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 who is authorized to sell both Life & General insurance products. 2. In property insurance (not in marine insurance) insurable interest must exist at the time of a. Loss b. Contract c. Both a & b d. None of the above Solution: c In property insurance one needs to have insurable interest both at the time of contract and loss. Exception is Marine insurance were in one needs to have insurable interest only at the time of Loss. Further in Life insurance one needs to have insurable interest only at the time of contract. 3. Gambling is an example of a. Pure risk. b. Speculative risk c. Personal risk d. Property risk Solution: b 4. Which of the following is the third step in identifying risks a. Identify risks b. Develop Alternative for handling risks c. Choose and implement an appropriate Strategy. d. Analyze and evaluate risks (Risk Measurements) Solution: b 5. Pure risk can be defined as a situation where a. there is a chance of loss or no loss b. There is a chance of a loss or a profit c. There is a no chance of loss d. All of the above. Solution: a 6. An organization cannot finance its own risk cost (risk financing ) a. Payment out of current expenses b. By debt or equity financing c. By pre or post credit. d. By approaching a reinsurance company. Solution: d 7. _______________ is the right of one person, having indemnified another under a legal obligation to do so, to stand in the place of that other and avail himself of all the right and remedies of that other, whether already enforced or not. a. Substitution. b. Indemnity c. Adhesion d. Subrogation. Solution: d 8. Touching another person unlawfully is an example of a. Intentional Tort. b. Absolute liability. c. Negligence. d. Conclusive tort. Solution: a Tort is civil wrong doing, which could be divided in to 3 types (1) Intentional, (2) Absolute and Strict liability and (3) Negligence. 9. Pricing of a product in an Life insurance company is a function of a. Marketing b. Underwriting c. Actuarial d. Finance

Solution: c 10. Collection and payments of monies in an Life insurance company is a function of a. Marketing b. Actuarial c. Finance d. Legal and secretarial Solution: c 11. Auditing in an Life insurance company is a function of a. Underwriting b. Actuarial c. Finance d. Legal and secretarial Solution: c 12. Compliance to regulator and other public supervisory bodies in an Life insurance company is a function of a. Underwriting b. Actuarial c. Finance d. Legal and secretarial Solution: d 13. The amount of insurance accepted by the re-insurer is known as a. Premium b. Net premium c. Cession. d. Retention. Solution: c 14. Which policy meets the need of “security for children’s education” the best a. Term assurance plan b. Children deferred assurance plan c. Deferred annuity plan d. Health insurance. Solution: b 15. Re-insurance Advisory committee consist of ____________ persons a. Five b. Four c. Six d. Ten Solution: a 16. Insurer has a period of within _________ days of all reports received to decide about the claim. a. 30 days b. 45 days c. 60 days d. 90 days Solution: a 17. For any applicant to be registered as an IRDA licensed agent, the minimum qualification required in an urban area is a. X th standard b. XII th standard c. Graduation. d. Post-Graduation. Solution: b 8. Employees liability for his employee’s injury even when there is no negligence on the part of the employer is an example of a. Intentional Tort. b. Absolute liability. c. Negligence. d. Conclusive tort. Solution: b In case of strict liability certain defenses are allowed but not so in Absolute liability. 19. Investigation regarding mortality factor in an Life insurance company is a function of a. Marketing b. Underwriting c. Actuarial d. Legal and secretarial

Solution: c 20. The limit of indemnity for a Direct Broker is A] Three times remuneration received at the end of every financial year subject to a minimum limit of rupees fifty lakhs. B] Three times remuneration received at the end of every financial year subject to a minimum limit of rupees Two crores and fifty lakhs. C]Three times remuneration received at the end of every financial year subject to a minimum limit of rupees Five crores. D]Three times remuneration received at the end of every financial year subject to a minimum limit of rupees Ten crores. Solution: a Professional Indemnity requirement as per IRDA norms : Direct broker - 3 times of remuneration in PY subject to Min- 50 lakhs Reinsurance - 3 times of remuneration in PY subject to Min- 2.5 cr. Composite -3 times of remuneration subject to with min 5 cr. 20. An ultimate mortality table excludes data for . first 5 to 15 years . first 3 to 5 years . first 3 to 6 years . first 7 to 15 years Solution: a 20. The cheapest policy in the market is . A term policy . A unit linked policy . An endowment policy . A Whole life policy Solution: a 20. Participating polices are policies entitled to . risk sharing . premium . bonus . fixed payments Solution: c 20. An increasing term insurance means . The term insurance sum assured increases with inflation . Both the premium and sum assured increases . The term insurance increases at intervals . Only the premium keeps on increasing. Solution:c 20. Overseas mediclaim policy does not cover one of the following : . Loss of passort . Loss of baggage . Medical accidents . Personal accident. Solution: b It is loss of checked in baggage which is covered. 20. ________________ insurance is a Tariff Product . life . motor . health . marine Solution: b Now only Third party is tariffed and not motor. 20. The process of due diligence conducted by an insurance agent is known as . Underwriting . Investigation . Inspection . Site Check. Solution: a 20. This type of insurance is not easily available in India . Officers liability . Disability Income Protection. . Health

the contingency insured against is usually the . Health insurance. Solution: d 20. . Solution: d 20. Solution: a 20. Vicarious Liability . IRDA . Which policy meets the need of “Security after retirement ” the best . Absolute Liability. Life Solution: b 20. Contractual Liability. Higher than expected claims ratio in the pool. Insurance companies often offer the services of specialists and experts to industry in different fields. Total income of an individual . Insurance Advisors and Agents are governed by . Depends on the underwriting standards of the insurance company. Total worth of an individual. . Lower premium being received by the insurer . Three times remuneration received at the end of every financial year subject to a minimum limit of rupees Two crores and fifty lakhs. Rate of death in the population. Financial loss . Solution: d 20. . Probability that the insured will die before reaching a certain age. Total wealth of an individual. This is for rendering advice on . AMFI . Three times remuneration received at the end of every financial year subject to a minimum limit of rupees Five crores.. Term assurance plan . Solution: d 20. an individual with health problems . Both IRDA & SEBI. Three times remuneration received at the end of every financial year subject to a minimum limit of rupees Ten crores. Children deferred assurance plan . Three times remuneration received at the end of every financial year subject to a minimum limit of rupees fifty lakhs. Adverse loss ratio refers to . . In insurance. Loss of profit . . a below average intelligent Indian life. Lower than expected claim ratio in the pool . Mortality rate is . Earning Capacity. Rate of death in a group. The limit of indemnity for a Reinsurance Broker is . Certain financial loss . Solution: b 20. . . Reduction in uncertainty . Higher premium being received by the insurer . HLV explains in general . Strict liability. Solution: a 20. . Deferred annuity plan . A sub standard Indian life is considered . Solution: c 20. Solution: c 20. . Probability of death in a group . The other name of no fault liability is . A life which cannot be insured . . SEBI . Uncertain financial loss.

Which policy meets the need of “ special needs” the best . Underwriting . The doctrine of adhesion . Solution: a 20. Disablement of parent . Three times remuneration received at the end of every financial year subject to a minimum Five crores. Three times remuneration received at the end of every financial year subject to a minimum Ten crores. War risk. Health insurance. Term assurance plan . Duty of disclosure . Health insurance. Indemnification . Solution: c 20. Loss prevention/minimization . One of the following is not a valid exclusion for Temporary Total Disablement . it is expensive . Actuarial . Three times remuneration received at the end of every financial year subject to a minimum Two crores and fifty lakhs. The principle of indemnity . Solution: b 20. Which policy meets the need of “Security of the family” the best . Solution: d 20. The “duty of disclosure” follows from . . Existing disability. Suicide or self inflicted. The principal of subrogation . . Marketing . The principle of utmost good faith Solution: d 20. Finance Solution: a 20. Solution: b 20. Deferred annuity plan . . The principle of subrogation is derived form the principle of . . Indemnity Solution: d 20. None of the above. HIV virus infection. . Utmost good faith . The limit of indemnity for a Composite Broker is . Deferred annuity plan . Term assurance plan . Three times remuneration received at the end of every financial year subject to a minimum fifty lakhs. Children deferred assurance plan . Solution: c 20. Market Research of existing products in an Life insurance company is a function of . Offer in life insurance contract refers to limit of rupees limit of rupees limit of rupees limit of rupees . The disadvantage of a term policy . Solution: d 20. there is no bonus . All of the above. Any existing disablement . Insanity . it is only for a short period . One of the following is not a valid exclusion for Critical Illness Insurance . .. Pre-existing Critical illness. Children deferred assurance plan . Adhesion .

.000 . Total Premium Amount Solution: c 58. Four days. . 30 to 55 years . Solution: c 20. Solution: b 20. Health insurance for children is provided for children aged 4 years . Solution: a Bhavishya Arogya is a life term policy where medical benefits are made available after retirement of the insured. 25 to 55 years . Life insurance Policy . Both A and B Solution: c 20. 20. Conclusive tort. Proposer’s application form for insurance . . Both the parents covered concurrently . . The working capital of a TPA should be minimum . One day . Rs. Publication of a false statement in a permanent form designed to damage the reputation of another person. Intentional Tort. Goods carrying vehicle insurance. 20.by New India Assurance. Solution: a 57.Unlawfully touching another person. None of the above . 25 to 60 years . . 20. it is only for a short period . Absolute liability. it is expensive .00.00. The disadvantage of a whole life policy . In life insurance insurable interest must exist at the time of . .Damaging reputation verbally Assault . Jan Arogya Bima policy is a . Company’s brochure duly authenticated. All of the above. Bhavishya Arogya policy is meant for persons in the age group between . 30 to 60 years. Both a & B . Third Party Adjustor . With no precondition . Rs. All of the above.Publication of false statement to damage others reputation.000 . Loss . Travel insurance policy .00. 5. Two days . Contract . A family car insurance . One of the parents being insured. Original policy document .. Health insurance. Marine insurance policy .000 . 10. Third Party Administrator . Rs. Is an example of . Passenger carrying vehicle insurance. Solution: c 60. Solution: a Intentional Tort could be Libel .000 Solution: d 59. Third party Assessor . there is no bonus . 5. Three days . Domicillary hospitalization period is defined as . Slender .000. Proposer paying first premium . Commercial vehicle insurance does not include . Negligence. Solution: d Jan Arogya policy is a Medicalim / health insurance policy by United India Insurance Company. In insurance parlance TPA means . 10. Rs.

Solution: b n property insurance one needs to have insurable interest both at the time of contract and loss .Exception is Marine insurance were in one needs to have insurable interest only at the time of Loss. Further in Life insurance one needs to have insurable interest only at the time of contract. 61. In insurance market Dynamics, the risk manager must choose between . Risk evaluation & speculation. . Risk rentention and risk transfer . Risk identification and safety . Risk financing and actuarial aspects. Solution: a 62. The insurance company has to respond to all communication received from the policyholders within . A week of receipt of such communication . 15 days of their receipt . 10 days of their receipt . 20 days of their receipt. Solution: c 63. In hazard logic tree, under the peril water damage, hazards are . Malicious Damage, subsidence, hurricane . Flood, storm, bust pipe or other apparatus, burst water main . Spillage or leakage or Flammable Liquids. . Subsidence and flooding. Solution: b All are water related perils. 64. Which of the following is not a classification of term insurance policy . sum assured with bonus return term insurance . Level benefit term assurance . Increasing benefit term assurance . Decreasing benefit term insurance Solution: a 65. Particular risk is a risk that affects . Entire economy . Only individual . Government . None of the above Solution: b Solution: Particular risk effects an individual where as Fundamental risk effects whole economy. 66. Home loan/Mortgage protection insurance refers to . Property insurance policy . Credit insurance policy . Life insurance policy guaranteeing the mortgage loan. . None of the above Solution: c 67. The most basic risk management decision is . Whether to provide fire protection equipment . Perhaps to explore, whether to purchase insurance . Analyze the probability distribution . None of the above Solution: b 68. It is compulsory for the broker to maintain . Liquidity margin . Cash margin . Solvency margin . Cash balance Solution: c 69. While treating the appropriate techniques for treating loss exposures, the major issue for top risk management concern is . Disability management . Regulatory changes . Occupational Safety and health Act regulations . Workers compensation costs. Solution: d 70. In controlled Third party captive business, retailers are underwriting . Credit life, health and disability; extended warranty . Subcontractor coverages . Joint ventures . Credit life, health and disability; mortgage insurance, title insurance, auto and property. Solution: a 71. To keep the license in force the composite broker shall have to pay registration fees calculated at the rate of ____________ per annum. . Rs. 2 Lakhs . Rs. 3 Lakhs . Rs. 25,000

. Rs. 50,000 Solution: b 72. Quick asset ratio is used to a. Determine the investment capacity of the firm a. Determine firm’s liquidity to cover unexpected payment too. a. Determine the current assets of the firm a. Determine the current liabilities of the firm. Solution: b 73. Standard deviation and coefficient of variation d. Are used in fair value accounting d. Economic indicators d. Methods used to measure dispersions d. None of the above. Solution: c 74. Product development in an Life insurance company is a function of d. Marketing d. Underwriting d. Actuarial d. Finance Solution: a 75. Self insurance funds may be identified as d. Contingency funds used to spread the cost of losses more evenly over a large term d. Profitability not due to normal trading, but because of exceptionally good or bad loss experience d. Contribution collected from each of the division of the company d. None of above. Solution: a 76. If unacceptable Risk is accepted d. This would bankrupt the firm d. Outcome will be that of a speculative risk d. Outcome will be that of a dynamic risk d. None of the above. Solution: a 77. Charging 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 Identifying the losses. Solution: c 78. The waiting period under a disability benefit policy refers to d. The period of time that must elapse before the policy benefit will commence d. The period of time that must elapse before settlement of the claim after submission. d. The period of time that must elapse before the issue of the policy document. d. The period of time that must elapse before the proposal can be considered. Solution: a 79. The law of reinsurance is primarily based on d. law of torts d. law of vicarious liability d. law of contract d. law of specific relief Solution: c 80. An Indian Insurance company can transact d. Life insurance and general insurance business d. Life insurance and reinsurance business d. General and reinsurance business d. Either Life or general insurance or reinsurance business. Solution: d 81. The reinsurance contract itself may relate to d. One particular company d. One particular ceding insurer d. One particular insurance d. One particular catastrophe Solution: c 82. The following factor is not very important form an underwriter’s view d. Age d. Sex d. Occupation d. Family income Solution: d 83. In fire insurance, a reinsurance policy was called as d. A guarantee policy but nowadays is more commonly referred to as facultative reinsurance d. A coagulative policy on property insurances with specific focus on catastrophe insurances d. A fire fighting comprehensive policy with focus on mega risks

d. An extraneous perils covering policy in the event of disaster. Solution: a 84. Ram insures his home worth Rs.50 lakhs for Rs.30 lakhs. The house is destroyed in a fire and he suffers losses worth Rs.20 lakhs. How much will he receive from the insurance company? d. Rs.10 lakhs d. Rs.20 lakhs d. Rs.16 lakhs d. Rs.12 lakhs Solution: [a] The answer is Rs. 10 lakhs because Ram is underinsured by 40%. 85. Reinsurance cannot exist d. Without its global character d. Without captive insurers d. Without there being direct insurance, for the first party is reinsured who has already issued a direct policy d. Without past data of catastrophe risk covered. Solution: c 86. The application of the law of contract does not apply to _____________contracts. d. Insurance d. Stock markets d. Property deals d. None of them Solution: d 87. Every reinsurance instrument executed out of India chargeable with duty may be stamped d. Within four months d. Within five months d. Within three months d. Within six months. Solution: c 88. Insurance can be ________contracts. A = Benefit, B= Indemnity, C= Negotiated. d. Only A d. Either B or C d. Only A d. Only B Solution: b 89. Fundamental risk is a risk that affects d. Entire economy d. Only individual d. Government d. None of the above Solution: [a] Fundamental risk effects whole economy and particular risk effects individual. 90. Which one of the following is not a personal risk d. risk of premature death d. risk of sickness d. risk of unemployment d. risk of car accident Solution: d 91. Policy cost/conversion = 0.001, Interest allowed equivalent to after tax return =20%, annual premium = 13,000, Dividend or bonus = 23,000 death benefits = 20,00,000 Cash surrender value at the end of current policy period=6,50,000 , cash surrender value at the end of previous policy year = 570000. What is policy cost per thousand? d. 19.70 d. 44.66 d. 57.84 d. 122.51 Solution: [a] Policy Cost (per thousand) = [PM + CSVP] [1+i]-[CSV + D] ---------------------------------------[DB-CSV] * 0.001 PM= Premium-yearly; CSV = Cash surrender value at the end of policy year; CSVP = Cash surrender value at the end of previous year; i = interest or rate of return; D =Dividend or bonus; DB = Death benefit; policy cost conversion given=0.001. Hence answer is 19.70. 92. Policy cost/conversion = 0.001, Interest allowed equivalent to after tax return =19%, annual premium = 14,000, Dividend or bonus = 22,000 death benefits = 25,00,000 Cash surrender value at the end of current policy period=6,00,000 , cash surrender value at the end of previous policy year = 580000. What is policy cost per thousand? d. 19.70 d. 44.66 d. 57.84 d. 122.51

annual premium = 14.000 death benefits = 30.66 d. CSV = Cash surrender value at the end of policy year. 44. 19.001 PM= Premium-yearly. policy cost conversion given=0.002 .000 .001. Hence the answer is 9. annual premium = 14.000 Cash surrender value at the end of current policy period=6.000. 94.92 d. 22. Policy cost/conversion = 0.000 Cash surrender value at the end of current .Solution: {b} Policy Cost (per thousand) = [PM + CSVP] [1+i]-[CSV + D] ---------------------------------------[DB-CSV] * 0.70 d.00. CSVP = cash surrender value at the end of previous year.002.84 d. D =dividend or bonus.85 d. 44. CSVP = cash surrender value at the end of previous year.002 PM= Premium-yearly. Interest allowed equivalent to after tax return =18%.66 d.85 96. What is policy cost per thousand? d.001.000. cash surrender value at the end of previous policy year = 600. 122.000 death benefits = 25. 61. i = interest or rate of return. D =Dividend or bonus. policy cost conversion given=0. i = interest or rate of return. Hence the answer is 22. policy cost conversion given=0.000 .000. Dividend or bonus = 21. CSVP = cash surrender value at the end of previous year. policy cost conversion given=0. CSVP = cash surrender value at the end of previous year. DB = Death benefit.000.002. policy cost conversion given=0. 28. cash surrender value at the end of previous policy year = 590000. What is policy cost per thousand? d. 122. CSV = Cash surrender value at the end of policy year.00. Interest allowed equivalent to after tax return =18%.50.25 Solution: {a} Policy Cost (per thousand) = [PM + CSVP] [1+i]-[CSV + D] ---------------------------------------[DB-CSV] * 0.70 d. i = interest or rate of return. 9. 57.33 d. CSV = Cash surrender value at the end of policy year.002. annual premium = 13. DB = Death benefit. Interest allowed equivalent to after tax return =20%. Policy cost/conversion = 0. Dividend or bonus = 21. CSV = Cash surrender value at the end of policy year.25 Solution: {b} Policy Cost (per thousand) = [PM + CSVP] [1+i]-[CSV + D] ---------------------------------------[DB-CSV] * 0.51 95. i = interest or rate of return. What is policy cost per thousand? d. Dividend or bonus = 20000 death benefits = 20. Policy cost/conversion = 0.002 PM= Premium-yearly. Dividend or bonus = 23.00. Hence answer is 44. D = Dividend or bonus.85 d.33 d. Policy cost/conversion = 0. cash surrender value at the end of previous policy year = 570000. CSV = Cash surrender value at the end of policy year. 9.00.002.33 97.50. Hence answer is 122.00.001.001 PM= Premium-yearly.84 d. 19.000 . DB = Death benefit.000 Cash surrender value at the end of current policy period=6. 22.000 death benefits = 20.51 Solution: {d} Policy Cost (per thousand) = [PM + CSVP] [1+i]-[CSV + D] ---------------------------------------[DB-CSV] * 0. 57. 61. Henceanswer is 57.002 .000 death benefits = 30.002 PM= Premium-yearly.66. DB = Death benefit.92 d. annual premium = 14. Dividend or bonus = 22. Policy cost/conversion = 0. Interest allowed equivalent to after tax return =18% annual premium = 15000. CSVP = cash surrender value at the end of previous year. 93. D =Dividend or bonus. Interest allowed equivalent to after tax return =19%.001 .000 Cash surrender value at the end of current policy period=5. cash surrender value at the end of previous policy year = 580000.000 Cash surrender value at the end of current policy period=525. 28. D =Dividend or bonus. DB = Death benefit. i = interest or rate of return.51 Solution: {c} Policy Cost (per thousand) = [PM + CSVP] [1+i]-[CSV + D] ---------------------------------------DB-CSV] * 0. What is policy cost per thousand? d.00.000.84.000 .

