Absract of Test Yourselfs& Self-Examination Questions

ABSRACT OF TEST YOURSELFS& SELF-
EXAMINATION QUESTIONS
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Test yourself 6
Which among the following is not a characteristic of ethical behavior?
i. Making adequate disclosure to enable the clients to make an informed decision.

ii. Maintaining confidentiality of client’s business and personal information.
iii. Placing self-interest ahead of client’s interest
iv. Placing client’s interest ahead of self interest.
GRIEVANCE REDRESSAL MECHANISM
Test Yourself 1
The ______________ has jurisdiction to entertain complaints,
where value of the goods or services and the compensation
claimed is up to Rs.20 lakhs.
I. District Forum
II. State Commission
III. Zilla Parishad
IV. National Commission
Answers to Test Yourself
Answer 1
The correct answer is I.

The District Forum has jurisdiction to entertain complaints, where
value of the goods or services and the compensation claimed is
up to Rs. 20 lakhs.
Self-Examination Questions
Question 1
Expand the term IGMS.

I. Insurance General Management System
II. Indian General Management System
III. Integrated Grievance Management System
IV. Intelligent Grievance Management System
Question 2
Which of the below consumer grievance redressal agencies
would handle consumer disputes amounting between Rs. 20
lakhs and Rs. 100 lakhs?
I. District Forum
II. State Commission
III. National Commission
IV. Zilla Parishad
Question 3
Which among the following cannot form the basis for a valid
consumer complaint?
I. Shopkeeper charging a price above the MRP for a product
II. Shopkeeper not advising the customer on the best product
in a category
III. Allergy warning not provided on a drug bottle
IV. Faulty products
Question 4
Which of the below will be the most appropriate option for a
customer to lodge an insurance policy related complaint?
I. Police
II. Supreme Court
III. Insurance Ombudsman
IV. District Court
Question 5
Which of the below statement is correct with regards to the

territorial jurisdiction of the Insurance Ombudsman?
I. Insurance Ombudsman has National jurisdiction
II. Insurance Ombudsman has State jurisdiction
III. Insurance Ombudsman has District jurisdiction
IV. Insurance Ombudsman operates only within the specified
territorial limits
Question 6
How is the complaint to be launched with an insurance
ombudsman?
I. The complaint is to be made in writing
II. The complaint is to be made orally over the phone
III. The complaint is to be made orally in a face to face manner
IV. The complaint is to be made through newspaper
advertisement
Question 7
What is the time limit for approaching an Insurance Ombudsman?

I. Within two years of rejection of the complaint by the insurer
II. Within three years of rejection of the complaint by the insurer
III. Within one year of rejection of the complaint by the
insurer
IV. Within one month of rejection of the complaint by the insurer
Question 8
Which among the following is not a pre-requisite for launching a

complaint with the Ombudsman?
I. The complaint must be by an individual on a „Personal Lines‟
insurance
II. The complaint must be lodged within 1 year of the insurer
rejecting the complaint
III. Complainant has to approach a consumer forum prior to
the Ombudsman
IV. The total relief sought must be within an amount of Rs.20
lakhs.
Question 9
Are there any fee / charges that need to be paid for lodging the
complaint with the Ombudsman?
I. A fee of Rs 100 needs to be paid
II. No fee or charges need to be paid
III. 20% of the relief sought must be paid as fee
IV. 10% of the relief sought must be paid as fee
Question 10
Can a complaint be launched against a private insurer?

I. Complaints can be launched against public insurers only
II. Yes, complaint can be launched against private insurers
III. Complaint can be launched against private insurers only in the
Life Sector
IV. Complaint can be launched against private insurers only in the
Non-Life Sector
Answers to Self-Examination Questions

Answer 1
The correct option is III.

IGMS stands for Integrated Grievance Management System.
Answer 2
The correct option is II.
State Commission would handle consumer disputes
amounting between Rs. 20 lakhs and Rs. 100 lakhs.
Answer 3

Shopkeeper not advising the customer on the best product in
a category cannot form the basis of a valid consumer
complaint.
Answer 4
Complaint is to be lodged with the Insurance Ombudsman
under whose territorial jurisdiction the insurer‟s office falls.
Answer 5
The correct option is IV.
Insurance Ombudsman operates only within the specified
territorial limits.
Answer 6
The correct option is I.

The complaint to the ombudsman is to be made in writing.
Answer 7
The complainant must approach the ombudsman within one
year of rejection of the complaint by the insurer.
Answer 8
Complainant need not approach a consumer forum prior to
the Ombudsman.
Answer 9

No fee / charges need to be paid for lodging the complaint
with the Ombudsman.
Answer 10
Yes, a complaint can be launched against private insurers.
CHAPTER-4 REGULATORY ASPECTS OF INSURANCE AGENTS
CHAPTER-5 LEGAL PRINCIPLES OFANINSURANCECONTRACT
Test Yourself 1
Which among the following is an example of coercion?
I. Ramesh signs a contract without having knowledge of the fine print
II. Ramesh threatens to kill Mahesh if he does not sign the contract
III. Ramesh uses his professional standing to get Mahesh to sign a

contract
IV. Ramesh provides false information to get Mahesh to sign a
contract
Test Yourself 2
Which among the following options cannot be insured by Ramesh?
I. Ramesh‟s house
II. Ramesh‟s spouse
III. Ramesh‟s friend
IV. Ramesh‟s parents
Answer 1
Ramesh threatening to kill Mahesh if he does not sign the contract is

an example of coercion.
Answer 2
Ramesh does not have insurable interest in his friend‟s life and hence
cannot insure the same.
Question 1
Which element of a valid contract deals with premium?
I. Offer and acceptance

