Brokers Training Test : Life lnsurance - Paper 4 (05-04-2015 )

1. Which of the following factors form the basis of premium rates for life insurance policies?
a. Rates of interest b. Management expenses c. Rates of mortality d. All the above

2. The intermediary is called the first line underwriter. Which one he/she should not do?
a. He has to truthfully record the information provided by the life to be assured
b. He has to inform the insurer all information that he had about the financial conditions of the
person proposing the life insurance contract.
c. He has to ensure that the life insurance proposal is made in such a way that the insurer will
accept it
straightaway.
d. He has to make enquiries to find out the conditions that can affect the insurability of the
person and inform them to the insurer

3. Nomination & Assignment of an insurance policy are governed by

a. Transfer of property Act b. Life insurance Corporation Act
c. Contract Act d. lnsurance Act 1938,
4. The premium paid under a policy of life insurance qualifies for tax exemption
Upto:
a. section 10 (10D) oflncomeTaxAct, 1951: Rs.8O000/-
b. section 80 L of lncome Tax Act, 1951: Rs.1,00,000/-
c. section 80 C of lncome Tax Act, 1951: Rs.1,00,000/-.
d. section 80 C of lncome Tax Act, 1951: Rs.1.50 lakhs.

5. which of the following is a method of rating a sub-standard life?

a. lncrease in premium b. Restriction to the benefit
c. Postponement d. All the above
5, lnvestigation in to the financial conditions of the life insurance business and the valuation of its
liabilities of life insurer is carried out by-
a. Chairman cum Managing Director b,Auditor c. Actuaries d. Surveyors e. |RDM

7, lf the renewal premium of a life insurance policy is not paid in time then payment is required to be
paid:
a. Payment with interest ifgrace period is over;
b. Payment without interest till expiry of grace period;
c. Both the statements are true;
d. Both statements are untrue

8. ln Actuarial Valuation the excess ofassets over liabilities of an insureris called

a. Solvency margin b.Surplus c. Reserves d.None of the above

9. Name the _ lnsurance policy which combines term insurance and a savings plan.
a. Endowment insurance b. Whole Life lnsurance c. Term lnsurance d. None ofthe above

10. Maximum first year commission in life lnsurance as per the lnsurance Act 1938 is
a. 35Yo b. 30% c.4O% d.45Yo

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11. Every life lnsurance company in lndia is required to conduct a valuation of its assets and
liabilitles
a. At least once in three years; b. At least once in two years
c. Every year; d. At least in five years of its formation and every year there after

12. A person has taken a life insurance policy with accidental death as an add on cover from an
insurance company. Now the person dies because of an accident. He dashes against a municipal
bus and dies on the spot. After payment of insurance claim
a. The insurance company gets the subrogation rights and can recover money from the
municipal corporation.
b. The insurance company has no remedy against the munlcipal corporation as it is not a
contract of indemnity.
c. The insurance company can ask the nominees/ legal heirs of the insured to sue the municipal
corporation; get compensation and the remaining amount can be paid as a claim.
d. None of the above.

13. A wife has an insurable interest on the life of

a. Only herself b. Herself, husband and children
c. 'b'and her parents d. 'c'and his siblings
14. Controlled fund is a fund pertaining to
a. Life insurance business only b. Annuity certain and capital redemption insurance only
c. Both a & b d. None of the above

15. When a person does not conform to average risk as acceptable to the Insurer risk
proposed can be of
a. Increasing extra risk b. Decreasing extra risk
c. Constant extra risk d. All the above

16. ln case of a life insurer, the surplus ls distributed to

a. Government b. Policy holder c. Share holder d. b & c; e. All of the above

17. ln ULIP policies

a. Allocation offund can be done in Growth Fund, secure Fund, Balance Fund, Money Market Fund
b. Free Switching is allowed
c.There is Lock ln period
d. All of above
18. Postal Life lnsurance is managed by
a. Life lnsurance Corporation b. State Government
c. Central government d. Comptroller of Accounts

19. Which ofthe following factors affect the case of life insurance proposal
a. Age b. Family history of past illness c. Sex d. All of the above

20. A life insurance policy has:

a. Preamble / Recital; b. Schedule; c. Operative clause;

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 d. Proviso; e. Attestation; f. all the above

