Latest Updates from Industry

      
      

Canara Bank has entered into a MoU with Life Insurance Corporation of India for offering the Pradhan Mantri Jeevan Jyoti Bima Yojana Insurance cover to all its eligible customers. Canara Bank has ...

The financial sector has a pride of place in the equity portfolio of government-owned Life Insurance Corporation of India (LIC), with 53 of its 309 large picks from the sector. 

 

A business ...

The regulator IRDAI  in an attempt to provide the best and cost effective services for the claimants has directed the insurers as well as the TPA's to pass on discounts, if any, given by hospitals to ...

The Insurance Regulatory and Development Authority of India (IRDAI) has directed the  insurers to correct anomalies in product pricing after careful analysis of the  underwriting practices and make ...

The cost of insurance for aviation companies may rise if the Directorate General of Civil Aviation goes ahead with its plans to make it mandatory for pilots to undergo psychiatric test before takeoff ...

The new service tax rate of 14% will come into effect from June 1, top government sources said, in a move that will make eating out in restaurants, insurance and phone bills expensive, among many ...

With the Indian nuclear insurance pool falling short by Rs.600 crore, some foreign companies have shown an interest in being a part of the initiative. "We have pursued some overseas players and have ...

  

Life Insurance Council has urged the regulator for 50% concession in re-insurance rate on Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), on account that its members face losses as the premium ...

 

Life Insurance Corporation of India (LIC) is looking to collect at least Rs.31,000 crore as first year premiums from insurance product sales in 2015-16. Not only this it is also planning to ...

 

Life Insurance Council is working hard towards making the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) attractive for its member companies apprehending its viability under the present pricing ...

 

Life Insurance Corporation of India (LIC) reported a surplus of Rs.1,803.05 crore in FY 15, up 10.33 per cent over the previous year. The surplus in policy holders' accounts was reflected after ...

 

State owned reinsurer General Insurance Corporation Re has abandoned its expedition to buy a Lloyd's of London syndicate member and instead eyeing to apply for membership of the syndicate.

 

...

A survey by Bajaj Allianz General Insurance said although 75 per cent of respondents were aware that home insurance was essential, only 30 per cent had home insurance for either their home or its ...

 

Life Insurance Corporation of India (LIC) will recruit 5,066 people for the post of Apprentice Development Officers in its various zonal offices. The total number of vacancies, including those on ...

The Securities Appellate Tribunal (SAT) has adjourned an appeal against the IRDAI  in a hearing between SBI Life and the Insurance Regulatory and Development Authority of India (IRDAI). 

 

The case ...

The Insurance Regulatory and Development authority of India (IRDAI), in its new draft on investments, said that the equity investments in CNX 200 or BSE 200 can only be considered as approved ...

The insurance coverage in the agriculture sector needs to be enhanced to protect the interest of farmers as well as banks lending to this sector, as per the Financial Stability Report released by the ...

State owned re-insurer General Insurance Corporation Re (GIC) has announced a profit of Rs.2,693 crore to 2014-15, an increase of 20 per cent over the previous year. Gross premium rose by a mere ...

The Department of Financial Services (DFS) has given the green signal to Kotak Mahindra Bank's proposal to increase the foreign investment limit in the bank to 55 per cent from about 49 per cent ...

Life Insurance Corporation had committed to invest Rs 1.5 lakh crore in Indian railways over the next five years. As per the terms of the MOU inked by the two organisations, the railways will use the ...

Canara Bank has entered into a MoU with Life Insurance Corporation of India for offering the Pradhan Mantri Jeevan Jyoti Bima Yojana Insurance cover to all its eligible customers. Canara Bank has also partnered with the United India Insurance Company for offering the Pradhan Mantri Suraksha Bima Yojana Insurance cover. According to the MoU, LIC will offer a life cover of Rs.2 lakh in cash for death of the insured person at a nominal premium of Rs.330 per annum. 

 

All savings bank account holders in age group of 18 to 50 years can avail the of product, the bank said. Similarly, United India Insurance will give accident insurance scheme offering cover for death or disability on account of an accident. 

The financial sector has a pride of place in the equity portfolio of government-owned Life Insurance Corporation of India (LIC), with 53 of its 309 large picks from the sector. 

 

A business Standard analysis of data showed with significant holdings in 33 banks, both private and public sector that, LIC's financial sector investments are a little over than Rs.1 lakh crore or 25.7 per cent of its total equity assets of Rs.4.14 lakh crore as of March. 

 

The exposure, at par with banks and financials' weight age in the BSE 500 index at 25.4 per cent, is a slight increase over the previous year. The data is the aggregate of LIC's stake in companies in which it holds more than one per cent. As the companies don't have to disclose the names of investor holding less than one per cent, LIC's holdings in companies below this limit isn't available in the public domain.