A group of 75000 persons each aged 33 years wishes to apply for term insurance for a one year period for a sum of Rs.50. If mortality tables show that out of 60. CSVP = cash surrender value at the end of previous year.00.25 Solution: {c} Policy Cost (per thousand) = [PM + CSVP] [1+i]-[CSV + D] ---------------------------------------[DB-CSV] * 0.3.policy period=5. 2750 Solution: a 104. If mortality tables show that out of 50.3.00. If mortality tables show that out of 75.00.006 No. 2000 d. D =Dividend or bonus.00.00. policy cost conversion given=0. i = interest or rate of return.00 / 50000 = 1200 Hence the answer is 61.92 d. 1650 d.85 d.002 . 625 d.000.50.33 d.000 die within a year.92 d.000 die within a year.000.000.25 Solution: {d} Mortality = 30000/5000000 = 0.2.002 PM= Premium-yearly. A group of 50000 persons each aged 28 years wishes to apply for term insurance for a one year period for a sum of Rs.00. 1250 d. find the premium to be paid by each of the 55000 applicants. Interest allowed equivalent to after tax return =18% annual premium = 15000. 1200 d. 1400 d. 61.000 people 30. d.000 die within a year.00.00. d. 750 d. Policy cost/conversion = 0.000. 1900 d. A group of 45000 persons each aged 34 years wishes to apply for term insurance for a one year period for a sum of Rs. What is policy cost per thousand? d.000. 1500 d.000.000 die within a year. 1300 d.000 Cash surrender value at the end of current policy period=525.000 people 25.33 d.50.25 99.00.000 .006 = 300 Amount required to pay them = 300 * 200000 = 6 crores Therefore premium required = 6. 800 Solution: a 101. of people who would die = 50000 * 0. d. 1250 d. 1250 d. 9.00.000 die within a year.000. d. find the premium to be paid by each of the 50000 applicants. 28.2. A group of 55000 persons each aged 40 years wishes to apply for term insurance for a one year period for a sum of Rs. find the premium to be paid by each of the 35000 applicants.000 people 50. cash surrender value at the end of previous policy year = 600. find the premium to be paid by each of the 75000 applicants.85 d. Hence the answer is 28. d. 2100 Solution: c 103. d. 28.000 people 25.3. 22.000 people 60. 1500 d. cash surrender value at the end of previous policy year = 590000. 61. 1400 d. 1400 Solution: a 100.00.000. DB = Death benefit. 22.000 people 30. If mortality tables show that out of 120.50.000 die within a year. 9. 1800 Solution: c 102. 1700 d. What is policy cost per thousand? d.2. 1800 d. A group of 35000 persons each aged 30 years wishes to apply for term insurance for a one year period for a sum of Rs. If mortality tables show that out of 50.000 .92 98. Dividend or bonus = 20000 death benefits = 20. 2750 Solution: b . 700 d. A group of 50000 persons each aged 35 years wishes to apply for term insurance for a one year period for a sum of Rs. find the premium to be paid by each of the 50000 applicants. If mortality tables show that out of 100. find the premium to be paid by each of the 45000 applicants.002. CSV = Cash surrender value at the end of policy year. 1750 d.

A group of 55000 persons each aged 40 years wishes to apply for term insurance for a one year period for a sum of Rs. find the premium to be paid by each of the 60000 applicants. find the premium to be paid by each of the 55000 applicants. Calculate the HLV to recommend total insurance cover Mr.83 lakhs d. Rs.55000 (self insurance cover S. Expenses Rs. Rs. 6500 respectively rate of interest assumed for capitalization of future income is at 8%. 55. If mortality tables show that out of 60. Calculate HLV to recommend adequate insurance cover. Age= 30 yrs Retirement age 60 years. Rs. 2750 Solution: d 107.00.a.000) Reasonable maintenance charge for a person of his stature is assumed as Rs. Cumulative risk d.45000 p. Final costs Rs. 3.000 d.10. 100000p.5 lakhs.a. 52 lakhs. 20 lakhs.5 lakhs. Solution: a 109. 1250 d.000 Solution: [b] Revisionary Bonus = 30. This is not a risk faced by the individual in their various activities d.3. A planner and prospect agreed for an endowment policy for Rs. HUF co-partner profit share 1.. 117 lakhs d. post inflation rate/discount factor is 3%. dividends on individual shares 2. 1200000. His monthly salary is 55. Rs.000.00.25. Rao’s personal Expenses) Mr. Rs.00.10. Solution: b 108.70. he pays professional tax of rs. 1500 d. 1250 d. If reversionary bonus is taken as 7. 132000 Reasonable self maintenance expenditure estimated Rs. 3.4 lakhs limited payment for 10 years with a term of 20 years.50.000 d.00. Vice president. 68 lakhs d. Calculate the insurance required based on need based and income replacement methods on Mr. d. His present age 45 years. Rs. 1400 d. Rs. 2.) he has paid following taxes: Corporate professional tax 5000 income tax 410000 as per individual tax return filed.000 die within a year. 3 crores d. For wife and child he pays insurance premium of Rs. aged 46 and 42 years. 42 lakhs.00 lakhs ---------------Maturity value 10.00. Rs.000 d.000.2. Adequate additional insurance recommended is d. APTE.A.10.105. 42 lakhs. His total income of Rs. and Mrs. 1500 d. Post tax.00.60 lakhs 111. Rs. 18000 with total sum assured Rs. A group of 60000 persons each aged 45 years wishes to apply for term insurance for a one year period for a sum of Rs. This is an example of . Rs.00. A person goes to the neighborhood lottery store and buys a lottery ticket.000 d.5 lakhs.80.60 lakhs SA 4.3000 and income tax subject to allowable deductions i. 10500 and Rs. He pays total life insurance premium of Rs.000 die within a year.000 * 20 = 6. You have the following information Current investments: Rs.e.000. Mr. His retirement age is 70 yrs. 1400 d. Mr. Rao.10. He is Asst.000 people 40. 1. If mortality tables show that out of 80. Ritesh.000 d. Speculative risk Solution: b 112. Rs.000. tax paid Rs.00.000 ( Salaries 15 lakhs.21. both have a life expectancy of 35 years. Rs. 2750 Solution: c 106. 50. Pure risk d.000. applied rate of interest to arrive at a present value of his future income is at 5 % d. 42.26 crores d. 1 lakhs.00. d. Financial risk d. 20 lakhs. Rao’s income post tax rs.000 people 55. d.60.000 (including 1 lakh of Mr. 10. 22. interest on bank deposit and other investment 1 lakh.00 lakhs Terminal Bonus 0.000 d. 150 per 1000 what will be maturity value? d.00.80. minor daughters income added 1 lakh. life insurance premium for self Rs. Solution: c 110.80 crores d.5 % per annum and terminal bonus as Rs.000. Rao’s life. 12 crores.

Risk retention d. 122. Under the principle of insurable interest there should be _______ that can be insured . Risk avoidance d. The point regarding the colour of his wall in his house will be a ________ point for the purpose of insurance d. False because it has to fulfill the required conditions of measurability. Insurance helps a person to d. A living person will face the risk of death at all points of their life and this risk will be classified as d. Capital gains d. Dynamic risk d. Severity of the financial loss d. Property risk d. Liability risk d. Controlling the foreign exchange Solution: (a) Insurance companies can provide long term funds for the country which can be channeled in to long term infrastructure projects 121. A person wants insurance for his motorcar. Controlling inflation d. An insurance contract is meant for the purpose of d. Risk retention d. While deciding upon the risks to be insured the various factors considered for the process are d. True because a person can take the necessary insurance d. Risk transfer d. The role of insurance in the economy will relate to the process of d. Property . True because risk can be transferred d. All of the above Solution: d 117. Risk transfer d. 119. Profit d. Risk avoidance d. A footballer who is voted as the European Footballer of the year does not take an insurance policy on his legs and continues to play as before. All the risks present for a person can be insured d. Non financial risk Solution: c 113. Pushing up interest rates d. This is a case of d. This is an example of d. Providing funds for investment and credit d. Speculative risk d. There should be no gain. Earning return Solution: (a) Indemnity is to bring back the insured back to the position he/she was prior to the loss. Every time the children move out to play in the afternoon in the summer holidays their mother insists that they wear a cap to keep out the impact of the direct rays of the sun and to drink water to avoid dehydration. None of the above Solution: a 114. Material d. False because everyone does not have all the different kinds of risk Solution: b 118. Various events of risk d. Frequency of occurrence d. Prevent a profit d. Risk reduction Solution: c 116. Non material d. Personal risk d. Risk reduction Solution: d 115. Here the colour of wall is non material to the risk being insured. None of the above Solution: c Material fact is any fact which would influence the insurer in accepting or declining a risk or in fixing the premium or terms and conditions of the contract. Indemnity d. homogeneity etc d. Make a capital gain d. Prevent a loss d. Earn a rate of return Solution: b 120. Pure risk d.d. Slightly material d.

A person is not supposed to profit from an insurance policy but should be in a position similar to what he was in before the loss occurred. Replacement d. Uninsured peril d. Right ii. Repairs d. Insurable Interest d. All of the above Solution: d 123. Nature d. Reinstatement d. In the month of November 2006 does the wife have an insurable interest in the life of the husband? d. Limited Solution: c 127. In case of a mortgage the situation for the two parties in terms of insurable interest is d. A life insurance policy says that the death on account of a war will not be covered by the insurance policy. Only the mortgagee has insurable interest d. Yes because a person has an automatic insurable interest in the life of the spouse d. None of the above Solution: b 133. Interest . This is outlined by the principle of d. Excluded perils d. In this case insurable interest is created by d. None of the two have insurable interest Solution: c 129. The feature of indemnity can be undertaken through the route of d. Interest ii. Life . None of the above Solution: b Risk and Insurance 19 128. Excluded peril d. In an insurance contract the side making the offer is . Both have insurable interest arising d. Bailee d. The risk that are covered by an insurance policy are called d. Right . Subrogation Solution: c 131. A person owns a building in which he stays. All of the above Solution: d 132. Common law d.. Relationship ii. Statue Solution: d 126. Part d. Contract d. The insured must have a _______ with the subject matter of insurance for benefiting from it ii. Potential liability . The following will have insurable interest in the role that they play d. A person has ______ insurable interest in his own life d. Limb Solution: b 124. Unlimited d. Insured peril d. Specific d. The following will not be factor covered for being insured under the principle of insurable interest . Utmost good faith d. No because only the husband has an insurable interest in the life of the wife d. None of the above Solution: c 134. None of the above Solution: c 125. Uninsured perils d. Indemnity d. Executors d. Insured perils d. No because a year has not passed since marriage d. A person got married in the last week of December 2005. This will be classified as a d. Only the mortgagor has insurable interest d. Space . All of the above Solution: d 130. Trustees d.

Has to have an insurance license under the regulations d. . A only d. The beneficiary d. Class or manual. All of the above Solution: c Risk and Insurance 20 135. Subrogation c. The insurance company d. The insured d. A type of risk with high frequency but low severity is probably best handled by a. Private insurance d. Fixed contract d. Be over 5 years in existence d. Individual rating d. The value exchanged in terms of premium paid and the payout in case of a loss is not equal but is based upon an uncertain event. C only d. Under-Insurance Solution: c 142. 2000/is paid to the family. LALGI is ___________. the greater will be the amount of each payment Solution: a 140. The older the annuitant is when he or she receives the first annuity payment. 134.On death till 60years a sum of Rs. if insurance company changes any terms it makes an counter offer to the insured and then it is up to insured to accept or deny. Experience rating d. Self-insurance d. None of the above Solution: a 138. Class rating d. In terms of competence from the side of the insurance company it has to d. Utmost good faith Solution: a 137. B & C Solution: d 143. Avoidance b. An insurance company leaves the setting of the insurance rate upon the person who is assigned to set the rate. Individual or judgmental. Class rating d. All of the above Solution: (b)In insurance contract . 139. Merit rating d. Private contribution guarantee scheme d. This is an example of d. Underwriting amount d. d. Schedule rating d. All of the following statements describe the operation of a life annuity EXCEPT: d. (A) Loss (B) Gain (C) Status Quo d. This person will look at the specific case and determine the premium rate. Because of the interest factor.d. Further. Be over 18 years in existence d. A. Premium d. 2. an annuitant is assured of receiving back more than he or she paid in d. This is not a way of determining the merit rating for an insurance company d. Retrospective rating Solution: c Rating could be-1. Fixed amount of payment Solution: b 136. Merit rating – Schedule . Commission d. Aleatory contract d. The emphasis is on the liquidation of the fund as opposed to its growth d. B only d. The consideration in the insurance contract is the payment of d. the insured makes offer and it is the company which accepts/denies. The annuitant is assured that he or she cannot outlive the length of time of the annuity payments d. Public benefit guarantee scheme d. 3. Adhesion d. Speculative risk can have following outcomes ________. Social insurance Solution: (d) Landless Agricultural Labourers Group Insurance ( LALGI ) scheme is a social security group scheme where in head of the family betwen 18 to 60 years is eligible if has no land. experience & Retrospective. This is based upon the feature of d.

d. Solution: d The large number of units have to be homogenous. The insurance company will pay a sum of d. There must be a sufficiently large number of heterogeneous exposure units to make the losses reasonably predictable. Minimum age at entry for Medi-claim is ___________. 149. The loss must be fortuitous or accidental. For risk to be insurable which one of following is not correct? d. d. The insurance company will pay d. Rs 2000 d. When there is a claim of Rs 55000 by the person insured then the insurance company will pay a sum of d. The loss must not be catastrophic. Rs 1200000 Solution: c Insurance is for indemnification purpose and there cannot be any profit from it. So. nothing would be paid here as excess is 5000 and loss is 4500 which is below excess limit. There is an asset worth Rs 10 lakh and this is insured for a sum of Rs 8 lakh. B d. Rs 5000 d. 150. Rs 320000 d. Rs 4500 d. 18 years Solution: b Questions 147 to 182 carry two mark each 147. Rs 1500000 Solution: c The property is under insured by 25 % and hence the claim would be of 75 % only. Rs 500000 . market risk is with ______. Rs 10000 Solution: c 148. Rs 0 d. An insurance company pays the insured the sum for the goods destroyed in his godown. In Unit-Link policy. A policy has an excess of Rs 5000 and a limit of Rs 1 lakh. 8 years d. There is a godown that is worth Rs 20 lakh. Rs 800000 Solution: b 151. d. Rs 20000 Solution: c Excess is a compulsory deductible from claims. Rs 1000000 d. Rs 500 d. Rs 0 . 5000 in a policy and the amount spent for the expense that has to be reimbursed under the policy comes to Rs 4500. Rs 1125000 d. Rs 5000 Solution: a The purpose of excess is to keep away the small claims and reduce the expenses of servicing claims. Rs 1000000 . Rs 0 d. Rs 0 d. 91 days d. 152. Rs 18000 d. Rs 500000 d. There is an excess of Rs. In this situation the share of the insurance company is d. There is a loss wherein half of the asset is destroyed. Both A & B d. Rs 400000 d. There is an excess of 10% in a policy and in the example where there is an amount of Rs 20000 that will be the claim then the insurance company will pay d. Neither A nor B Solution: a 146. The loss produced by the risk must be definite and measurable. A person insures it for Rs 15 lakh and there is a fire that completely destroys the godown. Rs 500000 d. 153. 145. Here 10 % and hence 2000 would be deducted. (A) Insured (B) Insurer d. d. There is still some additional part of the goods that is picked up from the godown and this results in an additional sum of Rs 5000 coming in. In this case the insurance company will pay d.144. A d. Rs 800000 . 365 days d. In this case when a fire destroys the full property then the insurance company will pay the insured a sum of . Rs 2500 d. A property is worth Rs 10 lakh and an individual insures it for a sum of Rs 12 lakh.

Age of the owner of the vehicle Solution: d 162. A person insures this for Rs 20 lakh each with two insurance companies. The following figure is not a premium figure paid by a holder of an insurance policy d. 157. In this case when there is a loss of Rs 6 lakh then the total sum paid by the two insurance companies put together will be d. Rs 4000000 Solution: a In insurance there is no scope for profit or gain. Rs 1000000 Solution: b Both the companies would contribute to the loss. Zone of operation of the vehicle d. Rs 1345 d. Insured Declared Value (IDV) of the vehicle d. Premium process d. 155. A person insures this for Rs 5 lakh each with 2 different insurance companies. If this is destroyed to the extent of 50% then the amount that will be paid by the insurance companies together is d. Rs 55000 Solution: c 154. Rs 2000000 d. None of the above Solution: b 161. Rs 9900 Solution: c 159. Cubic capacity of the vehicle d. Risk charges d. Rs 3000 d. Insurance coverage d. Rs 2500000 d. Rs 1. There is an asset worth Rs 10 lakh. Rs 2500 d. Rs 200000 Solution: c The claim cannot be more than the limit fixed in the policy. Rs 750000 d. In several unit linked polices the _____ charge can be as high as 30-35% d. Rs 5 lakh d. Rs 5000 d. 156. If the rate of insurance is Rs 3 per thousand per year and there is an insurance policy of Rs 3 lakh then the premium will come to d. Rs 6 lakh d.2 per thousand Solution: d Rate is the price per unit of coverage i e 1000 in insurance while premium is the total cost or price paid for the coverage. Rs 8 lakh d.d. 160. When there is a claim of Rs 200000 by the person insured then the insurance company will pay a sum of d. None of the above Solution: b Both the companies would contribute to the loss. If the entire asset is destroyed then each insurance company will pay d. Administrative charge d. Rs 1000000 d. An insurance company has been in the business of insurance in particular country since the last 15 years. Rs 50000 d. Rs 50000 d. 158. A policy has a limit of Rs 1 lakh. Rs 3546 d. Rs 100000 d. Loading d. Rs 0 d. This process is known as d. First year charge d. Rs 9000 d. Rs 250000 d. The company actively uses the data that has been generated for the past several years for the purpose of developing the insurance rates that it will charge its customers. A person takes insurance for Rs 5 lakh from one insurance company and Rs 3 lakh from another for the asset worth Rs 8 lakh. Rs 6000 d. There is an asset worth Rs 20 lakh. Asset management fees Solution: a . only indemnification. Rs 500000 d. Premium on Motor Insurance policy does not depend on which one of the following factors? d.

Loss of income d. Will be paid because the policy is in his name a. After making the necessary checks the insurance company paid the amount. A person enters into a contract in the course of his printing business.Solution: a Premium allocation charges are generally higher in the 1 st year in ULIP plans. Managed care plan d. Risk avoidance d. No because the premium can only be paid after a month Solution: b 165. Risk retention d. Accident insurance Solution: a 168. This is an example of d. A person owns a large house. This is an example of d. Normal claim d. Indemnity plan d. A person wants to ensure that while he has taken the necessary life insurance cover there is also some e protection to him and his family in case there is a serious illness that affects the person and which can drain him of financial resources. Risk reduction Solution: b 171. Due to the non fulfillment of the contract he was required to pay damages to some other party. This is an example of d. Statutory liability d. Since he was traveling abroad he has not been able to pay the premium. Will not be paid because of coverage under the suicide clause Solution: D 164. Higher premium d. A person has a health insurance policy. Yes because the time falls within the grace period clause of the policy d. Same benefit Solution: a 167. All of the above Solution: c 170. Accidental death d. This is an example of a d. In order to tackle such a situation in the future the family moved to Jaipur. The claim under the policy a. Yes because a person can pay premium anytime d. 163. All of the above Solution: c 169. Risk transfer d. Professional liability d. Direct property risk d. There is no other loss because of the fire and the person after looking at the situation files a claim for Rs. The overflowing of the river led to floods in Surat this year. This action of the family tackling the risk will be classified as d. A person has a premium due on 15 November. 275000. During the rains the road leading to the property was washed away leading to loss of income as the tourists were not able to come to the property. 25 days later he slashed his wrists after an argument with his family and consequently died. A person has a fire in his stock house and goods to the extent of Rs. Will be paid because the policy has completed 15 days a. Critical illness d. which is lent out to tourists as a hotel. Indirect property risk d. 235000 are destroyed in the fire. Lower benefit d. Personal liability d. After being trapped in their houses for over 5 days the Soni family was able to have access to food and water. Guaranteed insurability Solution: c 166. Will not be paid because he did not die due to a disease a. None of the above Solution: c . Lower premium d. Waiver of premium d. Disability insurance d. He had to be admitted to a hospital for the operation and after this was completed he paid the bill and forwarded the insurance claim to his insurance company. Inflated claim d. After he is back on 25 November can he pay the premium d. When a rider is taken on an insurance policy along with an additional benefit there would be an additional cost in terms of d. No because the due date was the last date for payment d. In such a situation one can take the option of which rider d. A person took a life insurance policy on 2 October 2005. Fraudulent claim d.