21. Endorsements are attached:

a. While issuing the policy; b. modification/ alteration in policy; c. Both

22. Documents in relation to underwriting will include:

a. Proposalform; b. Age Proof, c. Medical Report, d. Proofof ldentity,
e. Proof of residence, f. Proof of income, g. Agents confidential Report,
h. Moral Hazard Report, i. allthe above

23. AMVCFT Guidelines are also applicable while:

a. Paymentof claim, b. Refund of premium, c' Surrender,
d. Payment by ECs or NEFT, e. All the above

24. lnsurers are obliged to follow IRDA Regulations for Rural & Social Sectors:
a. Life insurers must secure prescribed %age of policy from rural areas, 18% from 5m year
b. Life insurers & general insurers must secure 25q)O lives from social sectors
c. General insurers must secure 5% of premium from Rural Sector from 6th year of operation.
d. All the above
25. Rural area is defined as:
a. Village having population oflessthan 5000,
b. Density of population should be less than 400 psqkm,
c. More than 25% of male population is engaged in agricultural activities.
d. All the above.
25. Group Term lnsurance is beneficial because:
a. Provides protection to lar8e number of people,
b. Premium rates are much cheaper ,
c. Administration is convenient,
d. People who are uninsurable in individual policiet can get protection,
e. contract is between insurer and NodalAgency ofthe group responsible for all matters,
f. Medically unfit person can 8et insurance,
B. All the above

27. Group Gratuity lnsurance scheme provides:

a. Funding of liability of employer under Payment of Gratuity Act 1972,
b. Rebate on contribution/premium made/paid to Gratuity Fund or Gratuity lnsurance Scheme.
c. Term insurance protection for anticipated service gratuity at very low rate
d. All the above
28. tn Suicide within 12 months from the date of policy or 12 months from the date of
commencement of risk or 12 months from the date of rider or revival, nominee will get:
a. Nothing; b. Min. S.V or Policy A/c Value,
c. None, d. 80/o of premium or surrender value, which is higher

29. ln policies on life of minor, date of commencement of policy & date of commencement of risk will
be:

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 a. Deferred date, b. Vesting date, c. 18 years,

30. lnterim bonus is allocated to policies during inter valuation period:

a.Pure Endt. Policy b. Term lnsurance Policy c. Pension policy
d. Participating policies becoming claim during inter valuation period

31. As a bachelor, Ramesh took a policy nominating his brother Suresh' After getting married, he did not
change the nomination in favor of his wife...Smita. What will be the legal position of death claim?
a.Being nominee Suresh can claim policy money and utilize the claim amount.
b. Smita can become a rival claimant under a policy
c.lnsurer will advice Suresh and Smita to serve injunction order from a competent court law of
within a specified period prohibiting the insurance company from making payment of claim.
d.Suresh is a trustee for policy money and he must past on the same to smita, being legal hear of
Suresh.
t. a ii. b lI. c iv. d v. b,c,d

32. Which of the following is the disadvantage of Numerical ratin8 method ?

a.
Establishes a standard method of underwriting which can be referred to by every underwriter
b- The factors are rated on the basis of documented manuals; hence all the factors are uniformly
rated by all underwrlters.
c.
Eliminates personal judgment of the underwriters to a larSe extent'
d.
Helps in assessing the combined effect of multiple adverse factors together
lncreases speed and efficiency in handling large volumes of business and also maintaining
e.
consistency in decision making in the underwriting process.
f.
The overall risk in case of multiple impairments in the same individual may not be equal to
ratings for the sum of risk of individual impairments. This is a limitation, as it does not account
for the effect of presence of co-morbidity factors.

33. Which are the safeguards adopted in non - medical underwriting:

a. a restriction on selection (female lives);
b. putting limits on the sum insured;
a restriction on maximum entry age and maximum term forthe policy'
c.
d. a restriction on the maximum age at maturity;
e. a restrlction on the types of insurance plans allowed & restrlctions on high risk plans;
f. limiting cover to certain categories of lives (based on educatlon, social and economic
background);
g. restricting the class of lives eligible (to individuals employed in reputable organizations, who
have undergone a medical exam at the time of recruitment, for whom leave records are
maintained, and they have completed at least one year of service etc'); and
h. requiring a moral hazard report from an officer ofthe insurer'
i. All the above