II. Consideration
III. Free consent
IV. Capacity of parties to contract
Question 2
_____________ relates to inaccurate statements, which are made

without any fraudulent intention.
I. Misrepresentation
II. Contribution
III. Offer
IV. Representation
Question 3
________________ involves pressure applied through criminal means.
I. Fraud
II. Undue influence
III. Coercion
IV. Mistake
Question 4
Which among the following is true regarding life insurance contracts?
I. They are verbal contracts not legally enforceable
II. They are verbal which are legally enforceable
III. They are contracts between two parties (insurer and insured) as
per requirements of Indian Contract Act, 1872
IV. They are similar to wager contracts
Question 5
Which of the below is not a valid consideration for a contract?
I. Money
II. Property
III. Bribe
IV. Jewellery
Question 6
Which of the below party is not eligible to enter into a life insurance
contract?
I. Business owner
II. Minor
III. House wife
IV. Government employee

Question 7
Which of the below action showcases the principle of “Uberrima

Fides”?
I. Lying about known medical conditions on an insurance proposal

form
II. Not revealing known material facts on an insurance proposal form
III. Disclosing known material facts on an insurance proposal form
IV. Paying premium on time
Question 8
Which of the below is not correct with regards to insurable interest?
I. Father taking out insurance policy on his son
II. Spouses taking out insurance on one another
III. Friends taking out insurance on one another
IV. Employer taking out insurance on employees
Question 9
When is it essential for insurable interest to be present in case of life

insurance?
I. At the time of taking out insurance
II. At the time of claim
III. Insurable interest is not required in case of life insurance
IV. Either at time of policy purchase or at the time of claim

Question 10
Find out the proximate cause for death in the following scenario?
Ajay falls off a horse and breaks his back. He lies there in a pool of
water and contracts pneumonia. He is admitted to the hospital and
dies because of pneumonia.
I. Pneumonia
II. Broken back
III. Falling off a horse
IV. Surgery
Answer 1
The element of a valid contract deals with premium is consideration.
Answer 2
Misrepresentation relates to inaccurate statements, which are made

without any fraudulent intention.
Answer 3
Coercion involves pressure applied through criminal means.

Answer 4
Life insurance contracts are contracts between two parties (insurer

and insured) as per requirements of Indian Contract Act, 1872.
Answer 5
Bribe is not a valid consideration for a contract.
Answer 6
Minors are not eligible to contract a life insurance contract.
Answer 7

Disclosing known material facts on an insurance proposal form is in
tune with the principle of “Uberrima Fides”.
Answer 8
Friends cannot take out insurance on one another as there is no
insurable interest present.
Answer 9
In case of life insurance insurable interest needs to be present at the
time of taking out insurance.
Answer 10
Falling off the horse is the proximate cause for Ajay‟s death.
Test Yourself 4
In case the premium payment is made by cheque, then which of the
below statement will hold true?
I. The risk may be assumed on the date on which the cheque is

posted
II. The risk may be assumed on the date on which the cheque is
deposited by the insurance company
III. The risk may be assumed on the date on which the cheque is
received by the insurance company
IV. The risk may be assumed on the date on which the cheque is
issued by the proposer .
________________________________________________________
Test Yourself 6
Which of the below statement is correct with regards to a warranty?
I. A warranty is a condition which is implied without being stated in

the policy
II. A warranty is a condition expressly stated in the policy
III. A warranty is a condition expressly stated in the policy and

communicated to the insured separately and not as part of the policy
document
IV. If a warranty is breached, the claim can still be paid if it is not

material to the risk .
Test Yourself 7
If certain terms and conditions of the policy need to be modified at the

time of issuance, it is done by setting out the amendments through
__________.
I. Warranty
II. Endorsement
III. Alteration
IV. Modifications are not possible
Test Yourself 8
Which of the below statement is correct with regards to renewal

notice?
I. As per regulations there is a legal obligation on insurers to send a

renewal notice to insured, 30 days before the expiry of the policy
II. As per regulations there is a legal obligation on insurers to send a

III. As per regulations there is a legal obligation on insurers to send a

IV. As per regulations there is no legal obligation on insurers to send

a renewal notice to insured before the expiry of the policy
Test Yourself 9
Though the duration of cover for pre-hospitalization expenses would

vary from insurer to insurer and is defined in the policy, the most
common cover is for ________ pre-hospitalization.
I. Fifteen days
II. Thirty days
III. Forty Five days
IV. Sixty days
Test Yourself 9

common cover is for ________ pre-hospitalization.
I. Fifteen days
II. Thirty days
III. Forty Five days
IV. Sixty days
Answer 1

common cover is for thirty days pre-hospitalization.
Answer 2
As per IRDA guidelines, a 30 days grace period is allowed for renewal

of individual health policies.
Question 1
Which of the below statement is correct with regards to a

hospitalization expenses policy?
I. Only hospitalization expenses are covered
II. Hospitalization as well as pre and post hospitalization expenses are

covered
III. Hospitalization as well as pre and post hospitalization expenses

are covered and a lumpsum amount is paid to the family members in
the event of insured‟s death
IV. Hospitalization expenses are covered from the first year and pre
and post hospitalization expenses are covered from the second year
if the first year is claim free.
Question 2
Identify which of the below statement is correct?
I. Health insurance deals with morbidity
II. Health insurance deals with mortality
III. Health insurance deals with morbidity as well as mortality
IV. Health insurance neither deals with morbidity or mortality
Question 3
Which of the below statement is correct with regards to cashless

service provided in health insurance?
I. It is an environment friendly go-green initiative started by insurance

companies to promote electronic payments so that circulation of
physical cash notes can be reduced and trees can be saved.
II. Service is provided free of cost to the insured and no cash is to be

paid as the payment is made by the Government to the insurance
company under a special scheme
III. All payments made by insured have to be made only through

internet banking or cards as cash is not accepted by the insurance
company
IV. The insured does not pay and the insurance company settles the
bill directly with the hospital .
Question 4
Identify the correct full form of PPN with regards to hospitals in health
insurance.
I. Public Preferred Network
II. Preferred Provider Network

III. Public Private Network
IV. Provider Preferential Network
Question 5
Identify which of the below statement is incorrect?
I. An employer can take a group policy for his employees
II. A bank can take a group policy for its customers
III. A shopkeeper can take a group policy for its customers
IV. A group policy taken by the employer for his employees can be
extended to include the family members of the employees
Answer 1
In a hospitalization expenses policy, hospitalization as well as pre and

post hospitalization expenses are covered.
Answer 2
Health insurance deals with morbidity (rate of incidence of disease).
Answer 3
Under the cashless service, the insured does not pay and the
insurance company settles the bill directly with the hospital.
Answer 4
PPN stands for Preferred Provider Network.