No there cannot be any question of insurable interest for a year after marriage d. Temporary Total Disablement Cover Solution: a 182. Which insurance cover does he require the most? d. In the above case the person can be deemed to be an agent for the cover of d. Normal claim d. In this case the user has an insurable interest because of d. Rs 0 d. Home Solution: c 183. In the month of April 2006 the husband wants to know whether he has insurable interest in the property of his wife d. Medical Cover d. 36 years and married. 35 lakh. works for a multinational firm. Common law d. Inflated claim d. He quietly ships off the painting to one of his associates and then claims the insurance with the company for the required sum stating that the painting was stolen while he was on vacation. Out of this a sum of Rs 50000 has already been paid back. This is an example of d. He already has his own home and savings of Rs. Rs 150000 d. If the person insures the full value of the property of Rs 20 lakh then he will be allowed the insurance for d. None of the above Solution: c 178. None of the above Solution: c 176. Life d. A person Sharad own various properties in the city of Jaipur. d. Is no insurable interest d. 20 lakh. Statue Solution: c 174.172. Life Cover d. Rs 0 d. Vinayak. Professional Indemnity d. Jayesh goes to an insurance company to take insurance on the property on behalf of Sharad. Rs 1000000 d. 2 lakh from his friend. Medical d. 25lakh. Loss of income of earning member of family is a ___________ type of risk. which provides adequate medical and related covers. A person has borrowed Rs. None of the above Solution: b 173. which are well invested. He has an agent Jayesh who operates and undertakes several activities on his behalf. Property d. Professional Solution: b 184. No he has insurable interest only in his own property d. Property Insurance d. A person got married in the last week of December 2005. He is also able to accumulate sick leave. Rs 200000 Solution: c 175. In this case there d. A person gives out his motorcycle on lease to his friend with the condition that any tax or repairs that will arise on the vehicle will have to be borne by the user. Fraudulent claim d. Rs 2000000 Solution: b 177. __________ Insurance protects oneself against losses as a result of lawsuits d. Rs 1500000 d. The amount of insurable interest of the person who had loaned the money in the life of the borrower is d. Personal d. A painting is insured with a private collector for Rs. Only a _________ insurance policy can be assigned d. Contract d. Yes there is insurable interest because the marriage is not registered d. A person has a share of 50% in a property with his partner. Rs 2000000 d. Liability d. The property is valued at Rs. Rs 0 d. Rs 50000 d. There is no insurable interest d. Rs 1000000 d. Yes because souses have insurable interest in each others property Solution: d 181. There is an insurable interest for the agent on behalf of the principal d. It is upto the insurance company to decide on the matter d. Health .

we will try to collect from the driver who damaged your car. Liability Solution: b 185. The assignment of property insurance by the seller of the property to the purchaser of the property is only valid if the insurer approves the assignment. She was referred to a specialist who determined that Maria has severe heart disease. Both I and II Solution: b . d. II only d. Solution: d 189. Which of the following statements is (are) true with respect to the human life value approach? i. d. Misrepresentation Solution: d 192. Insurance contracts are bilateral contracts. Insurance contracts are aleatory contracts. d. Warranty d. Which of the following statements about law and the insurance agent is (are) true? i. d. Concealment d.” The process the agent described is called d. General insurance policies shall be void unless the person affecting the insurance has an insurable interest in that property at the time the policy is affected as well as at the time of the occurrence of the insured event. The human life value approach considers all sources of income that the family receives. Kavita. False Solution: a 186. II only d. d. I only d. True d. The agent said. we’ll pay to get your car fixed. 1874 then _________________. Creditors have residual claim over policy proceeds d. Maria visited a doctor five weeks ago after experiencing chest pains. upon what grounds will the insurer be successful in denying the claim? d. Subrogation. “Don’t worry. Creditors have first claim over policy proceeds d.d. d. Neither I nor II d. Property d. Consumers should not assume that an agency relationship exists just because someone claims to represent an insurance company. d. Waiver d. When someone reasonably relies upon a representation of fact. The human life value approach does not consider the time value of money--future cash flows are not discounted back to present value. Solution: c 191. Insurance contracts are personal contracts. Life d. she answered “No” in response to the question “Have you visited a doctor for any reason during the previous 12 months?” In fact. another driver failed to stop at a stop sign and hit Kavita’s car. d. The reason that the insurer must approve the assignment of a property insurance policy is that d. Kavita phoned his insurance agent and reported the accident. Waiver. I only d. Income tax authorities have claim over policy proceeds Solution: b 187. Neither I nor II d. Agency Solution: a 190. When Maria applied for a life insurance policy. d. If Maria dies shortly after the life insurance policy is issued. Creditors have no claim over policy proceeds d. Warranty d. 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. And after we pay for the damage to your car. Waiver d. Estoppels d. Estoppels. While Kavita was driving home from work. Kavita purchased collision insurance on his new car. If the life insurance policy is endorsed under MWP Act. Insurance contracts are contracts of utmost good faith. d. Both I and II Solution: d 188. Consideration. ii. An insurer is responsible for the acts of its agents when the agents are acting within the scope of the agency agreement. ii.

. Solution: a The underwriter tries to manage the risk of adverse selection. Speculative risk. Solution: c 200. Comparative negligence. Contractual liability. She is married and has a child aged three. Property risk.193. the injured party is known as the d. Solution: c 196. Attorney. 1 lakh. This type of risk is called the d. Rs. Both I and II Solution: b 199. 197. Mr. Contributory negligence. Conditions that increase either the frequency or severity of loss are called: . d. Contingent liability. II.. Such situations are described as involving d. Completed operations liability. Rs. Assume a post tax. Hence Future value is Rs.40 lakhs. What is the main responsibility of the underwriting department of a life insurance company? . They are aged 40 and 36 respectively. Defendant. What in your judgement would be the life cover required for Mr. Liability risk. Two ways of assessing life insurance needs is a need based approach and the other is the income replacement method.5 lakh.15. Mrs. Tortfeasor.1 lakh as Final expenses. Breach of contract. Neither I nor II d. Workers compensation insurance is characterized by deductibles and coinsurance. D is incorrect. Solution: b 194. Premises liability.2 lakhs d.3. d. d. 60. Solution: a 198. .15. An individual who is injured as result of a tort may bring a legal action against the person who caused the injury. A court of law may order the person responsible for the wrongful act to pay damages to the party who was injured.14. . Rao is the sole income earner in the family.80 lakhs d.3 lakhs. Plaintiff.8 lakhs d. Other information you have is: Current investment port folio . Liability arising out of work done by independent contractors is known as d. Calculate the insurance requirement under the Needs Based method. C is incorrect. post inflation return/discounting factor of 3%. . Use the information below to provide answers to Questions 201. d. Rao's personal expenses). Rs. In some situations.40 lakhs. Strict liability. because the purpose is not to avoid exposure but to manage risks. I only d. Life expectancy for both of them is another 40 years. d.Rao on the basis of each of the two approaches.4 lakhs Solution: d Family. Hazards. Add Rs. d. B is a responsibility of underwriters but is not their main responsibility. .Rao will fall to Rs.14.14.Rs. Present annual expenses-Rs. d. 4 lakh (including a lakh of Mr. 202 and 203 • Your client earns Rs. d. .20 lakh. . To avoid exposures that could result in loss. To set a limit on the amount of insurance issued. d. it is not necessary to prove fault for injuries resulting from an act for the act to be deemed negligent. Rao’s post-tax income in hand-Rs. Rs. Fundamental risk. Rao is a homemaker.000 annually. To guard against adverse selection. d. because the rate is usually set after establishing underwriting standards. II only d. Which of the following statements is (are) true with respect to Workers Compensation and Employers Liability Insurance? I. Risks. To set adequate insurance rates.Rs. Find Future value of these expenses for 40 years with inflation at 4%. Mr. d. d. Estimated final Expenses .15. Workers compensation provides coverage for occupational injury and disease. Hence Insurance requirement will be Rs... Subrogation. d. d. They have no children. Solution: d 195.s expenses after death of Mr. In a court of law. An individual may commit an act that results in bodily injury or damage to someone's property.

000 Life Insurance 100. calculate 201.000 Mortgage Reducing Term Assurance 100.000 d. nper = 15.1.875 Solution: a fv= 120000 .A. 900.5% • Quarterly premium – Nil • Monthly premium – plus 5% d. • Occupation Extra Rs.000 Solution: c Pmt = 45000 . 440.000 Total Assets = 590.000 Total 120.000) 204.60 54.02. Calculate loan amount: Sum Assured Rs.53.000 d. Rs. tabular premium Rs. 130. 210. The present value of the annual incomes b.000 Bank Deposits 10. 55. 50.1 per thousand S.000 Mortgage 100.000 Liabilities Automobile Loan Rs.40 per thousand • Accepted with DAB extra Re. 15.000 Group Death Benefit 30. 50. automobile loan. 202.000 Automobile 40.246 b.A.95 Table Term 16-50 .000 annually for the next 20 years.88 Date of last premium paid 13. 547. Calculate half yearly premium on the basis of the following data: • Plan – Term – endowment 25 years. rate = 6 % pv= 5. 119. 45. 203. and outstanding credit card balances. she wants her family to receive Rs.92 Date of calculation 18.3 per thousand • S.071 d. 1.115 b.921 d. • She also wants to set up a final expense fund of Rs.000.60 + 3 + 1 = 54.60 * 150 = 8190 /2 = 4095 205. with the first payment due on her death.• If she should die.000 Mutual Funds 50. No insurance is needed d.60 – 2.827 d. rate = 6 % pv= 50071. and to provide Rs.40 – 0. d. 8610 Solution: b Tabular premium – payment mode discount – large SA discount +occupation + DAB 53.000 Mode of Payment Half yearly Rebate for half-yearly mode 1% Date of commencement 13. 15.000 Assuming that the life insurance proceeds and liquid funds can earn 6% annually. nper = 20 years .2 • Yearly Mode = Rebate – less 3% • Half yearly premium – less 1. Extracts of her personal balance sheet are as follows: Assets Condominium Rs.47. and pay off the mortgage.80 = 52.000 Personal Property 50.000 Solution: b (Total Liabilities = 597. 50. 143.186 + 135. The present value of her child’s college education cost d.146 b. 516. 500. The minimum amount of additional life insurance your client should purchase to attain her financial goals.000 Total 590.000 for her child’s college education in fifteen years time. 7740 d.000 Credit Card Balance 5.02.03.000 Rebate Rs.115. 8070 d. 152. 4095 d.00 = 50 . 120.

Selection of an appropriate capitalization rate iii. d. 207. iv. 50.250 Solution: c No.000 Solution: b 208.250 d.000 and level annual premiums of 5.92. 5% d.1. the interim bonus on 31.000 d.75 per thousand sum assured. 52. 828 X 85/100 = Rs.000/100 = Rs.232 d. calculate the internal rate of return implicit in the maturity proceeds. Ignoring mortality. I. Calculate paid-up value: Sum Assured – Rs.16.V factor/100 Paid-up value = 9 X 1. claims that in the past. ii .150 per thousand sum assured Interim bonus declared on 31. 00. 003. 000 (As last premium paid was 13. ii.1950 Tabular premium – 50. of premium payable + bonus if any.13. pertaining to a particular participating policy. 50.03. 16. 25. Ignoring mortality.1.000 X 52.03. d.3/100 = Rs. 7% d. Number of years from the client's present age to the contemplated age of retirement. fv = 125000 . 004 Paid up value = 9 * 150000 / 100 + 22500 = 36000 SV = 52. a.000 b.02. 30. rate = 6 % 209.711 d.Surrender value Rs. 206.92 is not taken for calculation loan amount) Surrender value = 36.1995 Last premium paid – 20. 24.02.8 or 16. a basic sum assured of 50.000 X 21/80 = 26. 828 Loan amount: 85% of surrender value.828 b. 250 Use the information provided below to provide answers to Questions 208 and 209 The sales literature of an insurer.3 / 100 * 36000 = 18.767 d. Loan: 90% of surrender value if the policy is at force or 85% of surrender value if policy is in paid – up condition. calculate the terminal bonus content in the maturity proceeds d.004 c. pmt = 5066 . The company uses the uniform compound reversionary bonus system and the terminal bonus system to distribute profits to its participating policyholders. 26. the company had paid maturity benefits of two-and-a half times the basic sum assured on their 15-year endowment policies.066. 500 + 22. Assuming a uniform reversionary bonus rate of 35 per thousand sum assured was declared over the last 15 years. 75. 250 Paid-up value Rs. of premiums paid X sum assured / No. 500 = 36. 41.02.18.3% Vested bonus declared from 3/88 to 3/91: Rs.26. of premium paid X sum assured/number of premium payable Rs. 21004 Solution: b Paid-up value – No. 8% Solution: b find rate …given Nper = 15 . 85 % because policy is though paid up but lapsed.02. Average annual earnings to the age of retirement.05 a. as it is paid-up condition 18. Which of the following is needed to calculate the client's human life value? i.828 Loan 18828 * 85 / 100 = 16004. 6% d. Surrender value – paid –up value X S. 50. 00.000 c.92: Rs. Costs of self-maintenance.2000 Quarterly Mode Date of Birth – 20.000 Plan – Without Profit Endowment Term – 20 years Date of commencement – 20. 18. 83.

ii. ULIP Solution: a 215. _________ insurance policy cannot be assigned. Solution: d Life insurance policies can be issued to anyone with an insurable interest. • Only a person with an insurable interest. • Generally. d. d. d. II only c. 2. and 3 only. The requirement that the insured must cooperate with the insurer in defending a liability claim is an example of a condition precedent. A son cannot insure his parents’ life. I. I. Money back d. d. _______ crores. iv d. 210. True only if the son is dependent on the parents. False c. I and II d. d. • The owner can assign (transfer) the policy to whomever he or she chooses. Term b. 200 Solution: c 217. A. I only b. 75 c. The minimum capital required for an insurance company as per the IRDA guidelines is Rs. a business associate. C. a.iv Solution: d The question asks what is needed to calculate the value of a life. 1. True. a. d. d. have been declared on the policy. It can revert only at the discretion of the assignee. 100 d. 2 and 4 only. True b. 4 only. but the original policy holder will not receive any of the interim bonuses which e.anf D are all needed in this calculation. Coverage is usually on a replacement cost basis. d. Solution: a 216. iii. a. a. Coverage limits are the same as the homeowners policy to which the endorsement is attached. 50 b. d. a. I. 50 b. An assigned life insurance policy can revert to the original policy holder once the liability is paid off. B. True only if both parents are earning a regular income. Solution: c 211. Identify the statement/s that is/are correct. ______ lakhs a. generally a relative. Solution: a 214. Coverage is usually on an actual cash value basis. can be named as a beneficiary. I. True b. False c. iii d. II.d. Which of the following is (are) true regarding the ownership of life insurance? • A policy can only be issued to the insured. Endowment c. The policy may be assigned to anyone and anyone may be named as beneficiary. d. Neither I nor II Solution: d 213. d. 75 . The insured need not be insurable at the time of assignment 212. Maximum sum assured available under a Life insurance policy currently is Rs. The human life value is determined by finding the present value of the future cash flows (the client’s annual salary). Property and liability insurance contracts are freely assignable by Policy owners without the insurer’s prior approval. The following are statements made concerning contracts of insurance. When fine arts or antiques are insured under a homeowners policy by an endorsement. The perils are the same as the homeowners policy to which the endorsement is attached. iii. even if the assignee has no insurable interest. Coverage is usually provided on a valued basis. assigning a policy requires proof that the insured is still "insurable" meaning still in good health. 1 only. or lender. ii.

He files for a claim of Rs. d. The maximum amount of income tax deduction that she will get on account of payment of premium on a Medical Insurance policy is Rs. A combination of all the three options Solution: b 224. Wearing a helmet while riding a bike is an example of ___________ d. Collaboration d. Motor Insurance c. A combination of all the three options Solution: c 225. Risk Sharing d. 12500 c. 1872 d. d. who reimburses him for the same. Life d. d. Inversely d. The rights of a beneficiary under an MWP life insurance policy are not affected by divorce. X then approaches Y and recovers half this amount from it. 1938 d. False in the case of Hindus d. True d. Risk Retention d. Risk Reduction d.5 lakhs from X. Pension Plan Solution: b 222. Contribution. 20000 Solution: a 220. Risk Retention d. Long term assets e. Protection d. Both a and b Solution: d 219. Subrogation d.5 lakhs each. A start-up coming approaching the stock market with an IPO is an example of d. Clause pertaining to Contribution and Subrogation are contained in ______ insurance contracts. a. d. Mrs. In India. Long term liabilities e. Intimidation Solution: a 226. 10000 b. 15000 d. Medical Insurance b.c. Indirectly d. Risk Reduction d. _____ a. 1956 d. Vinod has purchased medical insurance policies from two companies viz. The cost of insurance premium is ________ proportional to the odds of an event occurring. Outstanding balance on credit card II. Short-term loans outstanding III. Mishra is a female assessee aged 55. Mr. True only in the case of Muslims Solution: a 229. The following are examples of ___________. 1881 Solution: b 221. The Insurance Act was passed in _________ a. Data insufficient Solution: a 223. Accident d. I. 100 d. . X has employed the principle of _______ d. Medical d. Directly d. TPAs are being employed currently in _________ policies. Tax-saving d. A general insurance will usually insist that ________ is professionally valued before providing a Homeowners Insurance Cover. None of the above Solution: c 228. life insurance has been traditionally sold more as a __________ product. Bank overdraft e. No ceiling is mandated Solution: d 218. Life d. Risk Sharing d. d. X and Y for a sum of Rs. Current liabilities e. Investment d. False d. Current Assets Solution: b 227.

Income plus expenses. Motor Insurance d. it would not be able to lodge a claim to recover payment of damages to Anand. d. Rule of thumb e. Sujata's neighbours will collect damages from her. What are the insurance claims that arise from this event? d. Rs 5000 d. Term insurance with a level premium d. Insured participates in surplus of insurance company d. as it was negligent. Sujata was standing on the terrace of her building hanging out clothes. No claim bonus is not available in a ____________ policy d. while she still has dependent children and a large mortgage.a. Sujata cannot claim accident insurance as the accident was caused by her negligence. Sujata's neighbours will not be able to claim insurance. Residence a. What are the insurance claims that can a rise from this accident? d. d. which Sujata can pay out of insurance cover for losses to third parties. as she did not fall intentionally. Multiple of salary are all methods of calculating insurance need by e. d. Insurer participates in loss of insured Solution: c 235. Since the municipal corporation was negligent. d. the municipal corporation cannot claim third party loss insurance to pay damages to Anand. What type of insurance is she looking for? d. Money policy . Home Contents d. Solution: a 237. He met with an accident and had to be hospitalised for 3 months. Anand was driving his car home from work. None of the above Solution: b 232. as it was not caused by negligence on his part. In a case where there is an expense of Rs 50000 for the insured then the insurance company will pay d. Both insurer and insured participates in each others loss d. Anand has to apply to the municipal corporation for damages. Rs 45000 d. 236. Term insurance with a stepped premium Solution: c 233. Her neighbours can claim property insurance cover for loss to their property d. Participating policies are those where _____________. Income. Rs 50000 d. Anand can claim insurance for damage due. Furniture Solution: c 230. Sujata will be able to claim her accident insurance. She accidentally fell off and landed on the sunshield of the next floor. Sujata can claim personal accident insurance. as the damage to their property due to such freak accidents is not usually covered by insurance. Past record e. Workman's compensation Solution: c 234. His motor insurance will cover damages to his car. d. Money back policy d. Anand can claim temporary disability insurance and insurance for his damaged car d. Insured participates in running of insurance of company d. Research e. which crashed and damaged the car of her neighbour parked below. There is an excess of Rs 5000 for a health insurance policy. Solution: a . Rs 75000 Solution: b Excess is a compulsory deductible and hence 45000 would be paid. Anand can claim personal insurance for the accident. Solution: c 231. A client explains that she only wants an insurance policy that will cover her family against financial risk over the next five years. Health Insurance d. Electronic items a. Engineering insurance . Both a and b. An unit linked insurance plan d. It is unlikely her income will increase over this period. Anand will only receive motor insurance claims on his car. when a pit dug by the municipal corporation in the road. which the corporation will pay out of its claims for liability to third party. remained open and unmarked. Both her neighbours will claim property insurance for the freak accident. Commercial vehicle insurance . Jewellery a. Which of the following is type of pecuniary insurance? .

Rs 450000 Solution: a 244. A financial planner can persuade the client to consider the losses from permanent disability and highlight the risks to the client and recommend an appropriate policy for him. but has not bought a cover for permanent disability. Suresh has not done anything to manage his risks and has to immediately go for accident and personal risk cover. If a client is not willing to bear the costs of premium. Rs 325000 d.572 To support dependents 75% of pre-death salary (if no debt) . Shah would be _____________. She needs to insure her life for 30 years d. His argument is that he is paying too much by way of premium for risks that he believes are "far-fetched" and "not likely to affect him". Her current savings are not adequate to provide for her son's post graduate studies however she will be able to save it up by the time he finishes graduation i. She does not need to insure her life d. She needs to insure her life for 12 years d. He wears a helmet and drives carefully. 1. Suresh has transferred his personal risk to other drivers of the road.a Debts: Rs. the client is better off buying insurance. The costs of insuring against losses. It would not be possible to persuade this client to buy more insurance. Solution: a 240. 1. d. Your client has bought life insurance and medical insurance. Mrs. d. Due to the receipt of an additional sum of Rs 2 lakh the average rate goes up to 25%. What would you advise the client? d. 2 lakh p. has a 8-year-old son. knowledge and lecture delivery. Rs 375000 d. (1). She needs to insure her son. will in any d. The most appropriate policy that the owners may take in the interests of business on the life of Dr. He cannot rely on third party damages alone to cover the risk of the road. though his two-wheeler is covered for damages from accidents. d. (1) and (3) . What can you say about his risk management? d. The amount of insurance a person will buy depends on his perception of risks and their impact on him. If losses that would occur to the client in the event of permanent disability are higher than what he can bear. d. During retirement. which have lower probability of happening. Personal Accidental Insurance d. Suresh has controlled his personal risk and insured his property risk d.000 Total Expenses: Rs. d.28. Suresh has not bought accident insurance cover. a person would maintain a high level of life insurance protection to: (1) Pay estate duty (2) Provide succession or dependent income (3) Repay outstanding debt (4) Build cash value .s life for 30 years Solution: a 242. Rs 425000 d. Head Academics is held in high esteem nationwide for his expertise. Holistic Institute of Wealth Management has a great Education centre and a full business.238. If there is then an additional sum of Rs 50000 spent for own expenses then the amount remaining for the family is d. Dr. Suresh has insured the property risk. a 40-year-old widow. Key Man Insurance Solution: c 243. (1) and (2) .Shah. None of the above Solution: b 239. The gross income of a person is at Rs 3 lakh when the average tax rate is 20%. Mortality tables indicate that her life expectancy is another 30 years.e. Term Insurance d. when he is 20 years old. Rangnekar. Personal Data of Nilesh: Earnings: Rs. (2) and (3) . insured his property risk and can claim damages is accidents are caused by third party negligence. He controls some of his personal risk and retains the rest of the risk. Solution: a 241. Insurance may not be necessary in such cases.00. He has made a outstanding contribution for the last 8 years to enable market leadership for Holistic Institute of Wealth Management. it can be assumed that he is willing to bear the costs of risk retention. Which of the following is true? d.

