisstillinsurable
c) Onlyapersonwithaninsurableinterestcanbenamedasabeneficiary
d) Theownercanassignthepolicytoanybody.

Page 6 of 10 P.T.O

29. Aninsuredhasapremium dueonhisgeneralinsurancepolicyhaving no graceperiod.He
contactstheagentforextensionofthepremiumpaymentdate.Theagentassureshimthat
theinsurerusuallygrantsagraceperiodofoneweekforsuch premiumpayment.Oneday
aftertheduedateofpremium,theinsuredscarmeetswithanaccident.Theinsurercannot
deny liability for the loss, on the grounds that the premium was not paid within time
becauseofthePrincipleof:
a) Waiver
b) Estoppel
c) UtmostGoodFaith
d) InsurableInterest

30. CalculatePaidUpValueonthebasisofthedataasunder:
SumAssured Rs.50,000
Plan&Term ParticipatingEndowmentfor12years
Dateofcommencement 1
st
November,1998
DueDateoflastpremiumpaid 1
st
November,2000
Modeofpremiumpayment Halfyearly
Consolidatedbonusrate @Rs100perthousandSA
a) Rs12,500
b) Rs15,417
c) Rs10417
d) Noneoftheabove

Section3
Marks32=6
Attemptanytwo.Eachquestioncarries3marks.Showcalculations.

31. Mr.Ajayaged30yrsplanstoRetireatage60.HiscurrentAnnualSalaryisRs.3,00,000.He
paysprofessionaltaxofRs.1,000andIncometaxRs25,000.His selfmaintenanceexpenses
are estimated to be Rs60,000 p.a. He pays Life insurance premium for self Insurance
Rs.7,000foraselfpolicyofRs2Lakhs,alsopremiumforhiswifespolicyRs2000.Iftherate
ofinterestis6%,calculatethetotallifeinsurancerequiredasperHLVmethod.
a) Rs.52lakhs
b) Rs.68lakhs
c) Rs.48lakhs
d) Rs.66lakhs

32. Calculate cost per thousand of the risk amount of Mr. Ashoks Life Insurance policy which
heboughtforSAofRs20lakh.HepaysapremiumofRs15,000pa.TheSurrendervalueof
thepolicyisRs6,00,000atpresent.Ifhecontinuesit,thesurrendervaluewouldincreaseto
Rs25,000.Assumeinterestrateof7.5%pa.
a) Rs2.63
b) Rs26.27
c) Rs20.31
d) Noneoftheabove.

33. CalculateHalfyearlyPremiumfromthefollowingdata:
SA Rs1,00,000
TabularPremium Rs30.40perthousand
RebateforHalfyearlymode@Re1.00perthousand
LargeSumAssuredrebateRs1.50iftheSAisequaltoormorethanRs50,000
DoubleAccidentBenefitRiderpremium@Re1.00perthousand
Healthextra@Rs1.50perthousand
a) Rs3040
b) Rs1520
c) Rs1500
d) Noneoftheabove.
Page 7 of 10 P.T.O

34. If the insured dies on 2762007 who had taken a participating endowment policy for
Rs30,000 on 13121991. The halfyearly premiums @Rs900 were paid due up to 136
2006.Thepolicytermis30years.Thebonusalreadyallocatedtothepolicyis@Rs.800per
thousand forall the years upto March 2006. The interim bonus @Rs75 per thousand was
declaredonthevaluationason3132006.Calculatetheamountofdeathclaimpayableto
thenominee.
a) Rs54000
b) Rs56250
c) Rs54450
d) Noneoftheabove

Section4(Subjective)

35. Writebriefnoteonany3ofthefollowing: (3markseach)

a) Utmostgoodfaith
b) Pureendowmentplan
c) Deferreddate
d) Contract

Attemptanytwoquestions.Allquestionscarry5markseach.

36. Differentiatebetweenperilandhazardswiththehelpofexamples?
37. Whatisthedifferencebetweentermandendowmentplan?
38. PrincipleofIndemnitydoesntapplytolifeinsurancepolicies.Explain.

Page 8 of 10 P.T.O

PARTII(GENERALINSURANCE)
Section5
Marks115=15
Choosethemostappropriateanswerfromthealternativesgiven:

39. Whichofthefollowingisnotpurerisk?
a) Prematuredeath
b) Fireinagown
c) Investmentinequity
d) Machinerybreakdown

40. A loss arising from indifferent attitude towards safety because of existence of
insuranceis___________
a) Moralehazard
b) Occupationalhazard
c) Physicalhazard
d) Unintentionalhazard

41. Licenceforworkingasinsuranceagentaregivento__________
a) Individual
b) Companies
c) C0operatviesocieties
d) Alltheabove.