Answer 5
Statements I, II and IV are correct. Statement III is incorrect as a

shopkeeper cannot take group insurance for its customers.
_______________________________________________
CHAPTER-9-HEALTH INSURANCE UNDERWRITING
Test Yourself 1
Underwriting is the process of ___________.

I. Marketing insurance products
II. Collecting premiums from customers
III. Risk selection and risk pricing
IV. Selling various insurance products
Test Yourself 2
The principle of utmost good faith in underwriting is required to

be followed by ___________.
I. The insurer
II. The insured
III. Both the insurer and the insured
IV. The medical examiners
Test Yourself 3
Insurable interest refers to ____________.

I. Financial interest of the person in the asset to be insured
II. The asset which is already insured
III. Each insurer‟s share of loss when more than one company
covers the same loss
IV. The amount of the loss that can be recovered from the
insurer
Test Yourself 4
Which of the following statements about medical underwriting is
incorrect?
I. It involves high cost in collecting and assessing medical
reports.
II. Current health status and age are the key factors in medical
underwriting for health insurance.
III. Proposers have to undergo medical and pathological
investigations to assess their health risk profile.
IV. Percentage assessment is made on each component of the
risk.
Test Yourself 5
1) In a group health insurance, any of the individual constituting
the group could anti-select against the insurer.
2) Group health insurance provides coverage only to employer-
employee groups.
I. Statement 1 is true and statement 2 is false

II. Statement 2 is true and statement 1 is false
III. Statement 1 and statement 2 are true
IV. Statement 1 and statement 2 are false

Answer 1

Underwriting is the process of risk selection and risk pricing.
Answer 2

The principle of utmost good faith in underwriting has to be
followed by both the insurer and the insured.
Answer 3

Insurable interest refers to the pecuniary or the financial
interest of a person in the asset he is going to get insured and
can suffer financial loss in the event of any damage to such
asset.
Answer 4
Percentage and numerical assessment is made on each
component of the risk in numerical rating method, and not
medical underwriting method.
Answer 5

In a group health insurance, when all members of a group are
covered under a group health insurance policy, the individuals
constituting the group cannot anti-select against the insurer.
In addition to employee-employer groups, insurers have
provided group health insurance coverage to varied type of
groups such as: labour unions, trusts and societies, professional
associations, clubs and other fraternal organisations.
Question 1
Which of the following factor does not affect the morbidity of
an individual?
I. Gender
II. Spouse job
III. Habits
IV. Residence location
Question 2
According to the principle of indemnity, the insured is paid for

__________.
I. The actual losses to the extent of the sum insured
II. The sum insured irrespective of the amount actually spent
III. A fixed amount agreed between both the parties
IV. The actual losses irrespective of the sum assured
Question 3
The first and the primary source of information about an
applicant, for the underwriter is his ________________.
I. Age proof documents
II. Financial documents
III. Previous medical records
IV. Proposal form
Question 4
The underwriting process is completed when
___________________.
I. All the critical information related to the health and personal
details of the proposer are collected through the proposal form
II. All the medical examinations and tests of the proposer are
completed
III. The received information is carefully assessed and classified
into appropriate risk categories
IV. The policy is issued to the proposer after risk selection and
pricing.
Question 5
Which of the following statements about the numerical rating
method is incorrect?
I. Numerical rating method provides greater speed in the
handling of a large business with the help of trained personnel.
II. Analysis of difficult or doubtful cases is not possible on the

basis of numerical points without medical referees or experts.
III. This method can be used by persons without any specific
knowledge of medical science.
IV. It ensures consistency between the decisions of different
underwriters.
Answer 1

The morbidity of an individual is not affected by their spouse‟s
job, though their own occupation is one of the important factors
which can affect their morbidity.
Answer 2
According to the principle of indemnity, insured is compensated
for the actual costs or losses, but to the extent of the sum
insured.
Answer 3

The primary source of information about an applicant, for the
underwriter is his proposal form or application form, in which all
the critical information related to the health and personal
details of the proposer are collected.
Answer 4

The underwriting process is completed when the received
information is carefully assessed and classified into appropriate
risk categories.
Answer 5
The correct answer is II.

A more careful analysis of difficult or doubtful cases is made
possible by numerical rating method because past experience
with reference to the doubtful points is expressed numerically in
terms of a known standard and shadings.
______________________________________________________
CHAPTER-10-HEALTH INSURANCE CLAIMS
Test Yourself 1
The amount of provision made for all claims in the books of the
insurer based on the status of the claims is known as ________.
I. Pooling
II. Provisioning
III. Reserving
IV. Investing
Test Yourself 2
Which of the following documents are not required to be

submitted for Permanent Total Disability claim?
I. Duly completed Personal Accident claim form signed by the
claimant.
II. Attested copy of First Information Report if applicable.
III. Permanent disability certificate from a civil surgeon or any
equivalent competent doctors certifying the disability of the
insured.
IV. Fitness certificate from the treating doctor certifying that
the insured is fit to perform his normal duties.
Test Yourself 3
________________ are paid upfront by Assistance Company and
later claimed from insurance company.
I. Bail bond cases
II. Personal accident claims
III. Overseas travel insurance claims
IV. Untenable claims
Question 1
Who among the following is considered as primary stakeholder in

insurance claim process?
I. Customers
II. Owners
III. Underwriters
IV. Insurance agents/brokers
Question 2
Girish Saxena‟s insurance claim was denied by insurance

company. In case of a denial, what is the option available to
Girish Saxena, apart from the representation to the insurer?
I. To approach Government
II. To approach legal authorities
III. To approach insurance agent
IV. Nothing could be done in case of case denial
Question 3
During investigation, of a health insurance claim presented by