Both of them d. Assuming simple interest of 7% p.000. Personal Accident Solution:d Rajarajeshwari mahila kalyan is a Disablity policy by United India Insurance Company. Rs 370000 d. Brijesh has a health insurance policy with sum assured Rs. Which one of the following is not the Money Back Policy of LIC d. Rs. Bima Kavach Yojana is a policy designed for which area a. Rs. Term Plan d. Urban Area b. 249.42. 30.000 in wages as he could not work for 2 weeks. Rs. 248.000.750 Solution: c 246. 21. None of them Solution: b Bima kavach Yojna is a premium back term plan by Birla Sunlife specially for rural masses. 22. Plastic Surgeons a.000 and 12 times of current annual salary d. 21.10. what is the limit of premium which is totally exempt from Income Tax? d. Jeevan Surbhi d.To support dependants spouse and one child. Consulting Physician Solution: a 250.300 and 5 times of current annual salary d. 20. Rs. 30. Jeevan Chhaya d. 2. 251. Rural Area c.42.000 and 10 times of current annual salary d. In this case his immediate cash needs are d. The estimate is that final medical expenses will be around Rs 1.250 d. 8. Brijesh had a operation to remove his appendix which cost him Rs. As a Financial Planner find out the Insurance required by Capital Retention Approach and the times it will cover his current annual salary? d. While all other 3 are money back policies.000. The deductible is Rs. 28. Rs. the funeral charges Rs 20000.500.000 .15. Jeevan Anand d.42. In addition his wife will require Rs 2 lakh in her retirement period. 22. Experience & Retrospective 247. Rs. Rs. Health Plan d. Normal medical policies do not have a loss of earning cover. Judgement rating Solution: d Rating could be.750.250 d. 5. Rs. if insurer has life insurance policy 252. 33. Rs. 75% of pre-death salary required (if no debt).000 and 11 times of current annual salary d. Retrospective rating d.IV.5 lakh. Money Back d. All these policies are from LIC. Rs. if both the partners are covered d.10.Because 2 lakhs is income need. Rs.10 Lakhs. He also lost Rs. Rs 220000 d. None of the above Solution: b 245.750 d. Schedule rating d. Rs. it comes under which category of Insurance: d.a. Experience rating d. 35. A person is looking at evaluating the life insurance needs that will arise for him. "Rajarajeswari Mahila Kalyan" is a policy designed for women. Which one among the following professionals are not eligible for Professional Indemnity Cover? a. for family package d. Dentists a. What would be the amount paid by the insurance company? d. if paid by a cheque d. Which one of the following does not come under principal of merit rating? d. Rs 350000 Solution: a 150000 + 20000 = 170000. Class or manual IV.65. . General Physician a. Merit rating – Schedule. Individual or judgmental IV.42. Rs 170000 d. In Mediclaim.000 and 12 times of current annual salary d. Jeevan Rekha Solution:b Jeevan Anand is combination of whole life and endowment. Rs.

Rs 35 lakhs c. The amount of insurance cover required here is d. Which of the following statements is (are) true with respect to pure risks? i.000 one can buy for 1 crore. The expense is expected to go upto Rs 3. As a Financial Planner find out his “Net Income Needs”. As a Financial Planner find out the amount of premium that will be used for the insurance cover by employing “Premium as a Percentage of Income Method”. I only . Rs 10 lakh d. Rs 45000 d. d. Rs 100 lakhs c. Cannot be determined Solution: a 5 + 1 + 2 = 8 % of income…. Rs 16000 d. None of the above Solution: a 258. A person lives in a nuclear family consisting of his wife and two children. He has an income of Rs 5 lakh and an expense figure of Rs 3 lakh during the year.25 lakh next year. A person lives in a nuclear family consisting of his wife and two children. Rs 14000 d. In case of a need that will amount to Rs 3 lakh for 5 years after a period of 3 years and where the rate prevailing is 5 % then this figure converted to an insurance need today comes to d. Rs 40000 d. Cannot be determined Solution: d Only premium payable can be worked from the information and not the cover.50 lakhs c. Refer to the above case study.70 Lakhs a. None of the Above Solution: b 4 / 1000 …so. f. Rs 20 lakhs d. 25. A person lives in a nuclear family consisting of his wife and two children. Rs 15 lakhs d. He has an income of Rs 5 lakh and an expense figure of Rs 3 lakh during the year. Rs 50000 d. The expense is expected to go upto Rs 3. Rs. 256.70 lakhs d. Rs 5 lakh d. The expense is expected to go upto Rs 3. In the above case.70 Lakhs. Rs. None of the above Solution: d 255. a. Pure risks may produce either a profit or a loss. Note his Investments in Mutual Funds and Stocks are valued currently at Rs. Rs 1456786 Solution: a 261. 22 lakhs d.2.41000 d. Rs.00 per Rs. In the above case.8 / 100 * 500000 = 40000 257. 260. Rs 40000 d.253.25 lakh next year. Rs. 8 Lakhs as well as he has an exisiting Insurance Policy with a Sum Assured of Rs. plus the Blackout Period Expenses are Rs. Rs 1298843 d. 15 Lakhs a. 13 Lakhs a. Premature death and damage to property caused by a fire are pure risks. Rs 1121989 d. Rs 1356474 d. c. 102. 17. If the Readjustment Period Expenses at today’s value is Rs 3 lakhs and the Dependency Period Expenses at today’s value is Rs 12 lakhs. He has an income of Rs 5 lakh and an expense figure of Rs 3 lakh during the year. None of the above Solution: d 254. Rs 40 lakhs c. d.25 lakh next year. He wants to assume his premium needs at 5 per cent for self plus 1 percent for other members of his family. Rs. He wants to assume his premium needs at 5 per cent for self plus 1 percent for other members of his family. 1000 sum assured. Rs 15 lakh d. He wants to assume his premium needs at 5 per cent for self plus 1 percent for other members of his family. As a Financial Planner find out the Total Insurance cover he can avail by using the “Premium as a Percentage of Income Method” (Note Insurance Premium for age 36 is Rs. for 40.70 Lakhs a. Rs. Rs 25. 5 Lakhs . The amount of premium that will be used for the insurance cover will be d. Rs. ii. as a Financial Planner find out his Insurance Requirement as per “Needs Approach”. 4.

The following fire losses occur: • 2 total losses • 30 partial losses at Rs.50. 9. 264. Rs. Assuming that the laptop was 50% depreciated.00 per thousand c. What amount would Ashish get from the insurance company? d.000 .000 [dep] = 25. 2. 17. calculate paid-up value: Sum assured: Rs. Rs. 2. Rs.000 Solution: d 50. while the second instance is one of reinstatement of sum insured following a loss under the policy. Karan wants to withdraw Rs. The modern portfolio theory suggests that the portfolio returns can be optimized by _______ d. Moving closer to the efficient frontier in terms of the risk return equation. d. 47.000 d. Rs.000.000 when it was purchased one year back.000.00 per thousand Solution: c Total loss = 2 * 20 lakhs + 30 * 2 lakhs = 100 lakhs They are underinsured by 50 % …so 50 lakhs / 2000=2500 / 1000 Rate = 2. 265. Plan: Endowment without profit Term: 20 years Date of commencement: 19/02/1994 Last premium paid yearly: 14/02/2000 a. All the buildings are insured upto 50% of their value. 1200/.500 c. The replacement cost of a new sofa set at the time of the loss was Rs. Rs. Statement B is right c.000 . (B) No. 18.60. Rs. He seeks to restore the cover value to its original level to make up for the loss and is willing to pay additional premium for this purpose. 50. Nilesh owns a laptop that was stolen. d. None of the above Solution: a 266.50.000 d. Rs. Rs. Both I and II f. 56949 d. 20. d.at the end of each month for the next 5 years. At the time of the loss. He expects to earn 10% interest compounded monthly on his investments. A similar laptop can be bought today for Rs. II only Solution: d 262.3. The laptop cost Rs. There are 2000 buildings in a city valued at Rs.000.000 d.25 per thousand b. what is the amount payable by the insurer? Assume deductible to be Rs. pmt = 1200 pv= 56478.000 each. Rs. Case 1: The owner of a building with running machinery seeks to insure the property by choosing a certain sum assured. as full value of the risk to be covered.000 b. Rs. Statement A is right c. Laddering the bond portfolio. The deductible was Rs. Investing in treasury bills and equities.000. 57. 59119 Solution:c find pv given rate 10 % /12 . (A) The former is a case of reinstatement as a basis of indemnity.000 – 3000 [ ded] = 22000. nper = 12 * 5 . d. What lump sum should he deposit now? d. 27.50 per thousand d. Rs. 267. Three years later the sofa set was destroyed in a fire.00.000. c. the furniture had depreciated to 50% of its value. it is in reverse order. Case 2: the owner of a property suffered a fire loss. Both statements A & B are wrong c. 263. 22. 4. Rs. Claim to be paid= 25. 56478 d. 1. 15. Rs. From the following particulars. What would be the pure premium rate? a. Rs.000 and insured it on an actual cash value basis. Rs. Rs. Investing in diversified equity funds. 1. Ashish purchased a sofa set for Rs.000 each. 35.000 – 25. 20.f.000 d. Neither II nor I f. 58630 d.000 Solution: b 50000 *7 / 20 = 17500.00.50 268. Rs. 2.

his wife. Rs.499 d.000 His Daughter: Rs. The treatment expenses of each are: Ramesh: Rs.084 e. 9.719 271. Rs.284 Solution: Traditional net cost method= premium paid-[dividends+SV] --------------------------------------No.499 d. The net cost of insurance per Rs.000 276. Rs.790 e. The net cost of insurance per Rs. e. Rs.1. The net cost of insurance per Rs.000 based on the surrender cost method will be d. Rs.1.577 Solution: d Net payment method = 79150 – 24400 / 34. 20.d. Rs.000 d.454 Solution: Surrender cost method = 79159 – [ 24400 + 35260] / 34. 10.500 His Wife: Rs.719 272.561 d.000 d.000 d. 7. 9.780) e. Re. of years 45600 – 50884 / 20 = -264. Rs. 12. 10.000 based on the net payment cost method will be: d.780) e. 19.510 e. Rs. (-0. Rs. born in 1950. (-0.000 based on the traditional net cost method will be: e. 07 yrs . Rs. 1.284 Solution: aTraditional net cost method= premium paid-[dividends+SV] --------------------------------------No. 1.000 d. Rs.510 d.000 based on the traditional net cost method will be: d. of years 273. Rs.000 that applies to each covered person.454 Solution: Net payment method = 79150 – 24400 / 34. 1.264) d. Rs. Rs. The policy has a deductible of Rs.404) d. has a life expectancy at birth of 65 years. 34. 1. 500 d.870) e. 269.1.517 d.2 / 1000 = -0.780) d. 10 yrs. 20. Ashok. Rs. Rs. Rs.000 His Son: Rs. The net cost of insurance per Rs. Rs.577 Solution: c Surrender cost method = 79159 – [ 24400 + 35260] / 34. (-0. 1.719 274. born in 1955 has a life expectancy at birth of 70 years.1. 2.264) d. Rs.000. He and his family are injured in an accident and have to be hospitalized for treatment.000 based on the net payment cost method will be: d. (-0.2642 270. Ramesh has a family medical insurance policy with sum assured of Rs. 5. Rs.823 d.084 d. 5. Rs. Rs. Ashok is planning to buy an annuity to be paid to him or his wife till anyone of them is alive. Rs. Rs. 0.000 Solution: a 20000 – 10000 = 10000 – 1000 = 9000. (-0. Rs. 21. (-0. 17. 1. The net cost of insurance per Rs. 1. Rs. Sita. 10.1. Assuming that the life expectancies have not changed. 21. e. He should buy an annuity for ________ years.000 based on the surrender cost method will be: e. 12 yrs e. 0. Rs.00. 1. 1. Rs. The net cost of insurance per Rs. Rs.000 d. (-0. (-0. 2.264) d. Rs.719 275.

All of the above Solution: d 286. One of the perils mentioned below will not be covered while setting the claim: . By what means can the policy be kept in force without payment of further premiums so that the intended benefits are retained d. driving Ram’s car (Ram was traveling in the car) was involved in a collision accident against the boundary wall of Rahul’s house and also injured Rahul.000 d. For dependent parents. Both A & B statements above are true d. Medical treatment charges of Ram .000 d. All of the above Solution: d 287. Paid up and surrender value d. Under an Overseas Travel Insurance policy. Repair charges to Ram’s car . Product design d. Insurer d. the driver. which of the following are important factors d. Which of the following statement(s) is / are True? Statement (A): The existence of insurance may make people to exert less effort to control losses. the maximum cover for third party liability is d. Life insurance cover e. Insured d. The actuary is responsible for d. d. It was later ascertained that driver Suresh was under the influence of alcohol. A father takes out a policy to meet his son’s enhanced educational needs when the son reaches 18 years of age. Increasing cove d. 17 yrs Solution: d 277. For professionals with limited time span of income earning possibilities. Whole life d. US $ 1. Both A & B statements are not true Solution: a 285.000 d. Agent d. All of the above Solution: d 280. Limited payment endowment plan Solution: d 283. None of the above Solution: a 284. Medical treatment charges of Rahul Solution: a 279. Statement A is true d.e. Term assurance d. Unfortunately after paying 5 years premium. Boundary wall repair charges of Ram’s house . US $ 5. Age d. Premium rates d. Long term Care cover Solution: a 278. the father dies. Term d.00.00. Immediate annuity d. Policy type . Suresh. the following plan of insurance would be ideal d. For guaranteed renew ability of term insurance policies. Decreasing cover d. Statement (B): It might also induce commitment of frauds against insured. Constant cover d. Age of the insured d. Rate of premium depends on the basis of d. Risk status d. US $ 2. A Term Insurance plan can be for d. Premium rates d. Ram’s neighbour. None of the above Solution: c 281. Hospitalization / Sickness Insurance e. Lien on policy d. Premium is the legal consideration paid by the d. Accident benefit premium d. the least important risk to be covered is e. Broker Solution: b 288. Premium waiver facility d. Statement B is true d. Disability Insurance e.00.

Both A and B Solution: d 294. An owner of a large group of privately owned residential property units is seeking cover from a general insurance company for (i) fire and other associated perils (ii) depreciation in the value of property (iii) complete destruction of property from terrorist strikes for the next six months. Which of these is involved in Needs Analysis? d. Which of these are not contracts of indemnity? d. Consider the two statements below: (A) Past losses may be a precursor of further losses in all types of life and general insurance business. Baggage insurance Solution: a 297. Offer cover for (i) and (ii) Solution: c 296. Both A and C Solution: c 292. (B) Longer term liabilities include personal loans etc. (ii) and (iii) d. critical illness and personal accident insurance cases. All of the above Solution: d 289. Risk premium d. Statement B alone is correct d. Bonus d. Term insurance provides ___________ benefit d. Statement A alone is correct d. Net premium d. Offer cover for (i) only d. it is customary to include credit card debt. (B) Past losses may be a precursor of future losses in some general insurance cases. Survival d. None of the above Solution: a 290. The proposal form has to be signed by d. lease etc. The proposer and witnessed by a third party d. Every policyholder is given the option to choose premium payment ___________ d. Gross premium d. Statement A alone is correct d. Frequency d. Statements A & B are correct d. Death d. Mode d. Homeowner’s insurance d. Risk factors in insurance business Solution: a 291. Personal details of the client d. The proposer and the person whose life is to be assured d. Life insurance d. Offer cover for (i). d. The chances are that the insurance company will____ d. Interest d. Consider the two statements below (A) While assessing financial liabilities. The surplus generated from the investment division of an insurance company. Frequency d. Policy details d.d. which is distributed amongst the policyholders is called as d. Statements A & B are incorrect Solution: b 299. Needs Explaining . None of the above Solution: a 298. No d. Offer cover for (i) and (iii) d. Statements A & B are correct d. Information about the insure d. Maturity value d. Statement B alone is correct d. hire purchase of household goods. None of the above Solution: a 293. The proposer and the agent d. The proposal form includes d. d. under short term liabilities. Fire insurance d. Maturity Solution: a 295. The amount required to meet the risk of death for a given age in a particular year is called d.

an improvement in dietary practices d. 80 hours . None of these Solution: d 309. A general and life insurance broker d. One must look at various stages of an individual’s life to analyze his/her insurance need. None of the Above Solution: c 300. The Insurance Company d. Needs Prioritization d. The given order: first A then B is correct d. Insurance Institute of India d. 100 hours Solution: d 301. what should be the correct order of objectives d. 30 days d. Matured couple d. An independent intermediary d. Actuarial Society of India Solution: b 303. A spouse or partner d. A Broker is characterized by the fact that he isd. 150 hours . . None of the above Solution: a 307. 30 days Solution: d 306. The prescribed training program for life insurance or a general insurance agency that an applicant has to undergo is for ________. d. Both A & B are of equal importance d. 07 days d. Personal protection insurance d. Safer birth practices d. Young family d. A Composite Broker may be defined asd. Of the above two statements. Young adult d. Consider the two statements below: (A) An important step in risk control is to spread out the cost of risks evenly over a period of time. These stages of life comprise d. 10 days d. B should precede A d. Representative of a group of companies d. Children d. All of the above Solution: d 308. Employed by the insurance company Solution: b 302. One who carries on business as a broker and agent d. Which of these will NOT be considered a dependant while taking insurance? d. Enhanced health care amenities d. The IRDA allows a cooling period of ______ for the holder of a Life Insurance policy. Within how many days of accepting a proposal must an insurer handover the copy to the insured? d.d. All of these Solution: d . 50 hours . Attached to the insurance company d. Needs Sequencing d. A general insurance agent Solution: b 305. Life expectancy has been on the rise in India since 1921 because of d. An insurance and reinsurance broker d. Relatives d. (B) The objective should be to minimize the cost of risk. 10 days d. Which agency conducts the pre-recruitment test for a prospective agent? d. All of these Solution: d 310. 15 days d. 15 days d. Which of these insurances are appropriate for a young adult? d. 07 days Solution: b 304. IRDA d. Household insurance d. Automobile insurance d.

None of these Solution: b 313. None of the above Solution: b 316. The day to day running of the insurance company d. A Participant Whole Life policy will allow the insurer to participate in d. Which of these policies refer to a Home Loan/ Mortgage Protection? d. The disadvantage of insurance mechanism includes d. Premiums on death only d. Death claim d. When the insurance company cools off or stops its operations d. None of these Solution: a 321. __________ is a claim arising out of the life assured. in case of his death d. Annuity d. Disabilities caused by sickness . Mr.311. Policy guaranteeing the mortgage loan d. Sum assured in case of death d. Singh has applied for a bank loan of Rs. The person nominated under the policy by the individual. Operating expenses and moral hazard d. Calculate the sum assured of the policy. The board of the insurance company d.injury in an accident d. Which of these is provided for under a Term Insurance policy? d. d. 75 lakhs d. None of the above Solution: c 319. Bodily injury or property damage d. 1. All of these Solution: b 320. The profits of the company d. None of these Solution: c 314. Capital gain and financial risk d. Assured benefits on death or survival Solution: c 317. Payment of educational expenses at a future time d. _____ would be paid the money. 80 lakhs d. What is a “Cooling off” provision in an insurance policy? d. Only the premium is paid till the date of death d. Injury to employees d. The first son of the insured individual d.25 crore d. None of the above Solution: b 318. Continued Educational support to an insured individual’s children. Property insurance policy d. Sum assured plus bonus in case of death d. Assured benefits on death only d. Maturity claim d. Liability exposure is NOT d. Premiums paid on death or survival d. He is an Electronics Engineer by profession. if any Solution: d 322. The bank approves his loan with a conditional hypothecation of +25% and requests him to hypothecate the life policy as collateral security for mortgage redemption. one crore to launch his own business venture. When the insured individual does not have to pay a premium d. The spouse of the insured individual d. surviving till the end of the selected term of the life insurance d. Self . d. When the insured individual can elect to cancel the policy and receive refund of the premium d. If a claim arises out of the death of an insured individual. Reduction of uncertainty d. Credit insurance policy d. Professional negligence in giving advice Solution: a 312. 2 crores Solution: c 315. An Endowment policy may be defined as one that paysd. Which of these is NOT provided for by an Educational Life policy? d. Insurance under Disability Insurance is not provided for___________ d. Education to insured individuals up to a certain age d. The mother of the insured individual d.

