MCQ Basic Questions about Insurance

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Insurance exam questions and answers:

Ques. ___ is an annual payment made by a life insurance company in consideration form a lump sum received.

(a) claim

(b) annuity

(c) bonus

(d) premium

Ans. (b)

Ques. Property damaged because of earthquake is _ risk

(a) Risk for general insurance

(b) Non insurable risk

(c) Property risk

(d) None of the above

Ans. (c)

Ques. General Insurance includes ___

(a) Fire Insurance

(b) Marine Insurance

(c) Burglary Insurance

(d) All of these

Ans. (d)

Ques. __ is a policy where the insurer undertakes to make good the loss upto the amount mentioned in the policy

(a) Specific policy

(b) Valued policy

(c) Average policy

(d) None of these

Ans. (c)

Ques. Distribution of insurance products and insurance policies by banks as corporate agents is known as:

(a) General Insurance

(b) Non-life insurance

(c) Bank assurance

(d) Insurance banking

(e) Deposit insurance

Ans. (c)

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Ques. When the amount for which a subject matter is insured is more that its actual value. It is called __

(a) Double insurance

(b) Over insurance

(c) Over premium

(d) None of these

Ans. (b)

Ques. Insurance business is based on _.

(a) Newton’s Law

(c) The Theory of Probability and Law of large numbers

(b) Boyles Law

(d) Parkinsons Law

Ans. (c)

Ques. A policy for protecting a group of employees in a firm is called __

(a) General Insurance

(b) State life insurance

(c) Group insurance

(d) None of the above

Ans. (c)

Ques. An annual payment which an insurer guarantees to pay for lump sum money received in the beginning is called ___

(a) Premium

(b) Annuity

(c) Claim

(d) Policy

Ans. (b)

Ques. Reinsurance also termed as __

(a) Double insurance

(b) Reinsurance of reinsurance

(c) Insurance of insurance

(d) None of these

Ans. (c)

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Ques. Insurance is a risk management technique involving __

(a) Risk retention

(b) Risk avoidance

(c) Loss Control

(d) Risk transfer

Ans. (d)

Ques. The principle of subrogation is applicable to___

(a) Fire Insurance

(b) Marine Insurance

(c) Burglary Insurance

(d) All of these

Ans. (d)

Ques.  ___ is a device of reducing the risk undertaken by an insurance company.

(a) re-insurance

(b) double insurance

(c) risk insurance

(d) none of these

Ans. (a)

Ques. __ in the insurance are just like the retailers of any consumer product who help in selling and distributing the product.

(a) Underwriters

(b) Surveyors

(c) Agents

(d) Banker

Ans. (c)

Ques. Under __ policy the sum assured becomes payable on the attainment of a specific age or on death whichever is earlier

(a) whole time life policy

(b) endowment policy

(c) with profit policy

(d) none of these

Ans. (b)

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Ques. Life insurance is a contract of__

(a) indemnity

(b) guarantee

(c) contribution

(d) none of these

Ans. (b)

Ques. General insurance is a contract of __

(a) contribution

(b) indemnity

(c) guarantee

(d) none of these

Ans. (b)

Ques. The consideration in insurance for covering the risk is called ___

(a) Claim

(b) Premium

(c) Annuity

(d) None of these

Ans. (b)

Ques. Insurance prices are called

(a) Commissions

(b) Allowances

(c) Premiums

(d) Discounts

Ans. (c)

Ques. Reinsurance is common in __

(a) life insurance

(b) general insurance

(c) none of these

(d) all kind of insurance

Ans. (b)

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Ques. In the case of marine insurance reserve for unexpired risk is __

(a) 50%

(b) 100%

(c) 40%

(d) none of these

Ans. (b)

Ques. Valuation balance sheet is prepared by a life insurance company to find out

(a) Profit or loss

(b) financial position

(c) surplus or deficiency

(d) net liability

Ans. (c)

Ques. ___.is an agreement between two insurance companies whereby one transfers a part of risk to other.