Rajiv Mehto, insurance company finds that instead of Rajiv
Mehto, his brother Rajesh Mehto had been admitted to hospital
for treatment. The policy of Rajiv Mehto is not a family floater
plan. This is an example of ___________fraud.
I. Impersonation
II. Fabrication of documents
III. Exaggeration of expenses
IV. Outpatient treatment converted to in-patient /
hospitalization
Question 4
Under which of the following condition, is domiciliary
hospitalization is covered in a health insurance policy?
I. The condition of the patient is such that he/she can be
removed to the Hospital/Nursing Home , but prefer not to
II. The patient cannot be removed to Hospital/Nursing Home for
lack of accommodation therein
III. The treatment can be carried out only in hospital/Nursing
home
IV. Duration of hospitalization is exceeding 24 hours
Question 5
Which of the following codes capture the procedures performed

to treat the illness?
I. ICD
II. DCI
III. CPT
IV. PCT

Answer 1

Customers are primary stakeholder in insurance claim process
Answer 2

In case of insurance claim denial, individuals can approach legal
authorities.
Answer 3

This is an example of impersonation, as the person insured is
different from person treated.
Answer 4
Domiciliary treatment is provided in health insurance policy,
only when the patient cannot be removed to Hospital/Nursing
Home for lack of accommodation therein
Answer 5

Current Procedure Terminology (CPT) codes capture the
procedures performed to treat the illness.
GENERAL SECTION
CHAPTER-11-PRINCIPLES OF INSURANCE
Test Yourself 1
Which one of the following does not represent an insurable risk?
I. Fire
II. Stolen goods
III. Burglary
IV. Loss of goods due to ship capsizing
Test Yourself 2
Which among the following cannot be an element in a valid
insurance contract?
I. Offer and acceptance
II. Coercion
III. Consideration
IV. Legality
Test Yourself 3
Mr. Pinto contracted pneumonia as a result of lying on wet ground
after a horse riding accident. The pneumonia resulted in death of
Mr. Pinto. What is the proximate cause of the death?
I. Pneumonia
II. Horse
III. Horse riding accident
IV. Bad luck

Answer 1

Stolen goods violate the principle of legality and hence do not
represent an insurable risk.
Answer 2

Coercion is not an element of a valid contract.
Answer 3

The horse riding accident set things in motion that eventually
resulted in Mr Pinto‟s death and hence it is the proximate cause.
Question 1
Moral hazard means:

I. Dishonesty or character defects in an individual
II. Honesty and values in an individual
III. Risk of religious beliefs
IV. Hazard of the property to be insured
Question 2
Risk indicates:
I. Fear of unknown
II. Chance of loss
III. Disturbances at public place
IV. Hazard
Question 3
______________ means spreading one‟s investment in different

kinds of assets.
I. Pooling
II. Diversification
III. Gambling
IV. Dynamic risk
Question 4
_____________ is not an example of an asset.
I. House
II. Sunlight
III. Plant and machinery
IV. Motor car
Question 5
______________ is not an example of risk.

I. Damage to car due to accident
II. Damage of cargo due to rain water
III. Damage to car tyre due to wear and tear
IV. Damage to property due to fire
Question 6
Earthquake is an example of:

I. Catastrophic risk
II. Dynamic risk
III. Marginal risk
IV. Speculative risk
Question 7
Select the most appropriate logical equivalence for the statement.

Statement: Insurance cannot protect an asset from loss or
damage.
I. True
II. False
III. Partially true
IV. Not necessarily true
Question 8
__________________ means transfer of all rights and remedies,

with respect to the subject matter of insurance, from insured to
insurer.
I. Contribution
II. Subrogation
III. Legal hazard
IV. Risk pooling
Question 9
An example of a fact which need not be disclosed unless asked
for is ______________ by the insurer.
I. Age of the insured
II. Presence of fire extinguisher
III. Heart ailment
IV. Other insurance details
Question 10
________________ is a wrong statement made during

negotiation of a contract.
I. Misrepresentation
II. Contribution
III. Offer
IV. Representation

Answer 1

Moral hazard means dishonesty or character defects in an
individual.
Answer 2

„Risk‟ indicates a chance of loss.
Answer 3

Diversification means spreading one‟s investment in different
kinds of assets.
Answer 4

Sunlight cannot be classified as asset as it fails the test of scarcity
and ownership.
Answer 5
Damage as a result of wear and tear cannot be treated as risk.
Answer 6

Earthquake is an example of catastrophic risk.
Answer 7
Insurance cannot protect an asset from loss or damage.
Answer 8

Subrogation means transfer of all rights and remedies, with
respect to the subject matter of insurance, from insured to insurer.
Answer 9

Presence of fire extinguisher need not be disclosed while buying
insurance, unless asked for.
Answer 10

Misrepresentation is a wrong statement made during negotiation
of a contract.
__________________________________________________
CHAPTER-12- DOCUMENTATION
Test Yourself 9
What is the significance of the principle of contribution?

I. It ensures that the insured also contributes a certain
portion of the claim along with the insurer
II. It ensures that all the insured who are a part of the pool,
contribute to the claim made by a participant of the pool, in
the proportion of the premium paid by them
III. It ensures that multiple insurers covering the same subject
matter; come together and contribute the claim amount in
proportion to their exposure to the subject matter
IV. It ensures that the premium is contributed by the insured
in equal installments over the year.
Test Yourself 4
Which of the below statement is true with regards to cover
notes?
I. Cover notes are predominantly used in life insurance
II. Cover notes are predominantly used in all classes of
general insurance
III. Cover notes are predominantly used in health insurance
IV. Cover notes are predominantly used in marine and motor
classes of general insurance
Test Yourself 5

warranty?
I. A warranty is a condition which is implied without being
stated in the policy
II. A warranty is a condition expressly stated in the policy
III. A warranty is a condition expressly stated in the policy
and communicated to the insured separately and not as part
of the policy document
IV. If a warranty is breached, the claim can still be paid if it is
not material to the risk
Test Yourself 7
Which of the below statement is correct with regards to

renewal notice?
I. As per regulations there is a legal obligation on insurers to
send a renewal notice to insured, 30 days before the expiry
of the policy
II. As per regulations there is a legal obligation on insurers to
send a renewal notice to insured, 15 days before the expiry
of the policy
III. As per regulations there is a legal obligation on insurers to
send a renewal notice to insured, 7 days before the expiry of
the policy
IV. As per regulations there is no legal obligation on insurers
to send a renewal notice to insured before the expiry of the
policy
Answer 1

The principle of contribution ensures that multiple insurers
covering the same subject matter; come together and
contribute the claim amount in proportion to their exposure
to the subject matter
Answer 2

As per guidelines, an insurance company has to process an
insurance proposal within 15 days.
Answer 3

In case the premium payment is made by cheque, then the
risk may be assumed on the date on which the cheque is
posted.
Answer 4
The correct option answer is IV.