 

During FY 14, the financial sector accounted for 25.25 per cent. The members assume significance as LIC has been playing a key role in capitalizing of public sector banks. During financial year 2014-15, it bought additional shares of UCO Bank, Union Bank, Canara Bank, Bank of India and Central Bank of India. 

 

This was offset by profit booking in State Bank of India, HDFC Bank and Axis Bank, keeping the overall weightage around 25 per cent. Over five years, the insurer's financial sector exposure has remained in a range between a low of 25.3 per cent in March 2010 and a high of 27.2 per cent two years later. However, the number of financial companies has inched up gradually from 43 in 2010 to 53 now. 

The regulator IRDAI  in an attempt to provide the best and cost effective services for the claimants has directed the insurers as well as the TPA's to pass on discounts, if any, given by hospitals to policyholders. 

 

"While every insurer and TPA shall endeavour to get the best and cost effective services to the policyholders or the claimants of health insurance policies, it shall be ensured that the discounts obtained from the hospitals, if any, are passed on to the policyholders or the claimants of the underlying health insurance policy," IRDAI said. 

 

Going forward it has also asked the hospitals to reflect such agreed discounts in the final hospitalization bill of each claim, so that the policyholder or the claimant is aware of the actual  bill raised by the hospital. 

The Insurance Regulatory and Development Authority of India (IRDAI) has directed the  insurers to correct anomalies in product pricing after careful analysis of the  underwriting practices and make things easier for policy holders. 

 

"The (insurance) companies need to correct aberrations that exist in terms of adequate pricing based on scientific analysis of claims," Senior Joint Director of IRDAI Suresh Mathur said while speaking at a insurance summit in Kolkata organized by the Bengal Chamber of Commerce and Industry recently.

 

"It is also important for the industry to take a collective call to correct the aberrations that exist in terms of pricing…. This is one area where the industry needs a concerted effort to price risk and look at underwriting practices," he added. Insurers have so far been maintaining a register of policies and claims, in accordance with the provision of the insurance Act 1938. However, post amendments the Act has facilitated maintenance of such a register in electronic form too. 

The cost of insurance for aviation companies may rise if the Directorate General of Civil Aviation goes ahead with its plans to make it mandatory for pilots to undergo psychiatric test before takeoff as any failure to clear the test could lead to flight cancellations and claims. 

 

This might be just another burden for an industry already facing higher cost of insurance after a Malaysian Airlines flight vanished over South China Sea with 239 people aboard last year and due to accidents in the aviation industry. 

 

Airlines in India, mostly loss-making, may be squeezed further if the DGCA implements the plan. Insurance companies are yet to ascertain the liabilities of such an event since there is no available model to factor in such risks into a policy. 

 

"Initially, there will be loading, but based on experience in the first two years, there will be better understanding of the risk," said T. R. Ramalingam, head of underwriting at Bajaj Allianz General Insurance. 

 

Insurers are waiting for the final word on the mandatory test, which the DGCA is contemplating following the crash of the Germanwings aircraft in the French Alps last month, which killed at least 150 people. 

 

"There will be an increase in premium for pilot's loss of licence cover but reinsurance companies could look at it positively and reduce reinsurance rates," said Yogesh Lohiya, MD and CEO, Iffco Tokio General Insurance. 

The new service tax rate of 14% will come into effect from June 1, top government sources said, in a move that will make eating out in restaurants, insurance and phone bills expensive, among many other things. 

 

In his budget speech, Jaitley had said that to facilitate a smooth transition to levy of tax on services by both the Centre and the states, "it is proposed to increase the present rate" of service tax plus education cess from 12.36% to a consolidated rate of 14%. Service tax is levied on all services, expect a small negative list. Advertising, air travel, services of architect, certain type of constructions, credit card, even management, and tour operator are some of the important services which attract tax. 

With the Indian nuclear insurance pool falling short by Rs.600 crore, some foreign companies have shown an interest in being a part of the initiative. "We have pursued some overseas players and have received good response. 

 

Six companies came with Rs.150 crore. Now, it has become Rs.900 crore. We are putting all out effort into rising the remaining Rs.600 crore for operationalising the pool," said Y. Ramulu, GM of General Insurance Corporation (GIC) of India. 

  

Life Insurance Council has urged the regulator for 50% concession in re-insurance rate on Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), on account that its members face losses as the premium may not be sufficient to cover the cost. 

 

The council is also in the verge of  approaching the  states to waive stamp duty of $40 for improving the  viability of the scheme. Recently, out of 24 life insurance companies, 10 have joined the national programme, offering Rs.2 lakh sum assured in case of death of a policy holder on an annual premium of just Rs.350.