(a) Reinsurance

(b) Sub insurance

(c) Shared Policy

(d) None of these

Ans. (a)

Ques. The person responsible for evaluation and acceptance / rejection of risks and computation of premium in insurance is called

(a) Insured

(b) Assurer

(c) Agent

(d) Underwriter

Ans. (d)

Ques. In legal sense, Insurance is a

(a) Contract

(b) Activity

(c) Gambling

(d) Publicity

Ans. (a)

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Ques. __ % of net surplus of a life insurance company is given to policyholders as bonus

(a) 90%

(b) 80%

(c) 95%

(d) none of these

(b)

Ans. (c)

Ques. Valuation balance sheet is prepared by ___ business.

(a) Fire Insurance

(b) Marine Insurance

(c) Life Insurance

(d) All of these

Ans. (c)

Ques. Bonus payable on maturity of the policy is termed as

(a) cash bonus

(b) capital bonus

(c) reversionary bonus

(d) none of these

Ans. (c)

Ques. What is a insurance proposal?

(a) A request for an insurance cover

(b) An offer to enter into a contract

(c) Both (a) and (b)

(d) None of the above

Ans. (c)

Ques. ___ is the amount payable to the insured on the happening of event.

(a) Premium

(b) Annuity

(c) Claim

(d) Policy

Ans. (c)

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Ques. Valuation balance sheet is prepared by __

(a) General insurance company

(b) life insurance company

(c) joint stock company

(d) banking company

Ans. (b)

Ques. Legal expenses in respect of claims of an insurance company is shown in __

(a) P & L a/c

(b) Revenue a/c

(c) Balance sheet

(d) Surplus a/c

Ans. (b)

Ques. The commission given by insurance companies to others for receiving business under reinsurance is called ___

(a) Commission on reinsurance accepted

(b) Agents’ commission

(c) Commission on reinsurance ceded

(d) None of these

Ans. (a)

Ques. The chance of loss from the unforeseen circumstances in future refers to ___.

(a) Perils

(b) Damage

(c) Risk

(d) Hazards

Ans. (c)

Ques. Bonus in reduction of premium appears in the revenue a/c as __

(a) an income

(b) an expense

(c) no where

(d) profit

Ans. (b)

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Ques. The commission earned by insurance companies from others for giving them business under reinsurance is called ___

(a) Commission on reinsurance accepted

(b) Agents’ commission

(c) Commission on reinsurance ceded

(d) None of these

Ans. (c)

Ques. When the same risk and subject matter is insured with more than one insurer is known as

(a) Reinsurance

(b) Double Insurance

(c) Under Insurance

(d) Over Insurance

Ans. (b)

Ques. The business of insurance is related to protection of __

(a) Status

(b) Economic value of asset

(c) Savings

(d) Profit

Ans. ((b)

Ques. Revenue Account is also called ___

(a) Shareholders’ Account

(b) Policyholders’ Account

(c) Creditors’ Account

(d) None of these

Ans. (b)

Ques. Under ___, the sum assured is given to the beneficiary only on death of policyholder.

(a) Life Policy

(b) Health Policy

(c) Annuity

(d) None of these

Ans. (a)

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Ques. ………is a form of agreement between two parties in which one party agrees to make good for loss of another.

(a) Contract

(b) Insurance

(c) Banking

(d) Mutual fund

Ans. (b)

Ques. The party whose risk is covered in insurance is known as __

(a) Insurer

(b) Insured

(c) Underwriter

(d) None of these

Ans. (d)

Ques. An escape from disability or death in a plain crash by refusing to fly is called __

(a) Risk shifting

(b) Risk avoidance

(c) Risk hedging

(d) None of these

Ans. (b)

Ques. The agreement of insurance is called as ___

(a) Policy

(b) Premium

(c) Annuity

(d) None of these

Ans. (a)

Ques. __ is the party who undertakes the risk in insurance.

(a) Insurer

(b) Assurer

(c) Underwriter

(d) All of these

Ans. (d)

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Ques. __ is an example for personal risk

(a) Business loss

(b) Fire occurred in business premises

(c) Risk of premature death

(d) None of the above

Ans. (c)

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