Cover notes are predominantly used in marine and motor
classes of general insurance.
Answer 5

A warranty is a condition expressly stated in the policy.
Answer 6

If certain terms and conditions of the policy need to be
modified at the time of issuance, it is done by setting out the
amendments through endorsement.
Answer 7

As per regulations there is no legal obligation on insurers to
send a renewal notice to insured before the expiry of the
policy.
Question 1
__________ is the maximum limit of liability of insurer under

the policy
I. Sum insured
II. Premium
III. Surrender value
IV. Amount of loss
Question 2
_______________ is the consideration or price paid by

insured under a contract
I. Claim amount
II. Surrender value
III. Maturity amount
IV. Premium
Question 3
A document which provides an evidence of contract of
insurance is called________
I. Policy
II. Cover note
III. Endorsement
IV. Certificate of insurance
Question 4
The duty of disclosure arises

I. Prior to inception of the policy
II. After inception of the policy
III. Prior to inception and continues during the policy
IV. There is no such duty
Question 5
Material fact
I. Is the value of all material covered in a policy
II. Not important for assessing the risk
III. Is important as it influences the decision of the
underwriter
IV. Is not important as it has no bearing on the decision of the
underwriter
Question 6
Fire proposal seeks to know
I. Process of manufacture
II. Details of material stored
III. Construction of building
IV. All the above
Question 7
Premium cannot be received
I. In cash
II. By cheque
III. By promissory note
IV. By credit card
Question 8
The certificate of Motor Insurance

I. Is not mandatory
II. Has to be kept with self always
III. Has to be kept in the car always
IV. Has to be kept in the bank locker
Question 9
A warranty
I. Is a condition expressly stated in the policy
II. Has to be complied with
III. Both a and b
IV. None of the above
Question 10
Renewal Notice for Motor insurance is issued by

I. The Insured before expiry of the policy
II. The Insurer before expiry of the policy
III. The Insured after expiry of the policy
IV. The Insurer after expiry of the policy
Answer 1

Sum insured is the maximum limit of liability of insurer under
the policy.
Answer 2

Premium is the consideration or price paid by insured under a
contract.
Answer 3

A document which provides an evidence of contract of
insurance is called policy.
Answer 4

The duty of disclosure arises prior to the inception and
continues even during the policy
Answer 5

Material fact is important as it influences the decision of the
underwriter.
Answer 6

Fire proposal seeks to know process of manufacture, details
of material stored and construction of the building.
Answer 7
The correct option is III

Premium cannot be received by promissory note.
Answer 8
The certificate of Motor Insurance has to be kept in car
always.
Answer 9
The correct option is III

A warranty is a condition expressly stated in a policy and has
to be complied with.
Answer 10

Renewal Notice for Motor insurance is issued by the insurer
before expiry of the policy.
CHAPTER-13-THEORY AND PRACTICE OF PREMIUM RATING
Test Yourself 1
Identify the two factors that affect insurance ratemaking.

I. Probability and severity of risk
II. Source and nature of risk
III. Source and timing of risk
IV. Nature and impact of risk
Test Yourself 2
What is pure premium?

I. Premium sufficiently big enough to pay for losses only
II. Premium applicable to marginal members of the society
III. Premium after loading for administrative costs
IV. Premium derived from the most recent loss experience
period
Test Yourself 3
What is expected of an agent when she detects a moral
hazard?
I. Continue with the insurance as before
II. Report the same to the insurer
III. Ask for a share in the claims
IV. Turn a blind eye.
Test Yourself 4
Suggest an insurance scheme for a doctor to protect him from

any claims of negligence against him.
I. Personal accident insurance
II. Liability insurance
III. Marine hull insurance
IV. Health insurance

Answer 1

Probability and severity of risk affect insurance ratemaking.
Answer 2

Pure premium is sufficient enough to pay for losses, however
it does not account for administrative expenses or profit.
Answer 3

An insurance agent should report to the insurer any detection
of moral hazard.
Answer 4
Liability insurance can insure the doctor against claims of
negligence.
Question 1
_____________ decides whether to accept or not to accept

the risk.
I. Assured
II. Underwriter
III. Agent
IV. Surveyor
Question 2
_______________ is the price of a given unit of insurance.

I. Rate
II. Premium
III. Sum Assured
IV. Bonus
Question 3
___________ is the maximum amount that an insurance
company will indemnify to someone who files a claim.
I. Sum insured
II. Premium
III. Rider
IV. Benefits
Question 4
______________ is not a source of information for
underwriter.
I. Annual accounts of a proposer
II. Pre-acceptance risk survey of the asset
III. Proposal form
IV. Registration certificate of insurer
Question 5
Hazards are:
I. Factors that increase the impact of losses
II. Factors that increases the frequency of loss
III. Factors that increase the impact and severity of losses
IV. Factors that decrease the impact and severity of losses
Question 6
Which of the following is true?