34. lf nominee is a minor, it will be lawful for the proposer to appoint a:

a. Nominee b. Beneficiary c' Appointee d' Trustee

35. Which of the following is a non-standard age proof:

a. School certificate b.
Service Register of EmPloYer
c. Marriage certificate issued by Roman catlike Church D. Horoscope

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35. Role of the Underwriter does not include:
a. Classification of risk b. Decision to accept / reject the proposal
c. Decide the terms and conditions for acceptance d. Marketing of policy

37. Group Gratuity - Cum - Life assurance scheme can be sold to:
a. Shops and Commercial establishments employin8 10 or more employees
b. Gratuity is payable after completion of five years of continues service, except in case of death /
disablement
c. Gratuity is reckoned at the rate of 15/25 for each year of completed service based on lost drawn
salary (Basic + DA).
d. Payment of/Gratuity Act 1972 covers temporarily and seasonal workers.
i. a&b ii. b&c iii. c&d iv. b,c,d v' a, b,c,d
38. ln the case of life insurance, the duty of disclosure is operational
a. At the time of proposal until the risk is accepted and at the time of revival of a lapsed policy
b. At the time of payment of every renewal premium
c. From the time of proposaltillthe time of claim
d. At periodical intervals stipulated by insurers.
proposer
39. From which date life lnsurance contract commences, unless otherwise declined by the
during the 'free look Period'?
a. From the date of Proposal
b. From the date of issue of First Premium Receipt
c. From the date of issue of the policy
d. From the date of issue of quotation
policy term through
40. An alteration in the terms of insurance policy can be made during the
a. Cover Note b. AsliP
c, Correction made in the Schedule d' An endorsement
41. What happens to bonuses if a with-profit policy is made paid up?
a. Bonus is reduced in proportion to the premiums paid
b. The accrued bonus is fully added to the reduced sum assured to arrive at the paid-up value.
c. The accrued bonus will be forfeited
d. Accrued bonus will be paid immediately.
policies if premiums have been paid
42. Normally insurance companies allow a paid up value for lapsed
for a minimum period of three years. This paid up value is
a. Payable immediately
b. Payable on maturity of the policy or on death before maturity
c. Payable with interest up to the date of payment
d. lncreasing with every subsequent year
paid before the policy lapsed and
43. The lnsurance Act does not allow forfeiture of the premiums
in the policy because
makes it mandatory to pay certain minimum surrender value as enshrined
a. under level premium system premiums collected in the early years of the policy are more than
the required amount.
b. Of the savings element in the premium
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 c. For both the above reasons
d. For none ofthe above reasons

,44. The process of bringing a lapsed policy into full force is called
a. Renewal b. Reinstatement c. Revival d. Paid-up

45. ln respect of Nomination under a life insurance poliry which of the following is not true?
a. A minor cannot be a nominee
b. More than one person cannot be nominated as nominees
c. Nominee becomes the policy holder
d. Nomination becomes effective only when it is registered by the insurer

45. Which of the following statements is not true?

a. Nominee can give valid discharge for payment of claim under a policy
b. When an assignment is made, the existing nomination remains valid for some purposes
c. An assignee can make a nomination
d. ln case of multiple nominations, the death claim amount will be paid to them in equal
proportion

47. Which of the following statements is incorrect in respect of assignment?

a. The assignor should be a ma,or and should have complete title in the policy
b. Assignment can be done by an endorsement on the policy or by a separate deed.
c. Assignment can be made for full interest in the policy.
d. The rights under an assigned policy will revert back to the assignor when it is re-assigned to him
by the assignee.

48. Which of the following statements is not correct in respect of foreclosure of a Policy?
a. lt is done by the insurer when loan granted under the policy with interest due thereon is likely
to exceed the surrender value available in the policy
b. lt is done by the insurer only after giving due notice to the borrower
c. On foreclosure nomination ceases to be operative
d. lt is voluntary surrender of the policy by the policyholder.
49. The surrender value of a policy has no relevance to the
a. paid up value under the policy b. Term ofthe policy
c. Duration of the policy till surrender d. health of the life assured

SO. Under a Term lnsurance Policy, the total premium for all riders including that of health or critical
illness should not exceed
a. 30%ofthe premium of the main product
b. 50% of the premium of the main product
c. 60% of the premium of the main product
d. 1oo% of the premium of the main product

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