A Hospital Expenses Insurance policy will NOT cover d. Long-term care after a major illness d. When there is the possibility of loss or no loss in an outcome. Speculative risk d. before the policy benefit will commence d. Hospital expenses for major illnesses d. before the proposal can be considered d. Gambling d. the policy owner d. Age of the insured individual d. let the client know if any new product will be more suitable for the client in place of the existing d. Assured benefits for major illnesses d. Discussing with the client the need for the program’s review d. Establishing a time for a future review meeting with the client d. Family size of the insured individual d. the person nominated to receive the policy money Solution: d 333. insurance company Solution: b 332. the legal heirs of the life assured d. To clarify with the client if there are any changes in his needs. The initial procedure followed by a planner while reviewing a client’s insurance program is d. The claim will be payable to _______ if the policy owner and the insured individual are different. before the settlement of claim after submission Solution: d 334. Disabilities caused by accidents d. policy holder d. before the issue of the policy document d. educate the client about the need for additional cover in case of changed circumstances d. Pre and post hospitalization expenses d. To analyze the insurance need of the client d. The _______ initiates the action with respect to maturity claims under a life insurance policy. During the review process of the insurance plan. Executing the revised program d. intermediary who sold the policy d. When the health disorder is noticed . All of these Solution: a 325. d. the planner must d. d. Income Protection insurance allows for protection against loss of income in which of these instances? d. When should one inform the insurer in case of a health insurance claim? d. The evaluation of a client’s program will conclude with___________ d. Expenses incurred due to outstation treatment d. notify the client of the risks faced by him. To determine client’s liability d. the waiting period is the period of time that must elapse d. the spouse and children of the insured individual d. the amount insured is associated with_________ d. Pure risk d. Disabilities caused by hereditary causes d. it is a case of d. None of these Solution: c 323. all of these Solution: d 331. Unemployment of the insured individual d. Special risk Solution: c 330.d. d. Setting up a revised program after consulting with the client Solution: d 329. To establish the frequency of review of the client’s planning process Solution: d 328. The insured individual’s disability or sickness d. The insurance provided by critical illness covers d. Under a disability benefit policy. When the insured person is hospitalized d. Personal habits of the insured Solution: a 324. A business loss d. Death of the insured individual Solution: b 326. which are not covered by his program d. planner d. None of these Solution: a 327. Income of the insured individual d. Under personal accident insurance. Hospitalization expenses following an accident injury d.

200 crore d. Life and general insurance business d. None of these Solution: c 336. Both Statements I & II are incorrect d. All of these Solution: d 338. Mr. Insurance companies reduce risk based on law of large numbers. Solution: d 340. The policy holder has to undergo specific medical examinations d. Rs. 50 crore d. When the bills of the hospital. Life insurance and Reinsurance business d. d. d. Tariff advisory committee Solution: b 339. The policy holder has to undergo a medical examination by an approved medical examiner d. Either life or general insurance or reinsurance business Solution: d 341. All of these Solution: b 343. d. Only statement I is wrong.C) d. II. Disability claims in personal accident policies d.C) d. d. General Insurance and Reinsurance Business d. Consider the two statements below I. The amount payable is guaranteed under the policy d. The policy holder has to submit medical certificates from the attending doctor d. Controller of Insurance d. As fixed by the IRDA Solution: b 344. Statement II alone is correct d. Which of these transactions are allowed by an Indian Insurance company? d. where the proposer was born would be deemed a material fact. 100 crore d. Death claims in life insurance policies d. Solution: a 335. Insurance Regulatory and Development Authority d. Mathew is the owner of a large group of privately owned residential property units seeking cover from a general insurance company for 1. Which of these is applicable under property insurance? d. In personal accident insurance. Marine insurance d. Statement I alone is correct Solution: b 345. The insurance planner or intermediary is responsible for_________. _______ is the regulator for the insurance industry in India d. Depreciation in the value of property 3. All of these Solution: d 342. General Insurance Corporation of India (G. The amount payable is at the sole discretion of the employer d. Fire and other associated perils 2. Fire insurance d. General Insurance and reinsurance business d. Life Insurance Corporation (L. Both statements I & II are correct d. medical history would be deemed a material fact. All of these Solution: d 337. The increasing pool of resources accessible to an insurer reduces the risk of non payments. What is the minimum paid up capital required for establishing a new Life Insurance Company? d. Complete destruction of property from terrorist strikes for the next six months . d.d. Health insurance claims d. II. The amount payable is assessed according to the principle of indemnity d. General insurance business comprises d. where the insured individual was hospitalized. When the course of treatment for the insured person is complete d.I. Rs. Consider the two statements below I. are paid. Rs. while II is wrong. General Insurance Corporation of India along with its 4 subsidiaries d. In life insurance. Both Statements I & II are incorrect.I. Statement I is correct. Both Statements I & II are correct d. _______ transacted general Insurance business before the IRDA act was passed in 1999 d. Which of claims is applicable under disability benefit claims? d. Miscellaneous insurance business d.

While talking out insurance. the insurance company proposes a higher premium for Ram. Rs. Ram lives on a flood plain and Raja lives on a hill next town. How would you discuss the present situation? d.5% and 5% Solution: d 351.6 lakhs d. The sum assured received under any policy is taxable if the premiums payable e) is more than 20% of the sum assured e) If it exceeds 30% e) If it exceeds 15% e) If it exceeds 12. by definition. d. Consider the two statements below: I Statements made by the proposer in the proposal form are representations. Ombudsmen 3. 5000 and then hit the wall causing further damage of Rs.2 lakhs d.5% d. Ram should understand that that the risk is higher so the premium is also higher Solution: d 347.The chances are that the insurance company will d. so both should be charged the same premiums d. Rearrange the sequence of the planner’s advises to the client for resolution of insurance complaints 1.3. Statement II is correct Solution: a 350. Assuming simple interest of 7% per annum. 10. 2.1.1.2.2. How much claim is admissible? d. Rs. 7.5% Solution: a 352. Both statements are correct d. Both are healthy. how much per current annual salary he needs for life Insurance.2 lakhs d. Living on a flood plain does not in any way affect the premium d. Arbitration 2. II All such statements are. 25%. Offer cover for 1 d. his own car suffered damages worth Rs.572 to support dependents 75% of pre-death salary (if no debt). Mr. Offer cover for 1.000 d. 5. Rs. if multiple method is used? a) 10 times b) 8 times c) 12 times d) 16 times . Offer cover for 1 and 2 Solution: c 346.5 lakhs Solution: c 348.4 b) 1. They should get a discount for being healthy d.4 c) 1.2. Rs. Consumer Protection forums a) 1.28. 10% and 7% d. able bodied men working in mines. Mani opted to have statutory minimum cover on his car to avoid higher premiums. Offer cover for 1 and 3 d. 18.000 d. A property worth 10 lakhs has been preferred to have a cover of 6 lakhs by its owner. material facts.3 d) 3. In house complaint handling call of the insurer 4.3.4 Solution: d 353. Statement II is incorrect d.1.000 d.4. Alok are: Earnings Rs. 15%. Rs. second and the third year are d. 20%. 15% and 10% d. The maximum rate of commission payable to Agents/ Advisors by the insurance companies for the first. Rs. 35%. Rs. 15% and 12. None of the above Solution: b 349. 5000. Ram and Raja are healthy. 8000. How much does the insurance company usually pay? d. Following are the details of Mr.2. While saving a child.1.1 lakh per annum Debts Rs. Both statements I & II above are incorrect d. Claim has been logged for a loss of 2 lakhs. his car hit a parked car causing damage to it of Rs. and 3 d.

A cargo ship carrying 1000 ton grain was partially ruined by dampness while in transit. . Under this d) The annuity is payable as long as both of them are alive d) The annuity will cease on the death of the eldest of the annuities d) The annuity is payable as long as either one of them is alive d) The annuity payment will cease on the death of any one of the annuitants Solution: c 358. opted for a joint life survivor annuity. a retired couple.3.2003. In both cases the items were insured as valued policies (1) The claims under both instances would be settled for the full value at risk. Tony has purchased a life annuity and Billy has purchased an annuity certain. a) 1 is correct b) 2 is correct c) Both 1 and 2 are correct d) None is correct Solution: a 357. Consider the two statements below: 1. he returned the Policy Bond stating the reason for his refusal to accept some of the terms printed in the Policy Bond and asked for refund of premiums paid. as he did not consider it a serious enough condition. under which the insurer will pay him a certain sum periodically as long as he is alive. for dependent parents to be covered is d) Life Insurance cover d) Hospitalization/ Sickness Insurance d) Disability Insurance d) Long Term Care Cover Solution: a 359. On 20.3. 355. Enquiries reveal that he had periodic stomach aches in childhood. which he does not disclose in the proposal papers. Tony has annuity certain and Billy has variable annuity. It was completed by the insurer and the Policy Bond was received by him on 8. 354. Driving track record is a material fact for Motor Insurance a) Both 1 and 2 are correct b) 1 is correct and 2 is incorrect c) 1 is incorrect and 2 is correct d) Both 1 and 2 are incorrect Solution: a 360. The least important risk. Tony buys an annuity from an insurance company. (A) The first is a case of innocent non-disclosure. whether he is alive or not. Type of construction is considered for Fire Insurance 2. while the second is one of deliberate disclosure. Consider the following two cases: Famous paintings were destroyed in a fire accident in an art gallery. Identify the element mentioned below which not a factor for premium consideration in Overseas Medical/ Travel insurance a) Age of the proposer b) Purpose of the trip c) Duration of the trip d) Amount of life insurance held Solution: d 356. Claimant argued that the assured did not disclose this in the proposal. 1. Consider the following two cases: After two years of taking out a life insurance policy. Manish and Sheela. 2. (B) The first is a case of innocent misrepresentation and the second one of deliberate misrepresentation.Solution: c 75000 * 100 / 7 = 1071429 + 128572=1200001 which is 12 times salary. Sippy submitted a proposal on his own life on 1. He is entitled to a) Any refund b) Half the amount c) 75 % of the amount d) No refund Solution: a because there is a 15 days cooling period where in one can ask for refund of premium by canceling the policy. Billy buys an annuity from an insurance company under which the insurer will pay annuities to him( or his heirs) for a definite number of years. Mr. the assured dies after complications from emergency surgery after an acute attack of duodenal ulcer.2003.3.2003. A doctor applies for life insurance soon after a series of seizures. a) Both statements A & B are correct b) Statement A is correct c) Statement B is correct d) None of the above Solution: c 361.

5525 =50.000 Plan Term: Money back (with profit) 25 years Last premium paid due: 13/09/2004 Three installments of Rs.000 Mode Rebate: Yearly-3%.32.000 d) Rs.000 (Paid-up value) and Rs. a) Rs.6 lakhs – 1. 363.12.49.03 + .500 (Paid-up value) and Rs.2% a) Rs.000. calculate the amount of claim payable.920 b) Rs.998 c) Rs.00.000. Calculate Mr.(2) The claims in the first case will be settled for the full value at risk while the second case will be settled on indemnity basis. rate = 8 % total salary 6. 00.75 • Age 26 .Rs.00.568 (Surrender Value) Solution: 20000 * 23/40 = 11500 + 800 * 20 [bonus]= 27500 assuming he’s paid march 06 premium unless stated otherwise.000 Mode: Half-yearly Bonus Accrued: Rs.000. 2 per thousand Tabular premium: • Age 24 . Sharma is 30 years old and plans to retire at the age of 60.32 + .000 each have been paid in 1994. 15. 1.020 d) Rs. if the insured dies on 27.Rs. 64. 50.000 .000 d) Rs. 13. 365.50 a) Rs.500 and Rs.42 lakhs b) Rs. 12. 26.2. 26.000 (Paid-up value) and Rs.50 • Age 25 .10. Half-yearly-1. From the following data.000 and above . 51.6500 for his wife and child respectively.1975 per thousand for 1 lack = 48.20. He is employed as the Vice President with Global Cosmetic Ltd. 5. 13. The rate of interest assumed for capitalization of future income is as 8%. 49. 5.55 lakhs d) Rs 1 crore Solution: b find pv given pmt=5.50 lakhs c) Rs.18000 with total sum assured as Rs.010 Solution: 4820 ….Re.53 [ 1.2005.5% Sum Assured Rebate: • Upto Rs.03.050 (Surrender Value) c) Rs. 1 per thousand • Rs.2 /100 = 14080.000. 25. Date of Commencement: 13/09/1989 Sum Assured: Rs.64 round off 50 lakhs. What would be the paid-up value and surrender value as on 20.51.07 lakhs pv = 61. a) Statement 1 is correct b) Statement 2 is correct c) Both cases will be settled on indemnity value basis d) None of the above Solution: b 362.75 – 1. 13.1.64 lakhs – 12 lakhs = 49.000 (Paid-up value) and Rs.Rs.3000 and income tax subject to allowable deductions of Rs. 1999 and 2004 Assume that bonus declared is Rs. nper = 30 .03.55.Rs. at a monthly remuneration of Rs. Mr. SV = 27500 * 51.2006 for the data given below? Date of Commencement of Cover: 20.312 (Surrender Value) b) Rs.1995 Plan Term: Endowment 20 years with profit Sum Assured: Rs.20 * 100 = 4820 364. 52.600 per thousand SA. 800 per thousand SA for 10 years duration SVF: 51. 4.1975 -2 = 48. Assume premium: Rs. 20.00.07. He also pays a professional tax of Rs.1.1.18]= 5. 4.800 (Surrender Value) d) Rs. Calculate the yearly premium for the data given below: Date of Birth: 19/09/1979 Date of Commencement of Cover: 21/02/2005 Plan Term: Endowment with profits 25 years Sum Assured: Rs. Sharma Human Life Value (HLV) to recommend adequate insurance cover.10.999 . His life insurance premium is Rs. He pays an insurance premium of Rs.

08.620 c) 82. 3.1. 1.000 Date Of Birth: 16.25 – 1. 1 per thousand Mode Half-yearly Tabular premium o Age 24: Rs.60 o Age 26: Rs. 370.575 d) Rs.1982 Date of Maturity: 15. 1.06.1999 Term: 30 years Bonus: Rs.2 per thousand Mode: Half-yearly.575 d) Rs.00. 69. 49. rebate for large sum assured Rs. 6. 25 years Sum Assured: Rs. calculate the yearly installment: Sum Assured: Rs. 1 per thousandper annum a) Rs.361 b) Rs.25. rebate.50.500 d) Rs.1. 3. 7. 6.1985 Last Premium Paid: 28.1.00.19.10.000.5 % .000 d) Rs.2036 Term: 25 years Double Accident Benefit: Re.00 + 1 = 67.00 d) Rs.00. 800 per thousand SA Surrender Value Factor: o 72% (for 14 years) o 78% (for 15 years) o 80% (for 16 years) Mode of Payment: Quarterly Date of Calculation: 28.03.000 366.00. 7.5% Age: 36 years Proposal accepted at ordinary rates with double accident benefit Tabular premium: Rs. Premium for double accident benefit is Re.24.000 Last premium paid 20.000 Plan Term: Endowment Plan 20 years .08.461 c) Rs. 1. 3.2006: SA: Rs.50 + 1 =5050 / 2 * 300 = 7575 368.916 b) 82.000 b) Rs. 52.775 d) Rs. From the following data.600 d) 91.000 Date Of Birth: 28.16.50 o Age 25: Rs.09.1. Calculate half-yearly premium as on 15.775 Solution: c 49.463 d) Rs.56.000/1.1. 3.d) Rs.2003 Surrender Value Factor 55% Bonus Accrued Rs. 50. calculate the loan amount that can be given: Date of Commencement: 20.1. 3. Calculate surrender value: SA: Rs.03.830.06.2.1990 Plan Term: Endowment with profit.800 Solution: d 150000 * 14/25 = 84000 + 150000 [ bonus]=234000 * 55/100 128700 * 90 / 100 [ loan at 90 % of SV ]= 1.1999 a) 83.1. Calculate the premium from the following data: Plan: Money Back 20 years Sum Assured: Rs.261 Solution: a 69. 1.800 369. 1.15. From the following data.15.900 c) Rs.21 * 100 /2 367.000 a) Rs.20.

The maturity value would be ______.06.5 disc for yearly mode + 1. Shah & Sons had a Fidelity Guarantee cover for its cashiers. a) Speculative Risk b) Financial Risk c) Personal Risk d) Monetary Risk Solution: b 372.000 * 20 = 6. Dr.50 for sum assured of Rs. He has made an outstanding contribution for the last 8 years to enable market leadership for Malhotra Heart Centre. 1.00 lakhs Terminal Bonus 0. 1.83 371. Malhotra Heart Centre has a great marketing centre and a full business.60 lakhs .83 per thousand o Age 29: Rs.a and terminal bonus as Rs.2022 Date of Birth: 28. Claim was lodged. Financial Quantifiable Loss is termed as _____________. 1. 80. 2.10 lakh. 70. a) Personal Accidental Insurance b) Term Insurance c) Key Man Insurance d) Mediclaim Insurance Solution: c 375.50 less for yearly mode Rebate of Rs. a) Repudiation is in keeping with Law. 10. 000 g) Rs. Though no fraudulent was established. 000 Solution:b Revisionary Bonus = 30. 1. Mr. Fraud was detected in December 2003. The insurer had indisputable evidence that Mr. the insurer repudiated the claim because _________________. Shah lodged the claim as Nominee. 50. 10. 1. Shah was hospitalized for 20 days earlier to his taking the proposal which was not disclosed in the proposal form. Solution: b 374. The direct advantage of insurance is a) Indemnification for unexpected losses b) Indemnification for expected profits c) Safety of funds d) Elimination of occurrence of insured risk Solution: a 373.5 SA discount]= 24.1974 Tabular premium o Age 27: Rs. b) Repudiation is not in keeping with the Law. the Chief Heart Surgeon is held in high esteem nationwide for his expertise and success rate in surgery. The sum assured was Rs. Kohli. 50. 10. 28.00 lakhs ---------------Maturity value 10. Neither was it renewed.60 lakhs SA 4. A Prospect and Planner agreed for an Endowment Assurance Policy for Rs. The cashier committed a fraud in April 2002. The most appropriate policy that the owners may take in the interests of business on the life of Dr.00 less for half-yearly mode o Rs.12. suffering from cancer. 000 g) Rs. If Reversionary bonus is taken as 7.93 per thousand o Age 28: Rs. 60. The claim is _____________.5% p. 2. Kohli would be _____________. 27. He died within a night thereafter. 10. The policy expired in the month of March 2003.843 Solution: c 27. a) Payable b) Not Payable c) Payable partially Solution: b 376.241 b) Rs. which he continued for 3 years.242 c) Rs.483 d) Rs. 000 g) Rs.37 per thousand Premium Adjustment: o 5% extra for monthly mode o Re.000 and above Assume premium will be paid annually a) Rs. 150/-per 1000/-. Date of Maturity: 23. Mrs. Shah took a Life Insurance Policy. limited payment for 10 years with the term of 20 years.83 – 3 [ 1. 4 lakhs. g) Rs. 26.

50. c) of rising inflation on future income and cost of assets. 70. Liabilities are insignificant and post retirement benefits substantial. The correct priority sequence in steps of review are_________. b) Insurance company and its agent c) Insurance agent and the Insured client. The two elements involved in evaluation of risks includes probability a) of loss producing events occurring and potential losses b) of occurrence of events. He and his wife both have good health and live in a flat. 3. eliminating and reducing the chances of occurrence of loss producing events or d) Anticipating.000 b) Rs.377.00. Himanshu owns a flat worth Rs. Take approval of the client to revised program a) 1234 b) 1342 c) 1324 d) 1423 Solution: a 379. 900 d) Rs. The advantage of insurance mechanism include a) Indemnification for unexpected losses b) Indemnification for expected profits c) Safety of funds d) Elimination of chance occurrence of insured risk Solution: a 380. He does not have any insurance cover except for the car. Develop revised program. c) Avoiding. 2. 1.2. eliminating and reducing the chances of occurrence of all events.1. asserting and increasing the chances of occurrence of loss.000 (market value). 1. The flat is very well decorated with valuable movable and immovable items.000 Solution: a because under insured by 25 % 381. Establish change in client’s circumstances. The insurance contract promises to a) Compensate in case of insured contingency b) Pay in case of any event c) Pay on demand d) Pay the premiums Solution: a 386. 37. as of now. Mr. Khanna will retire 6 months from now completing 65 years. The principles of Risk management are applicable to a) Individuals b) Small Enterprises c) Huge Commercial enterprises d) All the above Solution: d 382. d) of increasing cost of operation and employment Solution: a 383. Establish a frequency. 75. His 2 daughters are residing abroad. ascertaining and increasing the chances of occurrence of loss producing events b) Avoiding. The most relevant cover for him would be __________.00. Who normally makes the offer in case of Insurance? d) Agent d) Insurer d) Prospective buyer d) Anyone Solution: c 385. The flat is damaged by an earthquake. 4. What is risk control? a) Anticipation. He has insured it only for Rs. . and loss is assessed at Rs. The insurance contract is between a) Insurance company and any person. 000 c) Rs.1. d) Endowment Assurance d) Money Back d) Household Insurance d) Term Insurance Solution: b 378. Assuming the insurer applies the principle of Average to the loss the insurer will get a claim payment of _________. Solution: c 384.00.000.000. a) Rs. He purchased a car last year.