Physical Hazards:
I. Are not important for rate making
II. Cannot be ascertained
III. Can be calculated from the balance sheet
IV. Can be ascertained from information given in a proposal
form
Question 7
In motor insurance one of the warranties is:

I. The vehicle should be washed daily
II. The vehicle should not be used for speed testing
III. The vehicle should not be used for carrying luggage for
personal use
IV. The vehicle should not be run more than 200 km per day.
Question 8
The purpose of deductible clause is to:
I. To avoid claim payment
II. To eliminate payment of small claims
III. To harass the policyholder
IV. To increase the premium
Question 9
Installation of sprinkler system in the premises:

I. Increases risk
II. Decreases the risk
III. Neither increases nor decreases risk
IV. Increases risk of hooding
Question 10
Insured‟s declared value in motor insurance includes:

I. Registration
II. Manufacturer‟s cost price
III. Manufacturer‟s selling price
IV. Arbitrary price component

Answer 1

Underwriter decides whether to accept or not to accept the
risk.
Answer 2

Rate is the price of a given unit of insurance.
Answer 3

Sum insured is the maximum amount that an insurance
company will indemnify to someone who files a claim.
Answer 4
Registration certificate of insurer is not a source of
information for underwriter.
Answer 5

Hazards are factors that increase the impact and severity of
losses.
Answer 6

Physical hazards can be ascertained from information given in
a proposal form.
Answer 7

In motor insurance one of the warranties is that vehicle
should not be used for speed testing.
Answer 8

The purpose of deductible clause is to eliminate small claims.
Answer 9

Installation of sprinkler system in the premises decreases the
risk of fire.
Answer 10

Insured‟s declared value in motor insurance includes
manufacturer‟s selling price.
___________________________________________
CHAPTER-14-PERSONAL AND RETAIL INSURANCE
Test Yourself 1
householder‟s insurance policy?
I. A named peril policy may be purchased as a less expensive
alternative to a comprehensive coverage policy that tends to
offer coverage to most perils.
II. A comprehensive policy that tends to offer coverage to most
perils; may be purchased as a less expensive alternative to a
named peril policy.
III. A named peril policy or comprehensive policy comes at the

same price.
IV. With regards to a householder‟s policy, only a named peril
policy can be bought and comprehensive policies are not
available.
Test Yourself 2
Under the shopkeeper policy, the insured may opt for an

additional „Fixed plate glass and sanitary fittings‟ cover. This
will cover accidental loss of damage to which of the following?
I. Fixed plate glass
II. Sanitary fittings
III. Neon signs
IV. All of the above
Test Yourself 3
Motor insurance should be taken in whose name?
I. In the name of the vehicle owner whose name is registered
with Regional Transport Authority
II. If the person who will be driving the vehicle is different from
the owner, then in the name of the person who will be driving
the vehicle, subject to approval from Regional Transport
Authority
III. In the name of any family member of the vehicle owner,
including the vehicle owner, subject to approval from the
Regional Transport Authority
IV. If the person who will be driving the vehicle is different from
the owner, then primary policy should be in the name of the
vehicle owner and add-on cover in the name of the person who
will be driving the vehicle.

Answer 1

A named peril policy may be purchased as a less expensive
alternative to a comprehensive coverage policy that tends to
offer coverage to most perils.
Answer 2

Under the shopkeeper policy, the insured may opt for an
additional „Fixed plate glass and sanitary fittings‟ cover. This
will cover accidental loss of damage to fixed plate glass,
sanitary fittings and neon signs.
Answer 3
Motor insurance should be taken in the name of the vehicle
owner whose name is registered with Regional Transport
Authority.
Question 1
In householder‟s insurance
I. Gold and silver ornaments are covered
II. Content‟s of one‟s shop is covered
III. Cars owned by the family are covered
IV. Parcels sent by post are covered during transit.
Question 2
Householder‟s insurance covers

I. Only the structure of the home
II. Only the Contents of the home
III. Both the structure and contents
IV. Both Structure and contents only when insured is not at
home
Question 3
In shop keeper‟s insurance, which of the following are not

covered?
I. Machinery breakdown
II. Malicious damage
III. Business interruption
IV. Willful destruction by insured
Question 4
In shop keeper‟s insurance which of the following are usually not
covered
I. Money in till/counter at business premises
II. Money in transit from bank to business premises
III. Money in safe at business premises
IV. Money carried by customer to business premises.
Question 5
Shop insurance covers

I. Dishonest acts of employees
II. Dishonest acts of insured
III. Dishonest acts of customers
IV. Dishonest acts of money lenders
Answer 1

In householder‟s insurance gold and silver ornaments are
covered.
Answer 2

Householder‟s insurance covers both the structure and contents.
Answer 3

In shopkeeper‟s insurance, willful destruction by insured is not
covered.
Answer 4

In shopkeeper‟s insurance money carried by customer to
business premises is usually not covered.
Answer 5

Shop insurance covers dishonest act of employees.
CHAPTER-15-COMMERCIAL INSURANCE
Test Yourself 1
A fire policy for commercial risks covers the perils of ________

I. Explosion
II. Implosion
III. Both of the above
Test Yourself 2
A business interruption insurance policy can be taken only in

conjunction with ____________.
I. Standard fire and special perils policy
II. Standard fire and marine policy
III. Standard and special perils policy
IV. Standard Engineering and marine policy
Test Yourself 3
The premium for burglary policy depends on ______________.
I. Nature of insured policy
II. Moral hazard of the insured himself
III. Construction and location of the premises
Test Yourself 4
Which of the below is covered under a money insurance policy?

I. Shortage due to error or omission
II. Loss of cash from one‟s premises due to burglary
III. Loss of money that has been entrusted to other than
authorized person
IV. Riot strike and terrorism
Test Yourself 5
Fidelity guarantee insurance indemnifies ________________.
I. Employers against the financial loss suffered by them due to
fraud or dishonesty of their employees
II. employees against the financial loss suffered by them due to
fraud or dishonesty of their employer
III. Employees and employers against the financial loss suffered
by them due to fraud or dishonesty of third party
IV. Shareholders against the financial loss suffered by them due
to fraud or dishonesty of the company management
Test Yourself 6
Which of the below can be covered under a bankers indemnity
insurance policy?
I. Money securities lost or damaged whilst within the premises
due to fire
II. Forgery or alteration of cheques
III. Dishonesty of employees with reference to money
Test Yourself 7
In case of a Jeweler‟s Block Policy, damage to property insured
when it is in transit by registered parcel will be covered under
____________.
I. Section I
II. Section II
III. Section III
IV. Section IV
Test Yourself 8
Delay in start-up policy is also known as ______________.
I. Machinery Loss of Profits cover
II. Advance Loss of Profits cover
III. Contractors All Risk cover
IV. Contractors Plant & Machinery cover
Test Yourself 9
Which of the following is not covered under Industrial All
Risks insurance?
I. Fire and special perils as per fire insurance practice
II. Larceny
III. Machinery breakdown
IV. Electronic equipment
Test Yourself 10
Which branch of insurance offers cover against war perils?
I. Marine policies
II. Aviation policies
III. Both of the above
Test Yourself 11
Under the Public Liability Insurance Act, 1991, how much is
the compensation payable for actual medical expenses?
I. Rs. 6,250
II. Rs, 12,500
III. Rs. 25,000
IV. Rs. 50,000
Answer 1