42. Mr.HanishinsuredhisshopworthRs.40,00,000forRs.20,00,000.Inadevastating
fire the shop was completely gutted. Calculate the amount of claim payable to Mr.
Harish
a) Rs.10,00,000
b) Rs.20,00,000
c) Rs.40,00,000
d) Noneoftheabove

43. Acompositebrokeristhatbrokerwhocarriesonbusinessas_________
a) Broker&agent
b) General&lifeinsurancebroker
c) Insurance&reinsurancebroker
d) Anyoftheabove

44. Apackagemotorinsurancepolicywillcover
a) Onlydamagetothevehicle
b) Onlyliabilitytothethirdparties
c) Injurytodriver/owner
d) Alloftheabove

45. Insuranceisprimarilyacaseof
a) Riskretention
b) Riskreduction
c) Risktransfer
d) Riskprevention

46. Whichofthefollowingisnotconsideredasamaterialfact
a) Previousinsurerhasrejectedtheproposal
b) Insuredhimselfhascancelledthepolicy
c) Previousinsuredhascancelledthepolicy
d) Noneoftheabove
Page 9 of 10 P.T.O

47. Undermotorvehicleactnofaultliabilityincaseofpermanentdisabilityis
a) Rs.1lakh
b) Rs.50,000
c) Rs.25,000
d) Rs.12,500

48. A policy with sum insured Rs. 10 lakh is with franchise Rs. 10,000. The loss is Rs.
15,000.Whatistheamountofclaimpayable?
a) Rs.10,000
b) Rs.5,000
c) Rs.15,000
d) NIL

49. Overseasmediclaimpolicycanbeissuedforamaximumperiodof
a) 365days
b) 180days
c) 30days
d) 7days

50. Inagroupcorporatefrequenttravellernosinglevisitshallbe morethen___________

days.
a) 180days
b) 60days
c) 30days
d) 7days

51. In fidelity guarantee insurance (floator policy) the insured wants to cover 10
employeesforasuminsuredofRs.10Lakh.PremiumrateisRs.1%&forpercapita
Rs.10.Calculatethepremium.
a) 5050
b) 10000
c) 10100
d) 11000

52. Whichofthestatementiscorrect
A. Undercommonlawinsurerhasarightofsubrogationonlyaftersatisfyingtheclaim
B. Underpolicyinsurerhasrightofsubrogationevenbeforepayingtheclaim

a) StatementAiscorrect
b) StatementBiscorrect
c) Botharecorrect
d) Neitheriscorrect

53. The war risk can be covered under personal accident insurance, by charging extra
premium@____%duringabnormalperiod
a) 10%
b) 15%
c) 50%
d) 150%

Page 10 of 10 P.T.O

Section6
Marks25=10
Choosethemostappropriateanswerfromthealternativesandgivereasonsthereof.

54. Under mediclaim policy, as in patient stay of 24 hours is not applicable for
treatmentof
a) Lithotripsy
b) Asthama
c) Diabetes
d) Hernia

55. Domiciliaryhospitalisationexpensesarenotpayablefor
a) Renalfailure
b) Tonsillitis
c) CardiacArrest
d) Correctionoffractureinspinalcord

56. Whichofthefollowingstatementistrue
A. Weeklybenefitsunderpersonalaccidentarepayableonlywhencompensationamount
isarrivedat&agreedupon
B. Weeklybenefits&medicalexpensesaresubjecttocontributionclause.

a) StatementAiscorrect
b) StatementBiscorrect
c) Botharecorrect
d) Neitheriscorrect

57. Underfloatorcumdeclarationpolicytheminimumpremiumtoberetainedis
a) 10%
b) 30%
c) 40%
d) 50%

58. The declaration policy for burglary insurance issued for a provisional sum insured
ofRs.1crorewithrateofpremiumRs.1.ActualdeclarationmadeisRs.40lakh.
Calculateprovisionalsuminsured&refundableamount
a) Rs.1000Rs.500
b) Rs.10,000Rs.5000
c) Rs.10,000Rs.6,000
d) Rs.11,000Rs.4,000

Section7(Subjective)
Marks52=10
Attemptanytwoquestions.5markseach

59. Write what is covered under burglary insurance policy for commercial
establishment(minimumfourloses)withconditionsapplicable?
60. Explaincoverageunderfidelityguaranteeinsurancepolicy&typeofpolicies?
61. Explain in details full coverage under maternity benefits in a mediclaim policy &
whatareexclusion.

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