Solution: d 387. a) Deductibles b) Policies c) Endorsements d) All of the above. Material 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 policyholders d) Not affect the insurance contract Solution: b 392. in the case of property Insurance? a) At the time of entering contract b) At the time of loss occurring c) At any time d) Both at the time of entering into the contract and at the time of loss Solution: d 388. What does a Pure Risk involve? a) Loss or No Loss b) Loss and Gain c) Gain d) All the above Solution: a 390. Insurable interest is not satisfied between whom under the Life Insurance contract? a) Husband-Wife b) Parent-Child c) Friends d) Employer and Employee Solution: c 389. How much amount can the insurer recover under the existing subrogation rights? a) Equivalent to the claim. health and habits of the person to be insured b) Particulars possessions of the person c) Particulars about the vehicle owned d) None of the above Solution: a 393. An example of material fact under Life insurance is a) Occupation. Life insurance is primarily a) An investment tool b) A financial security tool c) A tax saving tool d) None of the above Solution: b .d) Registered insurer and the insured (individual or firm) who is competent to contract. Insurance means a) Sharing of risks b) Sharing of liability c) Sharing of responsibility d) None of the above Solution: a 398. Solution: c 396. What time does Insurable interest exist. The term used to alter the insurance contract is _________. the claims of the policy is shared by a) All insurers in the same proportion as their share bears to the total value insured b) Insured and insurers c) Total value insured will be shared by main insurer d) Main insurer and the insured Solution: a 397. Violation of Utmost Good faith gives the aggrieved party d) The right to avoid the contract d) The right to nondisclosure of breach d) The right to honour the contract d) None of the above Solution: a 395. b) Equivalent to the sum insured c) Not more than 1 lakh d) 20 % of sum insured Solution: a 391. In co-insurance. Insurance a) Protects the loss of an asset due to peril b) Compensates the loss caused by a peril c) Safeguards the loss of an asset due to peril d) None of the above Solution: b 394.

407. In order to be insurable. Without insurable interest. The insurance mechanism is used to a) Control the risk b) Transfer the risk c) Retain the risk d) All of the above Solution: b 401.399. Which of these is not an example of automatic insurable interest a) Husband and wife b) Brother and sister c) Company and a key-executive d) Any of the above Solution: b 408. Material facts should be disclosed during a) Proposal stage b) Revival stage c) Alteration d) Any of the above Solution: d 405. an insurance contract would be a) Void-ab-initio b) Wagering contract c) Void contract d) Commercial contract Solution:b wagering is basically betting / gambling . Uberrima fides means a) Utmost Good Faith b) Ad idem c) Caveat Emptor d) Doctrine of warranty Solution: 406. Peril refers to a) Wear and tear of assets b) Natural calamities c) Accidental occurrences d) Either B or C Solution: 403. Which material facts need not be disclosed? a) Facts of law b) Facts of common knowledge c) Facts known only to the proposer d) Both A and B Solution: 409. The components of Personal Risk that are faced by the individual is/are a) Death b) Disability c) Medical d) All the above Solution: 411. The mechanism of insurance is a) Reimbursement of losses by the Government b) Channeling of savings into investments c) Charring of risk by the community to minimize impact on a single member d) None of the above Solution: 404. Insurance covers a) Dynamic Risk b) Speculative Risk c) Pure Risk d) Fundamental Risk Solution: c 402. a) Speculative Risk b) Financial Risk c) Gambling Risk d) Pure Risk Solution: d 400. the risk should be a) Capable of financial measurement b) Similar to a large number of homogenous risks c) Not against public policy d) All of the above Solution: d 410. A material fact is a) A fact that would influence the judgment of a prudent insurer in fixing the premium or determining d c a d d . _____________ are insurable.

In case of whole life insurance. b) An agreement concluded by one insurer with another. a) Under Status b) Under Contract c) At Common Law d) All of the above. The damages that are awarded during personal injury claims include a) Special damages and General damages b) Special damages only c) Damages to third parties only d) None of the above Solution: a 418. Official and Property Risks Solution: b 422. the sum assured is normally paid to the a) Life assurer b) Nominee c) Legal heir d) Any of the above Solution: b 413. What is the liability that arise due to failure of one of the parties not fulfilling the provisions of contract which it had entered into with another party? a) Vicarious Liability b) Special Damages c) Contractual Liability d) Strict Liability Solution: c 419. Life Insurance is a) Total loss cover b) Indemnity cover c) Substitute for loss of income d) All of the above Solution: c 420. Which of the following are types of annuity? a) Immediate b) Deferred c) Flexible d) All of the above Solution: d 415. Name the area(s) under which legal liability risks may arise. c) The other name given to coinsurance d) The action of insured in getting the same risk insured by another insurer. The premium charged by the life insurer is calculated on the basis of a) Mortality Rate b) Interest c) Expenses d) All of the above Solution: d 414. Human Life Value in general is a) Total income of an individual b) Total wealth of an individual c) Earning capacity d) None of the above 423.b) A matter of common knowledge c) A fact that will reduce the premium d) A fact that will increase the premium Solution: a 412. Economic value of an individual includes a) Self b) Self and dependents c) Family (Economic unit) d) Only dependents Solution: c 421. Human Life Value amounts to a) Total savings b) Total investments . What is Reinsurance? a) Distribution of insurance business made by the insured. Solution: b 416. Solution: d 417. Insurable Risks are categorized into a) Private and Official Risk b) Personal and Property and Liability Risks c) Official and Property Risks d) Private.

back to force is called___________ a) Recovery b) Renewal c) Revival d) Relapse Solution: c 427. Which of the following statement(s) is are True? Statement A: Life insurance policies are available through the Unit Trust of India also. Which of the following statement(s) is/are True? Statement A: Sick people may be considered for grant of insurance on special terms. The impact of the death of one sole breadwinner of the family “over 40s family “ would be severe in the area of a) Meeting outstanding debts b) Meeting basic needs c) Meeting medical needs d) Meeting educational needs Solution: b 434. Statement B: In a joint life policy. a) Only statement A b) Only statement B c) Both statements d) Neither of the statements 428. a) Only statement A b) Only statement B c) Both statements d) neither of the statements Solution: a 426. Why does an office conduct a special enquiry in the case of death claim which arose after 4 years? a) As a precaution b) for a large sum assured c) As a routine d) On suspicion of suppression of facts Solution: a 425. The behaviour of an agent who tells his client that the advice given by another agent is wrong is _______ a) Non-professional b) Interfering c) Childish d) Dominating Solution: a 431. What risk is covered by an annuity? a) Sickness b) Accident c) Living too long d) Death Solution: c 432. What measures are taken to reduce or eliminate the chances of occurrence of loss? a) Control Measures b) Cost Measures c) Administrative Measures d) All the above Solution: a 433. XYZ Ltd has a project that is insured for 10 crores.c) Assets + Estimated future economic value of an individual his family d) Past income 424. Statement B: Insurance cover begins as soon as the premium is received in the office along with the proposal. The insurance policy is issued by Insurance . Which of the following statements is/are True? Statement A: The fact of having been on a sick leave must be disclosed even if there were no sickness and the certificate of sickness was false. 60% of its risk is covered by Insurance company A while 40% of the balance risk is covered by Insurance company B. a) Only statement A b) Only statement B c) Both statements d) Neither of the statements Solution: c 430. A person’s insurable interest in his own life is ___________ a) Unlimited b) 10 times his salary c) Equal to his assets d) Obligation for family Solution: a 429. Bringing a policy. death claim is payable only when both the insured die. Statement B: Most plans of insurance are a combination of two basic plans. which has lapsed.

Naresh is involved in a collision with the boundary wall of a neighbour’s house and injures the neighbour as well. Joint life policy. While setting the claim. He plans to start a family in 3-4 years. Children’s deferred. Naresh is a car driver by profession and drives Harish’s car. Harish was also in the car during the collision. Which of these may be excluded from coverage by the insurance company? a) Fire b) Theft c) Third party liability d) Loss of rental income Solution: b 437. Rahul’s life expectancy at birth is 65 years while Priya’s life expectancy at birth is 72 years. Singh a 50% rebate. Venkat proposes an insurance cover for his farmhouse which is occupied at intervals during the year. He plans to sign up for a flat immediately. It was later discovered that Naresh was under the influence of alcohol. which of these perils will not be covered? a) Repair charges to Harish’s car b) Boundary wall repair charges to the neighbour’s house c) Medical treatment charges of Harish d) Medical treatment charges of Rahul Solution: c 438. after paying a premium for 5 years. Mr. Which of these methods can Vikram adopt as recourse? a) Asset Insurance b) Legal Liability Insurance c) Comprehensive Insurance d) Professional negligence cover Solution: d 439. Children’s deferred policy. Victor is 24 years old and a young executive who has begun his career. Mortgage redemption Solution: c 442. His spouse is not working. Mortgage redemption c) Whole life with term assurance for spouse. Mr. Sharma passes away. Tripathi has no life insurance yet. Singh about the purchase of insurance plans for tax exemptions which will earn Mr. Health b) Term insurance. Mr. Unfortunately. It has a collective insurance clause setting out the liability of both the insurance companies.Rahul and Priya (husband and wife) were born in 1950 and 1958 respectively. Which of these combinations would you recommend for his case? a) Limited payment endowment assurance.company A. However. Mr. Joint life. Rahul is planning to buy an annuity that will be paid to him or his wife till any one of them is alive. Mr. He is in his early 30s and has a baby girl. Joint life. Sharma takes out a policy for his son Rahul’s higher educational needs after Rahul reaches 18 years of age. For how long should he purchase this annuity for? a) 10 years b) 12 years c) 17 years d) 22 years Solution: d 436. Vikram. an insurance advisor advises his client. He travels extensively by road and out of the city. Singh was unable to obtain this tax redemption and plans to sue Vikram for giving him misleading advice. How can the policy be enforced without paying future premiums so that the intended benefits are preserved? a) Accident benefit premium b) Line on policy c) Premium waiver facility d) None of the above Solution: c 441. This case is one of a) Co-insurance b) Reinsurance c) Both (a) and (b) d) None of the above Solution: a 435. The principle of insurance is based on a) Sharing of Resources b) Sharing of Losses c) Sharing of Capital d) Sharing of Investments Solution: b . Educational annuity with premium waive d) Money back policy. Children’s deferred. Virendra Tripathi is an executive in an Indian company. Mr. What kind of life insurance cover would you recommend for him? a) Endowment insurance policy b) Money back policy c) Unit linked policy d) Temporary insurance policy with convertibility and renewability option Solution: d 440.

1000 in treating his injuries.443.27 Certain conclusions are drawn below based on this study.40 44. Tarun’s act has created liabilities under _________. aged 35. She barely manages to get her funds back when she opted for the third option. is a Major in the Indian Armed forces. His proposal and family history reveal that he suffered from typhoid at the age of 18 years. Thereby he suffered several financial losses.70 1981 54. Consider the following situations1. Mr. Jain has suffered several damages to his property (uninsured) because of fire. caused injuries to a pedestrian by rash driving of car. His parents are alive. Sinha. Tarun. a) Not understandings the risks b) Taking a gamble for high returns c) Succumbing to greed d) Exercising poor judgment Solution: a 448. where he deposited it. a) Investment Risk b) Speculative Risk c) Regulatory Risk d) None of the above Solution: a 447.30 66. Hillary had a choice of investing her retirement dues in post office savings or bank deposit or with private fund raiser. is overweight by 10% and consumes one litre of beer every alternate day.10 54.10 58. Read the following two statements: (I) Death of the breadwinner is a “Financial Risk” (II) It is a ˜Pure Risk” a) I & II are correct b) I & II are incorrect c) I is correct d) II is correct Solution: a 446. went bankrupt due to questionable practices and defaulted on repayment. Ram lost his life’s savings when the owners of the private financial company. Please see the following data about life expectancy at birth of men and women during the last three decades in India-Census Year Male Female 1971 46. a) The Investment plan b) The Pure Risk c) The Speculative Risk d) None of the above Solution: b 449. a driver. The injured victim had to spend Rs. 2.60 2001 62. The underwriter will not consider any of these features as adverse. Bajaj. This is the case of ___________. His father passed away a year ago at the age of 70 due to a heart attack.70 1991 58. a) Only Statement A is correct b) Only Statement B is correct c) Both statement A and B are correct d) Both statement A and B are incorrect Solution: d 445. Which of these conclusions CANNOT be deduced from this data? a) Today. a) Common Law b) Contract c) Statute and Common Law d) Statue only Solution: c 450. Mr. This happened because he did not cover _________. Mr. It is the case of loss under ___________. This would be an instance of __________. aged 30. female children enjoy longer lives than those born three decades ago b) Women’s mortality has improved more than the mortality experience of men during the last c) The same trend as above is seen in the last two decades as well d) The mortality experience of men has improved in comparison to women in the last decade Solution: d 444. Mr. Roy took a business premises on lease with the provision that he himself had to pay the insurance premium for fire and other perils and not the owner of the premises. a) Risk Control b) Risk Transfer c) Risk Retention d) Risk Reduction Solution: b . The underwriter is likely to ignore these features.

. if the premises suffer a fire would be __________. c) Principle of duty of disclosure d) Principle of indemnity Solution: c 455. a) Doctrine of utmost good faith. the principle of waiver and in the latter. Enquiries revealed that he had periodically stomach aches in childhood. (I) The principle of estoppel and that of waiver in the first and second case respectively makes the denial of claim untenable. The insurer does not contact the applicant for the missing information and the policy is issued. a) A & B are correct b) A is correct c) B is correct d) None of the above Solution: b 454. the assured dies after complications from emergency surgery after an acute attack of duodenal ulcer.Case 1: An insurer receives an application for insurance which contains an incomplete or missing answer. the car met with an accident next day. he should have taken Accidental Insurance instead of property risk insurance. controlled some of the risks and retained the rest. An insurable loss must not be a) Catastrophic b) Fortuitous or accidental c) Definite d) None of the above Solution: a 453. (II) In the former. The grounds on which the insurer refuses to entertain the claim. He has ______________. the company denied the claim on the ground that the premium was not paid on time. Subsequently. as he did not consider it as a serious thought enough condition a doctor applies for life assurance soon after a series of seizures. Showroom of Rajesh & Sons. A fire insurance covered premises was housing a constructor’s office. Case 2: In another case an insured’s car insurance renewable premium was about to fall due. b) Doctrine of adheres ion. Peter has insured his two-wheeler for a property risk. Claimant argued that the assured did not disclose this in the proposal. The contents were insured. (B) The first is a case of innocent misrepresentation and second one of deliberate misrepresentation. will be considered by the insurance company under _________. the constructor vacated the premises and the space was rented out as a clothing store. which he does not disclose in the proposal papers. (A) The first case of innocent non-disclosure. d) Made a mistake. On enquiry with the company. they told him that there was 15 days grace period from that day during which time period he could pay. d) Indemnity d) Negotiated d) None of the above d) Either A and B Solution: d 458. In between. After two years of taking out of life insurance policy. Insurance contracts can be __________ contracts. a) Property Liability b) Financial Liability c) Legal Liability d) None of the above Solution: c 456. while the second is of deliberate non. the principle of estoppel were violated. d) Transferred his property risk. subsequently when claim arose under the policy. payment was denied on the basis of the earlier incomplete information. a) A is correct b) B is correct c) A & B are cases of aleatory contact d) None of the above Solution: b 452. The owner’s claim for damage of clothes etc. The insurance company was not informed about the change of the tenant. He wears a helmet while he drives but does not have an Accident Insurance. because of which the denial of claims were set aside by courts. d) Taken a grave risk by not taking accidental insurance.disclosure.451. Drycleaners caught fire in an accident where many items of clothing of customers were destroyed. Which of the following contracts do not adhere to the application of law contract? ) Insurance ) Stock Market ) Property Deals ) None of the Above Solution: d 457. Solution: c d) Done a good thing by reducing his premium payout personal by not taking Accidental Insurance.

An insurance party reinsures the risk with a re-insurer. 3. both have a life expectancy of 35 years.000 p.459. 75.500 Furniture replacement cost 21.000 + cost of the land Daughter’s marriage 3. & Mrs. Life cover 3. Manish insures his home worth Rs.000 Current professional Indemnity.25.000 Cost of building house 22. 20 lakhs. The Contractor gets a third party Liability Insurance d) Sam gets Disability Insurance. Mr.00.3.000 Acquisition value 37. In the next twenty years. Solution: b 465.50.75. this happens in the case of d) Risk retention d) Risk Transfer d) Both A and B d) None of the above Solution: b 461. Mark.25.5 lakhs Final costs Rs.50 lakhs for Rs. The most necessary cover for him is d) Fidelity Guarantee d) Professional Indemnity d) Public liability d) Burglary Solution: b 460. He already has his own home and savings of Rs.4 j) 4. Mr. Mohammed. a Manager earning 40.000 Retirement funding 6. Property insurance 4. You have the following information: Current investments Rs. Mr. Sharma’s life. He was unable to attend work for 6 weeks. What are the options available to Sam? d) Sam and the contractor get the Accident Insurance. Calculate the insurance required based on need based and income replacement methods on Mr. The contractor gets third party Liability Insurance d) Sam gets Disability Insurance. Sharma. aged 50 and 47. Cash transactions do not take place in office.00. 30 years and married. 30 lakhs.2 Solution: a 466.000 What should be his priority in regards of insurance to the following? 1.000 House market value 97.1. PTD 2.a has the following details: Electronic items market value 3. and the contractor gets Accident Insurance. The house was destroyed in fire and he suffers loss worth Rs.50. He maintains his office with modest furnishings. He has 3 young juniors. 3. Sam got some injuries at the building site when the building contractor’s car ran over his toe.42 lakhs which are well invested. How much will he receive from the Insurance Company? d) 20 lakhs d) 16 lakhs d) 12 lakhs d) 30 lakhs Solution: c 462.00. Sharma’s personal expense) Mr.3.1. An insurable loss must be d) Certain d) Fortuitous or accidental d) Indefinite d) Impossible to happen Solution:b 463. 25. 2. Sharma’s income post tax Rs. if he has one. he will be able to save enough to fund his retirement and his children’s education. Mark is an advocate having a roaring practice consisting of highly valued intricate cases of companies.75.4 j) 2. works for a firm which provides him with medical cover. Which of the following might be the most important insurance for him? d) Medical Cover d) Temporary Total Disablement Cover d) Property insurance d) Life Cover Solution: d 464.00.1 lakh .000 Children’s education 2.50. Professional Indemnity j) 1.2.2.3.000 Current investments 15.1. d) Sam gets Accident Insurance.000 Expenses Rs.4 j) 3.000 (including 1 lakh of Mr.

Arora have to support him for life.26 lakhs income replacement[retention] = 2. e) Mr.000 * 100/ 3 = 83. d) He should not take out property insurance since he does not need it. e) None of the above Solution: c 468.5 d) None of the above Solution: a 472. As an insurance advisor. Most of his earnings is through commission. aged 50.. He decides to take out insurance on his property. post inflation rate/discount factor is 3% d) 42 lakhs. Consider the following statements: (A) Payment of the first premium is legal consideration (B) Payment of the first year’s premium as also the subsequent two year’s premium constitute legal consideration. e) Mr. the courts construe the terms of insurance contract in favor of d) The insured d) The insurer d) None of the above d) Depends on circumstances Solution: d 473. & Mrs. works for a private firm. you would estimate the life expectancy of _________.4. which is not earthquake prone. surrenders 5. Adverse loss ratio d) 1. Arora’s father because Mr. Mr. Consider the following statements: (A) The proposer has to demonstrate utmost good faith while proposing for insurance (B) Mere good faith is enough. Investment rate 3.2.50. rate = 3 % pv= 44. Expenses 4. Arora have Mr. 3 d) 1. Dutta lives in Kerela. you would advise him that _________. who would look after the father. d) Property damage in motor accident d) Curios. 117 lakhs d) 20 lakhs. Post tax. Arora’s father staying with them.2. he is single and already had TPD cover.3. Puneet. d) Only Statement A is correct d) Only Statement B is correct d) None of the above. old jewellery d) Third party liability claim d) Property insurance Solution: c 470. e) Mrs. who is entirely dependent on them. due to _______________________. since it will be expensive d) He should not take out property insurance. Mr.3. He does not have benefits like sick leave.2. LTA etc. 52 lakhs Solution: Need based: Pmt = 200000. Insured Declared Value (IDV) does not apply to _______________. nper = 35 .26 lakhs add 1 lakhs final cost and deduct 25 lakhs investment 44. As an insurance advisor. An insurance company makes a surplus. Lapse. d) Life cover d) Health insurance d) Endowment policy d) Property insurance Solution: b 469.4 d) 1. 68 lakhs d) 42 lakhs. Because of the application of the doctrine of adhesion. & Mrs. since it will be expensive d) He can take out property insurance as the premium will depend on the risk and will therefore Solution: c 471.26 + 1 – 25 = 20. d) Statements A & B both are correct d) Statement A & B both are incorrect . Arora because if she is not there. His priority should be ____________. d) Statements A and B are both incorrect Solution: d 474. 83 lakhs d) 20 lakhs.333 lakhs 467. 1 Mortality of policy 2. Arora because he manages the expenses. d) He should not take the earthquake option.