Fire policy for commercial risks covers the perils of explosion
and implosion.
Answer 2

A business interruption insurance policy can be taken only in
conjugation with standard fire and special perils policy.
Answer 3

The premium for burglary policy depends on the nature of
number of things like insured property, the moral hazard of
the insured himself, construction and location of premises,
safety measures (e.g. watchmen, burglar alarm), previous
claims experience etc.
Answer 4

Loss of cash from one‟s premises due to burglary is covered
under a money insurance policy. Riot strike and terrorism can
be covered as an extension by paying an extra premium
Answer 5

A fidelity guarantee insurance policy indemnifies employers
against the financial loss suffered by them due to fraud or
dishonesty of their employees.
Answer 6
A banker‟s indemnity insurance policy can cover: money
securities lost or damaged whilst within the premises due to
fire, forgery or alteration of cheques, dishonesty of
employees with reference to money.
Answer 7
In case of a Jeweler‟s Block Policy, damage to property
insured when it is in transit by registered parcel will be
covered under Section III.
Answer 8

Delay in start-up policy is also known as Advance Loss of
Profit cover.
Answer 9

Larceny is not covered under Industrial All Risks insurance
Answer 10

Marine and aviation is the only branch of insurance that offer
cover against war perils.
Answer 11

Under the Public Liability Insurance Act, 1991, the
compensation payable for actual medical expenses is Rs.
12,500.
Question 1
In Engineering insurance CAR stands for
I. Motor Car
II. Contractors All Risks
III. Company‟s All Risks
IV. Companies All Requirements
Question 2
An employer insures himself from dishonest act of his

employees by _________
I. Employees compensation policy
II. Public Liability Insurance policy
III. Fidelity Guarantee Insurance policy
IV. Declaration policy.
Question 3
_________ refers to the body of the ship.

I. Hull
II. Cargo
III. Piracy
IV. Jettison
Question 4
Policy which covers loss or damage to aircraft is

______________.
I. Statutory liability
II. Property insurance
III. Aviation insurance
IV. Money insurance
Question 5
Fire Insurance Policy does not cover damage to property even
as add-on cover due to___________.
I. Floods
II. Earthquake
III. Fire
IV. Bombing due to war
Question 6
Consequential Loss (Fire Policy) covers:
I. Loss of profit due to damage to factory
II. Loss of Goodwill
III. Material wear & tear in machinery
IV. Losses due to foreign exchange fluctuations
Question 7
Premium in Burglary depends on:

I. Security measures
II. Location of Premises
III. Nature of property
Question 8
Contractor‟s All Risk Policy is a variation of:

I. Fire Insurance
II. Life Insurance
III. Engineering Insurance
IV. Marine Insurance
Question 9
Employee‟s Compensation Policy is a type of
I. Liability Insurance
II. Fire Insurance
III. Marine Cargo Insurance
IV. Engineering Insurance
Question 10
Money Insurance Policy covers:

I. Cash in hand
II. Money invested in Mutual Fund
III. Money lying in Saving Bank
IV. Money deposited with post office.
Answer 1

In Engineering insurance CAR stands for Contractors All Risks.
Answer 2

An employer insures himself from dishonest act of his
employees by Fidelity Guarantee Insurance policy.
Answer 3

Hull refers to the body of the ship.
Answer 4

Policy which covers loss or damage to aircraft is aviation
insurance.
Answer 5
Fire Insurance Policy does not cover damage to property even
as add-on cover, due to bombing or war.
Answer 6

Consequential Loss (Fire Policy) covers loss of profit due to
damage to factory.
Answer 7

Premium in burglary depends on security measures, location
of premises, nature of property etc.
Answer 8
Contractor‟s All Risk Policy is a variation of Engineering
Insurance.
Answer 9

Employee‟s Compensation Policy is a type of Liability
Insurance.
Answer 10

Money insurance policy covers cash in hand.
CHAPTER-16-CLAIMS PROCEDURE
Test Yourself 1
Which of the following activities would not be categorised
under professional settlement of claims?
I. Seeking information relating to the cause of the loss
II. Approaching the claim with a prejudice
III. Ascertaining whether the loss was a result of an insured
peril
IV. Quantifying the amount payable under the claim
Test Yourself 2
Raj is involved in a car accident. His car is insured under a
motor insurance policy. Which among the following is the
most appropriate thing for Raj to do?
I. Notify the insurer of the loss as soon as reasonably possible
II. Notify the insurer at the time of insurance renewal
III. Damage the car further so as to receive a bigger
compensation
IV. Ignore the damage
Test Yourself 3
Compare claims investigation and claims assessment.
I. Both claims investigation and assessment are the same
thing
II. Investigation tries to determine the validity of the claim
whereas assessment is more concerned with the cause and
extent of the loss
III. Assessment tries to determine the validity of the claim
whereas investigation is more concerned with the cause and
extent of the loss
IV. Investigation is done before the claim is paid and
assessment is done after the claim is paid
Test Yourself 4
Who is the licensing authority for surveyors?
I. Surveyor Association of India
II. Surveyor Regulatory and Development Authority
III. Insurance Regulatory and Development Authority of India
IV. Government of India
Test Yourself 5
Which among the following documents is most likely to be
requested while examining a cyclone damage claim?
I. Coroner‟s report
II. Report from Fire Brigade
III. Police report
IV. Report from Meteorological Department
Test Yourself 6
Under which principle can the insurer assume the rights of
the insured in order to recover from a third party the loss
paid under a policy?
I. Contribution
II. Discharge
III. Subrogation
IV. Indemnity
Test Yourself 7
If the insurer decides that a certain loss is not payable
because it is not covered under the policy then who decides
on such matters?
I. Insurer‟s decision is final
II. Umpire
III. Arbitrator
IV. Court of Law
Answer 1