 

Insurance companies will get just about Rs.249 after deducting towards bank commission and stamp duty, which many believe is not going to cover the cost of insurance.

 

Banks that are mandated to sell the social security scheme have sold 2.5 crore life insurance policies since May Insurers will have to pay Rs.100 crore as stamp duty collectively.

 

Insurers have also expressed concerns over duplication of death claims and the council has engaged Credit Information Bureau (India) Ltd or Cibil to detect them. Cibil has built a database of 40 crore bank customers and 2.3 crore commercial loans, beside repository data of one crore mortgages. 

 

Life Insurance Council has urged the regulator for 50% concession in re-insurance rate on Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), on account that its members face losses as the premium may not be sufficient to cover the cost. 

 

The council is also in the verge of  approaching the  states to waive stamp duty of $40 for improving the  viability of the scheme. Recently, out of 24 life insurance companies, 10 have joined the national programme, offering Rs.2 lakh sum assured in case of death of a policy holder on an annual premium of just Rs.350.

 

Insurance companies will get just about Rs.249 after deducting towards bank commission and stamp duty, which many believe is not going to cover the cost of insurance.

 

Banks that are mandated to sell the social security scheme have sold 2.5 crore life insurance policies since May Insurers will have to pay Rs.100 crore as stamp duty collectively.

 

Insurers have also expressed concerns over duplication of death claims and the council has engaged Credit Information Bureau (India) Ltd or Cibil to detect them. Cibil has built a database of 40 crore bank customers and 2.3 crore commercial loans, beside repository data of one crore mortgages.

 

 

Life Insurance Corporation of India (LIC) is looking to collect at least Rs.31,000 crore as first year premiums from insurance product sales in 2015-16. Not only this it is also planning to  introduce five to seven new insurance products during the fiscal year according to LIC chairman S. K. Roy.

 

 

“We will introduce at least one new product in the Unit-linked space, one in the health insurance space and the rest in the traditional insurance space. Our new business premium collection target for the current fiscal is 13% higher than last financial year,” Roy reported.

 

 

With the soaring aim, LIC has taken steps to further advance its technology and processes to make transactions paperless for policyholders. It is also looking forward to expand its international operations and will soon form a joint venture to enter the insurance market in Bangladesh along with its Singapore operations to a full-fledged insurance business this financial year, Roy said.

 

Life Insurance Council is working hard towards making the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) attractive for its member companies apprehending its viability under the present pricing policy. Secretary General of the council V. Manickam said that, out of Rs.330 charged for the Rs.2 lakh sum assured, insurance companies are left with only about Rs.250 after deducting bank commission and stamp duty.

 

Apprehending the scheme's viability, the council has already written to industry regulator IRDAI seeking its intervention in getting 50 per cent rebate in current re-insurance rate of Rs.180 on this policy promoted by the centre. 

 

 

Life Insurance Corporation of India (LIC) reported a surplus of Rs.1,803.05 crore in FY 15, up 10.33 per cent over the previous year. The surplus in policy holders' accounts was reflected after paying an interim bonus of Rs.1,899.75 crore to its policy holders. 

 

Life Insurance Corporation of India has also proposed the entire surplus amount to be paid as its final dividend to the shareholder - the Union government. The LIC board approved the audited financial results in its meeting on June 9.

 

LIC's surplus was pushed up by a higher income from investments and lower commissions and operating expenses. Premium income grew marginally by 1.15 per cent to Rs.2.39 lakh crore.

 

While non-business recorded 3.8 per cent growth, linked life policies recorded a lower premium income declining from Rs.1.885 crore to Rs.1,314 crore. Profit booking on investments was the next major contributor, rising from Rs.3.908 crore or 16.75 per cent over the previous year to Rs.27.234 crore. Bulk of this income come from non-linked or traditional life policies.

 

These policies accounted for 75 per cent of the interest and dividend income and 66 per cent of the profit on sale redemption, almost in line with the previous year. LIC had a good year booking significant profit on scrips such as State Bank of India, Business Standard had reported recently. 

 

Loss on sale and redemption of investments also increased significantly, but on a low base. Such losses totalled Rs.1.051 crore, up 62 per cent from FY14. 

 

 

State owned reinsurer General Insurance Corporation Re has abandoned its expedition to buy a Lloyd's of London syndicate member and instead eyeing to apply for membership of the syndicate.

 

Experts believe that this will ruin the designated national reinsurer position in about 50 countries for a long time as it will take 18 months to get a licence and years to build a business.

 

"We are planning to apply for a licence to be part of the syndicate," said AK Roy, chairman and managing director of GIC Re. "We have called off our plans to buy a membership, which we pursued for over a year." Lloyd's of London is an insurance market in London's primary financial district the City of London.