Rajan has an outstanding debt of Rs 2 lakh.00.000 e) Rs 10. medical expenses of Rs 50000. medical expenses of Rs 0.d) Statement A is incorrect.000 e) None of the above Solution: d 480. Which of the following is/are considered to be pure risk? d) Property risk d) Liability risk d) Risk from failure of others d) All the above Solution: d .50.50 lakhs per annum. Which of the following is not an example of Risk reduction when driving? d) Wearing a seat belt d) Driving within speed limits d) Driving defensively d) Not driving Solution: d 484.A Five time income multiplier is the accepted industry norm) e) Rs 7.00.000 e) Rs 41.000 e) Rs 40. measured d) measured. Refer to the case above. In such case the insurance company will pay _________.50.50.00. Risks must be __________ before they can be _________ d) severe. So when a genuine claim is filed for Rs 50000. With an annual income of Rs 7 lakh and a 5 time income multiple the insurance need according to the income method is a) Rs 450000 b) Rs 500000 c) Rs 700000 d) Rs 3500000 Solution: d 478. as a Financial Planner find out his Insurance Requirement as per “Income Plus Expense Approach” e) Rs 35. while B is correct d) Statement A is correct & B is incorrect Solution: c 475. There is an Excess Clause of Rs 5000 in a health insurance policy.00. education expenses of Rs 2 lakh and other domestic expenses relating to 1 lakh.000 e) Rs 12.50.000 e) None of the above Solution: c 481. As a Financial Planner find out his Insurance Requirement as per “Income Rule” (Note :.1 lakh per annum plus he earns an annual income of Rs 7 lakh. A person has expenses relating to a loan of Rs 2 lakh. identified d) none of the above Solution: d 476.000 e) Rs 35. Which are the two elements involved in evaluation of risks? a) Probabilities of loss producing events occurring and potential losses b) Probabilities of occurrence of events c) Probability of rising inflation on future income and cost of assets d) Probability of increasing cost of operation and employment Solution: a 483.000 e) Rs 39. assessed d) identified . To whom the principles of risk management are applicable? a) Individuals b) Small enterprises c) huge commercial enterprises d) all the above Solution: d 482. d) Rs 5000 d) Rs 45000 d) Rs 50000 d) Rs 55000 d) None of the above Solution:b 477. In the above case the requirement as per the income plus expense method is a) Rs 3000000 b) Rs 3500000 c) Rs 4050000 d) Rs 4500000 Solution: c 479. Mr. education expenses of Rs 2 lakh per annum and other self maintenance expenses of Rs.

d) I only d) II only d) Both I and II d) Neither I nor II Solution: a 491. 45 Lakh.485. ) Location of the loss. Ram got an Insurance from a company. In this case he has failed to disclose d) relevant fact d) material fact d) known fact d) common fact Solution: b 489. II. which can insure her property to the extent of Rs. which stood in his place in relation to a claim on a 3rd party.050 cards. Uses all values in the data set. Range equals the highest value minus the lowest value. She could only afford to pay a premium. Which of the following statements concerning range is/are correct? I. He spent most of the afternoon randomly drawing cards to see how often an ace appeared. The formula used to calculate the sum payable to the insured where a subject to average clause is mentioned in the contract is: d) Loss*(Sum Insured/ actual value) = sum payable d) Actual Value*(Sum Insured/ loss) = sum payable d) Sum payable/(loss*sum Insured) = Actual Value d) All the above Solution: a 487. Raj has insured his house with a well known insurer. Jack was very bored on a rainy day. c) It has an increasing cash value and decreasing risk amount. d) Both the cash value and amount at risk increase annually. Which of the following is a characteristic of an ordinary life policy? a) It is the most expensive form of cash value insurance.5% d) 15% Solution: b 492.25% d) 8% d) 12. an ace appeared 84 times. all of the following projections are made EXCEPT: ) Monetary value of a specific loss ) Total dollar loss of all losses during a particular time period. b) The premiums do not increase from year to year. When evaluating a loss exposure. Solution: c 495. He drew a total of 1. Which of the following statements concerning yearly renewable term is correct? a) The insurance company may experience some adverse selection at renewal time. This is an example of : e) Normal Insurance e) Over Insurance e) Double Insurance e) Under Insurance Solution: d 486. Solution: d 490. b) It matures at age 65. . During that time. He did not inform the insurance company that he has stored fire-works in his house. Rama owns a property worth Rs. This example best relates to: d) utmost good faith d) un-insurable interest d) subrogation d) non-indemnity Solution: c 488. ) Frequency of losses during a particular time period. What is the relative frequency of Jack's drawing an ace? d) 1. 35 Lakh. The human life value approach is based on a) a person’s eligibility for social security income b) the amount of life insurance he or she owns c) the standard of living he or she wishes to have d) the capitalized present value of potential lifetime earnings Solution: d 494. c) Evidence of insurability must be furnished at the time of each renewal. Which of the following is an advantage of pre-funding a loss? d) Money is free for other uses until needed for losses d) Costs can be spread over a period of time and limited to the exact amount required to pay for the losses d) Money in reserves cannot be used to support other activities d) Reserves can be built up over many budget periods Solution: b 493.

) Peril. ) Indirect (consequential) loss. What is consideration that insurer makes under insurance contract? a) promise to compensate in case of insured contingency b) promise to pay in case of any event c) promise to pay on demand d) promise to pay the premiums Solution: a 499. Solution: d 505. the publisher is using the holdharmless agreement as what type of risk treatment measure? d) Risk selection d) Risk avoidance d) Risk transfer d) Risk retention Solution: c 506. A warranty in insurance contracts are a) Guarantee b) Stipulations imposed by 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 pay the loss to the insurer in case of the loss being higher than the sum insured. What is the binding force of any contract? a) offer b) acceptance c) parties d) consideration Solution: d 498. __________ are the provisions under insurance contracts that stipulate deduction of a pre-specified amount from the claims payable under the policy a) endorsement b) rules c) deductibles d) none of the above Solution: c 503. or a large number of persons or groups within the economy. A risk that affects the entire economy. d) Particular risk. rather than the publisher. ) Hazard. In case of insurance who should normally make the offer? a) agent b) insurer c) prospect d) anyone Solution: c 497. ___________ is a compulsory deductible from each and every claim that the insurer pays to the insured a) premiums b) excess c) premiums and excess d) franchise Solution: b 504. Through this agreement. Solution: b 501. A condition that increases the chance of loss is called a (n) ) Direct loss. Which insurance contracts are not contracts of indemnity? a) Fire b) Marine c) Life Insurance d) Motor Solution: c 500. What are used when the terms of insurance contracts are to be altered? a) deductibles b) endorsements c) policies d) all the above Solution: b 502. the author. is held liable for plagiarism. is called a (n) d) Objective risk. A publishing company solicits manuscripts for publication. The publishing company is concerned that an author might plagiarize material and that the person who was plagiarized might sue the publisher. . the contract with the author includes a hold-harmless agreement. In this situation. To address this risk. Solution: b 496.d) The insured can renew the policy each year by completing a medical exam.

All of the following risk treatment techniques are classified as risk control methods EXCEPT d) Avoidance. d) Transfer of risk. Both gambling and insurance are socially productive. These measures are examples of d) Risk transfer. d) Fundamental risk. What is this problem called? d) Adverse selection d) Morale hazard d) Speculation d) Moral hazard Solution: a 513. d) Risk avoidance. she would like to purchase health insurance. Given her condition. d) The chance of loss must be calculable. Solution: d 511. When Bajaj Company managers learned of the potential legal liability that could result from the manufacture and sale of prescription drugs. so that average loss is substituted for actual loss.d) Speculative risk. Solution: b 509. d) Loss control. d) Loss reduction. Dean’s Discount Store has been experiencing problems with shoplifting losses. d) Risk retention. d) Losses should not be catastrophic. Which of the following statements is (are) true with respect to insurance and gambling? .A pre-loss objective of risk management is the reduction of uncertainty.A post-loss objective of risk management is the stabilization of earnings. If a tag is not demagnetized before the product bearing the tag leaves the store. d) Risk deprives society of certain goods and services. d) Select the appropriate techniques for handling losses. . you’ll be paid for the loss. Insurance is simply a wager that if a loss occurs. The first step in the risk management process is to d) Implement and administer the program. d) Neither I nor II S d) Both I and II d) I only d) II only Solution: b 516. ii. Managers of the company are considering several diversification options.Chaya does not own health insurance. Solution: b 510. d) Both I and II d) II only d) Neither I nor II d) I only Solution: c 512. d) Loss prevention. d) The loss should be within the insured’s control. When higher-than-average risks (like Chaya) are insured at average premiums. Solution: c 515. she has been experiencing sharp abdominal pain. d) Loss indemnify. d) Loss indemnification.The spreading of losses incurred by a few individuals over a larger group. d) Risk creates fear and worry. losses are higher than anticipated. Which of the following statements is (are) true with respect to the objectives of risk management? ii. Solution: c 514. d) Risk requires reserve funds to be set-aside in case a loss occurs. an alarm bell sounds. Solution: a 508. Solution: d 507. All of the following are ideal requirements that must be met for a risk to be privately insurable EXCEPT d) There must be a large number of similar exposure units. All of the following are burdens of risk on society EXCEPT d) Risk forces individuals to practice loss control. Bajaj Company manufactures electronic components. How did Bajaj Company choose to deal with the risk of legal liability arising from the manufacture and sale of prescription drugs? . For the past two weeks. Dean decided to install a camera monitoring system and to use magnetic price tags on products. One possibility is production of prescription drugs. d) Identify potential losses. the managers rejected the idea and decided to consider other diversification options. d) Evaluate potential losses. d) Pooling of losses. is known as d) Fortuitous loss.

) Net present value. Such events are called d) Mutually exclusive events.d) Loss control d) Risk transfer d) Risk retention d) Risk avoidance Solution: d 517. She is trying to determine if a loss control investment is justified. d) Cash flow analysis. Olivia is Risk Manager of ABC Company. The loss of profits that could have been earned if the business had remained open is best described as a (n) d) Hazard. In analyzing the probability that certain events will occur. d) Funded reserve. d) Contracts of adhesion. After a fire damaged the store. d) Independent events. d) Unconditional events. d) Probability analysis. d) Indirect (consequential) loss. d) Enhances credit. Deductibles are used for all of the following reasons EXCEPT . d) Valued contracts. d) Reduces insurance company operating expenses. d) Peril. An insurance contract must be accepted in its entirety and any ambiguity in the contract is construed against the insurer. d) Current net income. Kavita was forced to close the business for four weeks while repairs were completed. ) Internal rate of return. She summed the present value of the future cash flows and then subtracted the cost of the loss control equipment. d) Dependent events. The type of analysis that Jonathan employed is called d) Regression analysis. d) Time value of money analysis. Solution: a 521. Because of these characteristics. All of the following are benefits of insurance to society EXCEPT d) Provides a pool of investment funds. he can predict how many losses will occur next year. d) Indemnifies losses. Solution: a 525. d) Bilateral contracts. Armed with this information. Solution: c 524. Jonathan collected data on the number of claims and the number of miles driven for the past 15 years. d) Direct loss. Olivia calculated the present value of the future cash flows she expects the project will generate. d) Insurance. The resulting value is called the project’s ) Capital budget. Jonathan believes there is a relationship between the number of miles driven by his company’s delivery vehicles and the number of physical damage claims that will occur. All of the following are methods used to pay retained losses EXCEPT d) Borrowed funds. Solution: b 518. ) Loss distribution. Which of the following is most likely to occur in a “hard” insurance market? d) Low insurance premiums and loose underwriting standards d) High insurance premiums and tight underwriting standards d) Low insurance premiums and tight underwriting standards d) High insurance premiums and loose underwriting standards Solution: b 519. Solution: c 523. In which part of an insurance contract would you find information about the property or activity to be insured? Conditions Insuring agreement Declarations Exclusions Solution: c 526. Jonathan determined the coordinates of a line that best fit these data. Solution: b 522. a risk manager knows that certain events cannot occur together because the occurrence of the first event precludes the occurrence of the second event. we can describe insurance contracts as d) Aleatory contracts. Solution: a 520. Using a computer. Kavita opened a sporting goods store.

Surrender Value is not exempt u/s 10(10D) with the exception of only Death Benefit. Jitendra has an expected income stream over the next 15 years at Rs 25 lakh. the endorsement or rider takes precedence unless it conflicts with the law. To reduce moral and morale hazard Solution: c 527. (d) Such Premium is eligible for deduction u/s 80 C upto maximum of Rs. Endorsements and riders are used to amend provisions of insurance contracts. Which one of the following is not come under principal merit rating method: ) Schedule rating ) Experience rating ) Retrospective rating ) Judgement rating Solution d Rating could be 1. A combination of all above d. Risk Retention d. Merit rating – Schedule .d. d. If the inflation adjusted discount rate comes to 3% then what is the human life value when there is a lump sum requirement of another 3 lakh to clear off his outstanding debt. II only Solution: b 528. Which of the following statements is (are) true with respect to endorsements and riders? i. Risk Reduction d. (Assume the income stream per annum will remain at the same level for the next 15 years) d) Rs 1304654 d) Rs 1604654 d) Rs 1904654 d) Rs 2204654 Solution: c 529. Both I and II d. (d) Both a & b are false (d) Only b is False (d) None of the above Solution: b 531. then (d) Such Premium is fully eligible for deduction u/s 80 C upto maximum of Rs. Which of the following is the third step in “Risk Management Strategy” e) Identification of the Risks e) Develop Alternative for handling risks e) Choose and implement an appropriate Strategy. d. (e) Sec 80 C upto a Maximum of Rs. e) Analyze and Evaluate risks ( Risk Measurements) e) None of the above Solution: b 533. ii. Neither I nor II d. this is an example of ____________ from M/s XYZ Ltd point of view. 1 Lakh (e) Sec 80 C without any Maximum limit . Surrender Value is fully exempt u/s 10(10D). Class or manual 3. Risk Sharing d. None of the above Solution: c 532. To reduce loss control efforts. d. To eliminate small claims. 1961 if Annual Premium paid is more than 20% of Sum Assured. any sum received from Insurance Company is exempt fully for Income Tax. (e) True (e) False (e) True only when Annual Premium paid is less than or equal to 20% of Sum Assured (e) True for Death Benefit without any reference to Annual Premium condition (e) Both C & D are true Solution: e 534. d. To reduce premiums. M/s XYZ Ltd is entering the Capital Market to raise fresh funds(IPO) for its expansion. 1 Lakhs but only to extent of the first 20% of the Sum Assured but Maturity Value. I only d. 1961. Premium paid to Life Insurance for Basic Sum Assured (Death Benefit) is eligible for deduction under which section of the Income Tax Act. Risk Transfer d. As per the Income Tax Act. Experience & Retrospective 530. d. If the endorsement or rider conflicts with terms in the underlying contract. As per Sec 10(10D) of the Income Tax Act. 1 Lakhs and the Maturity Value. Individual or judgmental 2.

As a Financial Planner recommend the Priority Insurance Plan.000 ) Rs. 30. Disability Rider with Waiver of Premium for the next 25 years d) ULIP d) Money Back Policy for 25 years d) Endowment Policy for 22 years d) No Insurance required.000.000 ) Rs.000. Mr. Corporate Debt Restructuring. mis-statements and the like in the proposal form. he should invest all his savings in Wealth Creation for Asha MBA Education d) None of the above Solution: a 538. such right is covered under which clause? f) Incontestability Clause u/s 45 covering only the first two years form the policy commencement date f) Incontestability Clause u/s 45 covering only the first three years form the policy commencement date f) Incontestability Clause u/s 45 covering only the first five years form the policy commencement date f) Refusal of Claim clause u/s 45 covering only the first two years form the policy commencement date f) None of the above Solution: a 540. Mr. 1. 20. Bhavesh aged 32 years the sole breadwinner with dependant Spouse and one child named Asha aged 3 years. (d) Sec 80 C upto a Maximum of Rs. Mr. Rajesh is worried about its child (Sunita aged 5 years) education expenses and he does not want to stop her child education due to lack of funds. 70. As a Financial Planner recommend the Insurance Plan which will meets the need of “security for children’s education” e) Term assurance plan covering period till the child completes her Professional Education e) Children Deferred Assurance Plan e) Deferred annuity plan e) Health insurance e) ULIP e) None of the above Solution: b 541. As per the Insurance Act.70. Boiler Plant Insurance Policy has a Franchise Clause of Rs. Premium paid to Life Insurance for Value Additions such as Critical Illness Rider is eligible for deduction under which section of the Income Tax Act. 1961. (Note Asha will complete her MBA by her 25 age) d) Term Insurance with Critical Illness Rider.000 What would be the claim amount payable by the insurance company under the said policy? e) Rs.000 per month and has no dependants and is not financially responsible to his family.000 ) None of the above Solution: b 542. 50. (e) Term Insurance (e) Term Insurance with Personal Accident and Disability Insurance (e) Only Personal Accident and Disability Insurance (e) No Insurance required. Chitale. Disability Rider & Waiver of Premium Rider for the next 17 years g) ULIP g) Money Back Policy for 17 years g) Endowment Policy for 17 years g) Professional Indemnity Insurance g) None of the above Solution: e Risk and Insurance 82 539.20. As a Financial Planner recommend the appropriate Insurance Plan. What would be the claim amount payable by the insurance company under the said policy? ) Rs. the claim filed is Rs.000 . Disability Rider & Waiver of Premium Rider for the next 22 years d) Term Insurance with Critical Illness Rider. (Note: Mr Chitale will retire at 60 age) g) Term Insurance with Critical Illness Rider.000. 1938 an Insurance Company has the right to question the claim on the basis of concealment of facts. he should invest all his savings in Wealth Creation Solution: c 537. Capital Financing. the claim filed is Rs. a practicing Chartered Accountant age 43 years provides Advisory Services relating to Mergers & Acquisitions. A aged 22 years has just started working in a BPO earning Rs.000 ) Rs.15000 (d) Sec 80 D without any Maximum limit (d) None of the above Solution: c 536. As a Financial Planner recommend the appropriate Insurance Plan.(e) Sec 80 D (e) None of the above Solution: a 535. 50. 29.20. Mr.30. 1 Lakh (d) Sec 80 C without any Maximum limit (d) Sec 80 D upto a Maximum of Rs. Industrial Plant Insurance Policy has a Franchise Clause of Rs.

e) only (i) is correct e) only (ii) is correct e) Both (i) & (ii) are correct e) Neither (i) or (ii) are correct Solution: d 547.5 % per annum and terminal bonus as Rs.10. only if paid by a cheque – Sec 80 DD e) Rs.000 e) Rs. Which of the following does not constitute a valid charge on the premiums paid for an investment-linked life assurance policy? e) bid-offer spread e) front-end charges e) recurrent fund related charges e) surrender penalty . 1961 e) Rs.1000 sum assured.20. 150 per Rs. 59. misstatement of the insured’s age constitutes a voidable misrepresentation.000. (ii) An innocent misrepresentation by an applicant for insurance constitutes fraud. Nil e) None of the above Solution:d Franchise is a type of deductible where in claim above franchise limit is fully paid and below which nothing is paid.000 e) Rs. only if paid by a cheque – Sec 80 D e) None of the above Solution: bFranchise is a type of deductible where in claim above franchise limit is fully paid and below which nothing is paid 544. only if paid by cheque – Sec 80 D e) Rs.000.20. The following are statements made concerning contracts of insurance.21.8 lakhs limited premium payment for 10 years with a term of 20 years.30 – 2 = 5.000 e) None of the above Solution:b Revisionary bonus = 800000*7. what will be the Maturity value? e) Rs.000 e) Rs.000.000. As a Financial Planner compute the insurance required under “Needs Approach”? f) Rs 330000 f) Rs 530000 f) Rs 730000 f) Rs 930000 f) None of the above Solution:b 4 + 3 + 0.15.13. 29.20.2 =21. In Mediclaim.. An individual may prefer investment-linked assurance to conventional assurance policies for the following reasons EXCEPT e) he has some direction over the investment of his premiums e) he is informed of the expenses charged for the services provided e) he is attracted by the guaranteed surrender values offered under these contracts e) he prefers the switching facilities available under such contracts e) None of the above Solution: c 549.e) Rs.20. Identify the statement/s that is/are correct. The immediate Cash needs of an individual will come to Rs 30000 for the funeral (final cost) plus Rs 3 lakh as outstanding debt. If revisionary bonus is taken as 7. only if paid by a cheque – Sec 80 DD e) Rs.5 / 100 = 60000 * 20 = 1200000 Terminal bonus = 150 * 800 = 120000 Maturity value = 8 + 12 + 1.000 e) Rs.30 lakhs 545. The maxim “buy term and invest the balance” may not be a feasible proposition for many prospects for the following reasons EXCEPT for: d) it may be difficult to achieve sufficient diversification in the invested assets d) it may be difficult to achieve a suitable investment portfolio with the desired risk reward relationship d) it may be possible to consistently outperform the investment returns earned by an established life office d) that the insurer offers capital guarantees on cash values d) None of the above Solution: c 548.10.15.00.15. what is the maximum amount of premium which is deductible under The Income Tax Act. An Insurance planner and prospect agreed for an endowment policy for Rs. The Net Income needs at a present value are Rs 4 lakh. 543.000 e) Rs.2 lakhs 546. (i) For life insurance contracts. With an existing asset base of Rs 2 lakh.