Professional settlement of claims does not involve
approaching a claim with prejudice.
Answer 2

A claim needs to be notified as soon as reasonably possible.
Answer 3

Investigation tries to determine the validity of the claim
whereas assessment is more concerned with the cause and
extent of the loss.
Answer 4

IRDAI is the licensing authority for surveyors.
Answer 5

Report from Meteorological Department is most likely to be
requested while examining a cyclone damage claim.
Answer 6

Under the principle of subrogation the insurer can assume the
rights of the insured in order to recover from a third party
the loss paid under a policy.
Answer 7

If the insurer decides that a certain loss is not payable
because it is not covered under the policy then such matters
will be decided in the Court of Law.
Question 1
Intimation of loss is to be made:

I. at the exact time of the loss
II. after 15 days
III. as soon as reasonably possible
IV. any time after the loss
Question 2
Investigation of loss is done by:

I. unlicensed surveyor
II. licensed and qualified surveyor
III. insured‟s representative
IV. any person with a degree in engineering
Question 3
For personal accident claims, report of________ is

necessary.
I. Surveyor
II. Doctor
III. Police
IV. Coroner
Question 4
Independent surveyors are required for claims equal to or

above_______ as per the Insurance Act.
I. Rs. 40,000
II. Rs. 15,000
III. Rs. 20,000
IV. Rs. 25,000
Question 5
Claims assessed outside the country in case of travel

insurance polices are assessed by:
I. Indian surveyors
II. Local surveyors in the country of loss
III. Insurer‟s own employees
IV. Claims settling agents named in the policy
Question 6
In case of a fire claim, a report from the fire brigade:
I. is not required
II. is optional for the insured
III. is necessary
IV. is part of the police report
Question 7
What is TAT?
I. Time and Turn
II. Till a Time
III. Time and Tide
IV. Turnaround Time
Question 8
On payment of loss, salvage belongs to:

I. Surveyors
II. Insured
III. Insurer
IV. Local authorities
Question 9
Arbitration is a claim settlement process done

______________.
I. in the court of law
II. by a group of surveyors
III. by arbitrator(s) chosen by the parties involved
IV. arbitrarily by the insurance company‟s employees
Question 10
Insurers under right of subrogation are allowed to recover the

loss paid from:
I. Shipping companies only
II. Railways and road carriers only
III. Airlines and Port Trusts only
IV. Shipping companies and railway and road carriers and
airlines and port trusts
Answer 1

Intimation of loss is to be made as soon as reasonably
possible.
Answer 2

Investigation of loss is done by licensed and qualified
surveyor.
Answer 3

For personal accident claims report of a Doctor is necessary.
Answer 4

Independent surveyors are required for claims equal to or
above Rs 20000 as per the Insurance Act.
Answer 5
Claims assessed outside the country in case of travel
insurance policies are assessed by claims settling agents
named in the policy.
Answer 6

In case of a fire claim, a report from the fire brigade is
required.
Answer 7

TAT is turnaround time.
Answer 8
On payment of loss, salvage belongs to insurer.
Answer 9

Arbitration is a claim settlement process done by arbitrator(s)
chosen by the parties involved.
Answer 10

Insurers under right of subrogation are allowed to recover the
loss paid from shipping companies and railway and road
carriers and airlines and port trusts.

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ABSRACT OF TEST YOURSELFS& SELF-

i. Making adequate disclosure to enable the clients to make an informed decision.

The correct answer is I.

Expand the term IGMS.

Which of the below statement is correct with regards to the

What is the time limit for approaching an Insurance Ombudsman?

Which among the following is not a pre-requisite for launching a

Can a complaint be launched against a private insurer?

Answers to Self-Examination Questions

The correct option is III.

The correct option is II.

The correct option is I.

The correct option is II.

CHAPTER-4 REGULATORY ASPECTS OF INSURANCE AGENTS

CHAPTER-5 LEGAL PRINCIPLES OFANINSURANCECONTRACT

Which among the following is an example of coercion?

I. Ramesh signs a contract without having knowledge of the fine print

III. Ramesh uses his professional standing to get Mahesh to sign a

Which among the following options cannot be insured by Ramesh?

II. Ramesh‟s spouse

III. Ramesh‟s friend

IV. Ramesh‟s parents

Answers to Test Yourself

The correct option is II.

Ramesh threatening to kill Mahesh if he does not sign the contract is

The correct option is III.

Which element of a valid contract deals with premium?

I. Offer and acceptance

III. Free consent

IV. Capacity of parties to contract

_____________ relates to inaccurate statements, which are made

________________ involves pressure applied through criminal means.

II. Undue influence

Which among the following is true regarding life insurance contracts?

I. They are verbal contracts not legally enforceable

II. They are verbal which are legally enforceable

IV. They are similar to wager contracts

Which of the below is not a valid consideration for a contract?

III. House wife

IV. Government employee

Which of the below action showcases the principle of “Uberrima

I. Lying about known medical conditions on an insurance proposal

II. Not revealing known material facts on an insurance proposal form

III. Disclosing known material facts on an insurance proposal form

IV. Paying premium on time

Which of the below is not correct with regards to insurable interest?

I. Father taking out insurance policy on his son

II. Spouses taking out insurance on one another

III. Friends taking out insurance on one another

IV. Employer taking out insurance on employees

When is it essential for insurable interest to be present in case of life

I. At the time of taking out insurance

II. At the time of claim

III. Insurable interest is not required in case of life insurance

IV. Either at time of policy purchase or at the time of claim

II. Broken back

III. Falling off a horse

Answers to Self-Examination Questions

The correct option is II.