Risk Retention. e) Children Benefit Policy for 5 years e) Term insurance with a level premium for 5 years . As a Financial Planner compute his claim amount which will be paid by the Insurance Company. It is unlikely her income will increase over the covered tenure.000 to his neighbour whose house was accidentally burnt to some extent due to the fire. (ii).110. The policy has been renewed each year since. and (iv) only f) (i). Risk Avoidance & Risk Retention e) None of the above Solution: a 553. Mr. As a Financial Planner advise her about her Insurance Policy. and (iii) only f) (i). Suresh has come with the following risk matrix. Frank has an “Indemnity Policy” in respect of his owned house. the said house was completely destroyed by fire and the cost of rebuilding it was Rs. Risk Avoidance.58.000 and insured for that amount. Risk Control. (ii).80. Parab explains that she needs a life insurance policy that will cover her family against financial risk over the next five years. and (iv only f) (ii).80. High High 3. Risk Avoidance & Risk Reduction e) Risk Transfer. 93. must provide for future anticipated improvements in mortality d) investment-linked endowment assurance d) conventional endowment assurance d) group life assurance d) life annuities d) none of the above Solution: d 552. Ankush is in very good health without any background of existing diseases. he needs a temporary assurance Cover. 35. Low High 2. Mrs. without any alteration or modifications. which he is exposed to.No. In the current year. Mr. 556.182 e) Rs. 'Consideration' under the law is a written promise to ________ (i) Do certain things (ii) Abstain from doing certain things (iii) Forbear some acts (iv) Accept an offer f) (i).182 e) Rs.1. Identify the class of assurance for which an insurer. e) Rs. Mr. Low Low 4.000 (Market Value) plus he paid Rs. Risk Retention & Risk Reduction e) Risk Avoidance.000 e) Rs. Sr. Risk Retention & Risk Reduction e) Risk Transfer. As a Financial Planner advise him an appropriate Risk Management Strategy. High Low e) Risk Transfer. The house was valued when he first took out the policy three years ago at Rs.45.e) None of the above Solution: d 550. in a costing exercise.000 e) None of the above Solution: a 80000 * 80000/ 110000 = 58182. Risk Reduction. (iii). as a Financial Planner recommend an appropriate insurer? e) Insurer with a stringent underwriting policy e) Insurer with a lax underwriting policy e) Insurer with very few causes of death excluded e) Insurer with extensive causes of death excluded e) None of the above Solution: a 551. Frequency of Event Severity of Financial Loss 1. Professional Indemnity Insurance policy protects a financial planner who has been negligent in giving investment advice: e) Only if the financial planner is liable under statute e) Only if a contract exists between the financial planner and the investor e) Only if the investor relies on the advice e) Only if the financial planner has not included a disclaimer clause in the contract with the investor e) Only if the financial planner is a Qualified “Certified Financial Planner” e) None of the above Solution: c 554. while she still has dependent children and a large home mortgage. (iii). and (iv) only f) None of the above Solution: a 555.

e. Mr.75 d) None of the above Solution: a Inflation adjusted return = 2.86 %.3. Mr. Rupali purchased a Health Insurance. Rupali was hospitalized with a covered illness on January 23rd. wants a regular series of payments of Rs.e) Single premium Money Back Policy maturing after 5 years e) Mortgage Redemption Insurance for 5 years e) Whole of life assurance to be made paid up after five years e) ULIP to be redeemed after 5 years e) None of the above Solution: b 557. has maintained a high level of life insurance. 1460.500 g) The insurer will pay Rs.86 %.500. i.000 and Rupali will pay Rs. Shelar wish is that Suvarna should get the regular payment even if he becomes a departed soul . They want a regular series of payments in their Sunset Years covering both of their lives. (ii) and (iii) g) All of the above g) None of the above Solution: b 558. that Shelar should get the regular payment even if she becomes a departed soul.25 d) Rs. Ramesh left for heavenly abode on his 75th birthday.25 d) Rs. Terminal Bonus is to be paid ________________ e) Compulsory by the Insurance Company as per the Insurance Act. 1459. 1938 e) Is paid as a % of sum assured every year e) The Insurance Company usually pays it voluntary for being disciplined in regular premium payment e) None of the above Solution: c 559.But the cost of living increasing by 2% and hence effective increase would be 0. As a Financial Planner find out the IRR(Ignore impact of Taxes) e) 4. Find pv given pmt = 1200 . 1458.500 Solution: d 561. To achieve the aforesaid retirement goal he is ready to invest in a Single payment a maximum of Rs. This hospitalization was her first claim under the said policy for the calendar year. Her covered medical expenses were Rs.25 d) Rs. the reason being? (i) Pay estate duty (ii) Provide succession or dependent income (iii) Repay outstanding debt (iv) Build cash value g) Only (i) and (ii) g) Only (iii) g) Only (i). and how much will Rupali be required to pay to the Hospital? g) The insurer will pay Rs.500 and Rupali will pay Rs. The policy has a calendar-year deductible of Rs. As a Financial Planner address their concerns by giving them an appropriate advise. the couple should select? e) Life time Annuity e) Immediate Annuity e) Deferred Annuity e) Annuity Certain e) Annuity Certain with Life Time Annuity e) Joint-and-Survivor Annuity e) None of the above Solution: f 560. Ramesh aged 20 . Mr.500 and 80:20 coinsurance. Now find pv given nper=35 rate = 8 % fv = 21963 pv = 1485 562.200 per annum in accrued form from his age 55 without any interruption where he want its certain for the first 10 years and thereafter if he survives he wants the same till he becomes a departed soul.500 and Rupali will pay Rs. wants a regular series of payments of Rs. Praful aged 20 . rate = 0.500 g) The insurer will pay Rs. Pv = 21963.20.22 % . Mr.86% nper = 20 years. If the annual rate of earnings is taken as 8% per annum compounded annually throughout the working life & retirement life and an Inflation Rate of 5% per annum during his golden years. the same is the wish of Suvarna. Shelar & Suvarna are married couple who are 44 & 40 years respectively. If the annual rate of earnings is taken as 6% per annum compounded annually throughout the working life & sunset years. Sanjay aged 59.15.1898. presently in his retirement phase.200 per annum in accrued form with an escalation of 2% per annum from his age 55 to next 20 years without any interruption.20. 1.20. 1.4.2500 now in accrued form. How much of this amount will the insurer pay. As a Financial Planner find what contribution he is required to make right now in accrued form if he wishes to make a Single payment (Ignore impact of Taxes) d) Rs.16.500 and Rupali will pay Rs.Nil g) The insurer will pay Rs.

e) HFC will not interfere as long as the EMIs are being paid on time e) HFC will repossess the house after divorce e) HFC will insist on the house being transferred to only one of them e) HFC will appoint a Counselor for reconciliation between the couple.000 from a life insurance policy is to be disbursed under a settlement option using an “annuity accrued” with term certain of 15 years.491 e) Rs. Edward a Roman Catholic got married on 25th December 2005 in the Marriage Court under Special Marriages Act. e) Both (i) & (ii) e) Only i e) Only ii e) All of the above e) None of the above Solution: a 565.150.500 per annum.It’s the Insurance Company official standard to pay Surrender Value @ 75% of Accumulated Premium if the policy has been serviced for 19 years and more) As a Financial Planner find out the Surrender Value of the said policy if any? e) Rs. As a Financial Planner address their concerns by giving them an appropriate advise about the action of the Home Loan Lender. (Note:.e) 2. e) HFC will increase the interest rate in order to compensate for the increased risk e) HFC will apply the “Forfeiture Clause” immediately on divorce e) None of the above Solution: a 566.Anita after Marriage won’t get converted to Christianity) g) No. only Edward has an insurable interest on the life of the Anita and not the other way round.000 e) None of the above Solution: a 564.2373 . he wants to surrender the policy.000 from a life insurance policy is to be disbursed under a settlement option using an “annuity accrued” with term certain of 15 years. 3. On 28th December 2005 does his wife Anita a Hindu have an insurable interest in the life of Edward ? (Note :. pv = 2500 .82 % e) None of the above Solution:b find fv given rate = 6% . Insurable Interest is acquired only after a year of marriage g) Yes. Assuming that a 6% per annum interest compounded annually is appropriate. Insurable Interest is only among the same caste g) None of the above Solution: a 567. rate 6 % . nper = 20. “Co-Insurance” means _________ (i) Loss is shared in proportion of Insurance (ii) The goal is to provide equity in premium payment (iii) The Insured Co.22 % e) 3.444 e) Rs. will again insure it with some other Insurer. Anita has an automatic insurable interest in the life of Edward soon on marriage and the likewise for Edward g) No. nper = 15 568. fv= 19215 Now find rate given pv=19215.10 Lakhs for a term of 25 years costing an annual premium of Rs.875 e) Rs.They are on the verge of a divorce. As a Financial Planner find out the level annual payments arising under this arrangement e) Rs. After paying the said premium for a period of 20 years well on time.22 % 563. Shreekant aged 30 years took a Pure Risk Cover (Term Insurance) bearing a sum assured of Rs. The proceeds of Rs.12.13. Maggi & Savio are co-applicants of a mortgaged house. The proceeds of Rs. Assuming that a 8% per annum interest compounded monthly is appropriate.972 e) Rs. 70.14. however they are spectical about the action that may be initiated by the Housing Finance Company (HFC) once they are divorced. 52500 e) Rs. nper = 35 . 49. g) No. As a Financial Planner find out the level annual payments arising under this arrangement e) Rs. Mr. Nil e) Rs.22 % e) 2. pmt = 1200 IRR=2.250.570 e) None of the above Solution: c find pmt given pv = 150000.15.

Sunil has an Endowment Life Insurance Policy where he has duly paid his premiums for the past 15 years out of a term of 20 years. Praful has given his data as follows.1.3 e) 5. Not Catastrophic d) 1 & 2 d) 2.Required 2/3 of his last drawn Salary per annum in due form Life expectancy – 20 years on retirement His current annual salary is Rs. 60.2 e) 5. Current Age 35 years. Fortuitous or accidental 6. 5) To purchase life and health insurance policies.4. 30 Lakhs and wants to Insure it.2 e) 3. The characteristics of Insurable Risks are :6. Rupesh aged 33 and Sunita aged 29 (Married Couple) approach you a Financial Planner with the following data:Funds for Investment are Limited & Needs are in ample as follows:5) To start an investment plan for funding the Education of their child Akshay age 3 5) To set up a Testamentary Trust for their child.1.000 and this escalates by 6% per annum throughout his working career.2389 e) Rs. Will retire at 55 Retirement Fund :. As a Financial you advise him yes. His Employer gives the annual escalations on his birthdays.2 & 3 d) 1. Andrew recently purchased a 2 BHK Flat worth Rs. he is in urgent needs of funds only for a short period in order to marry off his son Paras. Mr.1.e) Rs.5.4 e) None of the above Solution: a 570.27043 e) Rs. e) 3. the flat can be insured by giving the following reason __ e) Insurable interest has been created by Common Law e) Insurable interest has been created by Contract e) Insurable interest has been created by Statute e) Insurable interest has been created by Ownership e) None of the Above e) All of the Above Solution: d 571.4. As a Financial Planner address their concerns by giving them an appropriate advice by sequencing there needs in the order of priority. In the event of a claim. As a Financial Planner advise him the maximum loan he can avail on the said policy ? f) 85% of Surrender Value f) 90% of Paid up Value f) 90% of Surrender Value f) 90% of all premiums paid f) 75% of all premiums paid f) None of the above Solution: c 573. Mr. 5) To set up a contingency fund amounting to 3 months of living expenses 5) To start saving for retirement. an Insurance contract governed by Indemnification clause pays to the insured a claim amount equal to ________ f) the sum insured f) the extent of loss admitted subject to a maximum equal to the sum insured f) the extent of loss admitted without any limits f) a previously agreed amount f) Negotiable amount between the Insured & Insurer f) None of the above Solution: b 572. . Definite and Measurable 6.29207 e) None of the above Solution: b find pmt given pv = 250000 rate = 8 % /12 and nper 15 * 12 569. 3 & 4 d) 1.3.2.4.2.2.3 & 4 d) None of the above Solution: d 574.1. Large Number of Homogenous Units 6. Mr.5.

132.042 e) Rs.536 e) Rs.25. Sanjay is interested Tabular premium: .181.000 sum assured at the end of 20 years ____ e) For Lic is greater than I-Pru e) For Lic is equal to I-Pru e) For I-Pru is greater than Lic e) Is not determinable. she is in urgent needs of funds which she doesn’t want to repay back in order to marry off her only daughter Sanjivani.28.042 e) Rs.24.810 e) 80.75.328 e) Rs. to Suresh aged 35 with the following cost data: Data LIC (Rs. 580.1.128.000 sum assured Accidental benefit – Rs. Calculate his last drawn annual salary on the eve of retirement e) Rs. Ms.70 per Rs.2 per annum for Rs.890 e) None of the above Solution: b find pmt given fv= 1283290 rate = 8% nper = 20 and type 1 578.) Annual premiums 230 290 Accumulated value of Total bonuses for 20 years at 6% pa 1613 1700 Cash value at end of 20 years 3620 4000 Based on the above information and assuming a 6% per annum interest rate.000 e) None of the above Solution: b find fv given pv = 60000 rate = 6% nper 19 fv= 181536 576. assuming that the first is due now.400 e) Rs.000 Bonus accrued from 31st March 1991 to 31st March 2000 is Rs. 1000 sum assured Plan – Endowment with profit – Term 25 years Sum assured – Rs. 1000 sum assured S. Assume the rate of earning of 8% per annum compounded annually throughout the overall period. 20 per annum for Rs.05.780 e) None of the above Solution: c 181536 * 2/ 3 = 121024 is pmt rate 8% nper 20 pv= 1283290 Again find pv given fv= 1283290 rate 8% nper 20 pv= 275328 577. Kavita has an Endowment Life Insurance Policy where she has duly paid the premiums. 20.1.428 e) Rs. to enjoy the stated retirement income during his sunset years.) I-Pru (Rs. 1965 Mode of premium payment – Half Yearly Premium – Rs.V. 1990 Date of last premium – 5th April. As a Financial Planner advise her the maximum amount she can avail on the said policy on its due surrender? Date of commencement – 5th October. 1. Calculate the present value of the retirement income as on the Current age of 35 yrs e) Rs. 2000 Date of birth – 1st May.000 are issued by two Life Insurance Companies. Participating ordinary life policies with a sum assured of Rs. since data is insufficient e) None of the above Solution: c 579.25. Lic and I-Pru. the annual surrender cost index for each Rs.933 e) Rs.810 e) 80. Calculate the level annual amount that he must deposit during his working life. 61.965 e) Rs. factor – 75% of Accumulated Value e) 24000 e) 81.28.2.100 e) None of the above Solution: e paid up value = 120000*21/50 = 50400 bonus 70*120*10 = 84000 Accumulated value = 134400 * 75/100 = 100800 is SV. e) Rs. 10.2. Lic Premium Table depicts the following data for a certain policy in which your client Mr.54.3.192. 62 & 63 575. As a Financial Planner answer Question No.2.800 e) Rs.

nper = 5 pmt=5000 type =1 fv = 29010 Now find pmt given pv= 29010 . both have a life expectancy of another 40 years.48 lakhs e) Rs. As a Financial Planner calculate the yearly premium for Rs.5000 in a Bank Deposit today @ 8% p.5. 1 Lakh of Mr. 6802 e) Rs. Mr. and Mrs.15 lakhs sum assured with occupation extra of Rs. rate = 10 % . 52.000 having sum assured Rs. Double accident is allowed up to a maximum of Rs.350 e) None of the above Solution: b 33. Rs.a compounded monthly.000 Income tax Rs. Life insurance premium for self Insurance Rs. Job Profile :.10.00 – 3.27628.20.000 p.4 per thousand sums assured e) Rs.2 less for yearly mode.80 lakhs find pv given pmt = 6.00. nper = 3 . 20. 13000 having sum assured Rs. She then withdraws the accumulated sum over a period of 3 equal annual installments at the end of the said each period. rate 8% /12 and nper 48 583.2] = 6. 1000 sum assured.000 Reasonable self-maintenance expenditure Rs. Kavita invests Rs. 6878 e) Rs. Rs. He hopes that this nvestment will enable him to fund his college education (estimated to cost Rs. Plans to Retire at age 65.1 * 1500 = 48150 581. 2 Lakhs Assume:.a.33. 48. Rs. in a bank deposit.650 e) Rs.10 – 2 – 3 + 4 = 32. 10145 e) Rs.00. Shelar invests Rs.66 lakhs e) None of the above Solution: b10.000 and above. 48. 10145 e) Rs. 1. Jagadish has given his personal details as follows:Current Age 30 yrs .46 lakhs e) Rs. 10653 e) None of the above Solution: d Find fv given rate= 5 %. Mr. As a Financial Planner compute the end value of this investment after four years? (Ignore the impact of Inflation & the rise in Education cost) e) Rs.1 per 1000 sum assured. Rs.1. 5 Lakhs Life insurance premium for Aditya (son) Rs. Rs. aged 40 and 36 years.1 less for half yearly mode. Rs. rate = 5 % . Re.5000 per year at the beginning of each year for 5 years @ 5% p. Mr.a. 00.95. 49. 6925 e) None of the above Solution: c find fv given pv = 5000. Noronha personal Exps) .68 lakhs e) Rs. Noronha is the sole breadwinner of the family and the family has no children Current investments has a Market Value of Rs.Senior Manager in Telco Ltd with Annual Salary of Rs.1. 29568.20 [ 2+ 1+ 0. Noronha.000 Annual Cash Outflow Professional tax of Rs. 20 Lakhs Life insurance premium for Sulekha (wife) Rs. nper=35 pv= 72 lakhs – 20 lakhs [present cover]= 52 lakhs 582. Their Data Sheet depicts the following information: Mr.10 lakhs sum assured on payment of Re.00. 29010. 6870 e) Rs.000 Annul Expenses Rs.10 per Rs.9000) which commences after 4years.8 lakhs.4 Lakhs (including Rs. As a Financial Planner recommend the Insurance Cover using “HLV Method” e) Rs. 11054 e) Rs. As a Financial Planner compute the value of the deposit at the end of 5 years and the quantum of withdrawal each year thereafter? e) Rs.150 e) Rs. Pmt = 10653 584.Rate of interest for capitalization of future income is at 10%. Rs.3 less for sum assured of Rs. 7000 having sum assured Rs.150 e) Rs. 29010.

7 & 8 ) Only 1. Raman needs a life insurance policy for Rs 5 lakh that will require a premium commitment of Rs 23000 each year for the next 15 years. Mr. Noronha as per “Needs Approach” & “Income Replacement Approach” (Ignore Impact of Inflation) e) 69.33 lakhs 585. Post tax.42 lakhs pmt = 3 lakhs . 696406 Solution: b find fv given nper = 15 . 396406 b) Rs. Final costs Rs.5 lakhs. 456376 d) Rs.50.6. . rate = 5% . Mr.5. 83. 596406 d) Rs. e) None of the above Solution:c Need based method for the life cover : 52. 1 lakhs (Funeral Exps of Mr. 3. rate = 5 % .2. 83. which is still 10 years away.33 lakhs e) 49.7 & 8 ) All except 3 & 4 ) All of the above Solution: a 586. 245675 b) Rs. Years of Working Life planned ) Only 1.34 lakhs. nper = 40 . Rohan has approached you for his Life Insurance Needs. 2. nper = 15 Now fv = 544932 .34 lakhs.33 lakhs. A person requires Rs 50000 per annum for the 15 years after retirement. rate = 3 % pv= 71.3. 567645 Solution: b find pv given pmt=50000.34 lakhs. post inflation rate/discount factor is 3 % per annum As a Financial Planner find out the Insurance Requirement of Mr. As a Financial Planner which of the following data will be required by you to calculate his Life Insurance Needs as per “Human Life Value Method” 6) Self Life Insurance Premium with its Sum Assured 6) Self Profession Tax & Self Income Tax paid 6) Income earned by his wife Renuka as well as her Life Insurance Sum Assured and its Premium 6) Income earned by his Child Ajay age 12 6) Income received by Rohan from HUF since being a Co-member of such HUF 6) Average Annual Earnings during his entire working career 6) Appropriate Capitalization rate 6) Present Age.42 lakhs Income replacement = 2. 68 lakhs e) 50. 318610 c) Rs.000 * 100 / 3 = 83. With a discount rate of 5% the need for the insurance based on this parameter is a) Rs. With an earning potential of 5% the adjusted interest earning potential comes to a) Rs. Noronha income post tax Rs. Noronha). 496306 c) Rs.33 lakhs e) 70.42 lakhs Add final cost [1] and deduct investments[20] =52.34 lakhs. 6. rate = 5 % nper = 10 pv= 334541. pmt = 23000 As one pays premium as advance this is type =1 Fv = 521122 587. 83.

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