 

GIC Re came very close to entering the Lloyd's of London market by acquiring Antares, owned by Lightyear Capital, but lost out to Qatar Insurance Company. Last year, it had acquired Johannesburg based Saxum Re to expand its global footprint. It has a joint venture reinsurance company in Bhutan.

 

One of the reasons for expanding globally is the shrinking of domestic business. Premium on insurance products is not adequately priced, leading to a decline in income from Indian business.

 

A survey by Bajaj Allianz General Insurance said although 75 per cent of respondents were aware that home insurance was essential, only 30 per cent had home insurance for either their home or its contents.

 

While most Indians are aware about the risks around earthquakes and natural calamities for their houses, they still do not purchase home insurance.

 

 

 

Life Insurance Corporation of India (LIC) will recruit 5,066 people for the post of Apprentice Development Officers in its various zonal offices. The total number of vacancies, including those on the reserved category, may increase or decrease and the selection will be based on an online examination and interviews. 

 

As per the notification given by LIC the total number of vacancies varies according to zones. Graduates in any discipline or a Fellow of the Insurance Institute of India, Mumbai are eligible to apply. The upper age limit is 30 for general candidates, 42 for LIC employees and 37 for its agents. Upper age limit is relaxed for reserved categories, according to existing norms. 

The Securities Appellate Tribunal (SAT) has adjourned an appeal against the IRDAI  in a hearing between SBI Life and the Insurance Regulatory and Development Authority of India (IRDAI). 

 

The case relates to a Rs.275 crore refund order the insurance regulatory passed against the life insurer. It had asked SBI Life to refund this policy amount to all policy holders who had purchased it in the past on grounds of irregularities in the way it was sold to customers. The case has been adjourned till September 2. 

 

The Insurance Regulatory and Development authority of India (IRDAI), in its new draft on investments, said that the equity investments in CNX 200 or BSE 200 can only be considered as approved investments. It further added that approved investments would also include debentures by first charge on immovable property. 

 

Rated debentures including bonds along with other secured debt instruments will be considered as approved instruments in equity shares, preference shares and debt instruments issued by All India Financial Institutions. Investment shall be made according to the investment policy guidelines, benchmarks and exposure norms approved by the board of directory of the insurer. 

 

IRDAI said bonds of debentures issued by companies, rated not less than AA or its equivalent and A1 or equivalent ratings for short term bonds, debentures, certificate of deposits and commercial papers by a credit rating agency, registered under SEBI (Credit Rating Agencies) Regulations 1999, would be considered as approved investments.

The insurance coverage in the agriculture sector needs to be enhanced to protect the interest of farmers as well as banks lending to this sector, as per the Financial Stability Report released by the RBI recently.

 

Although the crop insurance business is inherently riskier and costlier compared to other insurance products, the report said, crop failures are not specific to one particular farmer, as weather related events affect entire areas and populations at the same time. 

 

Farmers are often uninterested from buying an insurance products, as insurance companies calculate the loss for individual farmers by taking into account the average yield of the area (block) in the past three to five years. 

 

Though linking crop insurance with bank credit availed by a farmer protects the bank from losses (which indirectly helps the farmers too), it makes the insurance product a 'compulsory' add on cost for a farmer, it said.

 

In order to have faster settlement of crop insurance claims, the IRDAI is actively considering the possible use of satellite remote sensing technology as an efficient and reliable mapping tool for yield estimation, risk assessment, and settlement of crop insurance losses.

State owned re-insurer General Insurance Corporation Re (GIC) has announced a profit of Rs.2,693 crore to 2014-15, an increase of 20 per cent over the previous year. Gross premium rose by a mere 3.4 per cent to Rs.15.18 crore. 

 

Of this, Rs.8,660 crore (57 per cent) was from the domestic market, while the balance was from overseas business. The corporation's investment income rose from 25 per cent to Rs.4,253 crore, while its underwriting losses rose from 50 per cent to Rs.1,335 crore. GIC has declined a dividend of Rs.540 crore (Rs.449 crore) for 2014-15. 

The Department of Financial Services (DFS) has given the green signal to Kotak Mahindra Bank's proposal to increase the foreign investment limit in the bank to 55 per cent from about 49 per cent would not necessarily lead to problems for the banks plan to raise the foreign investment limit in Kotak Mahindra Old Mutual Life Insurance. 

 

When the government raised the foreign investment (FPI/FDI) limit in insurance from 26 per cent to 49 per cent in March, it stipulated that the insurance ventures in the country should remain "Indian owned and controlled”. 

 

This provision had led to fears that the plans of many insurance companies including those of HDFC and ICICI Bank could stumble upon this condition, enforced by the IRDAI given that these (parent) companies are majority foreign-owned although their foreign ownership is widely dispersed (with various FPI stakes) and management is in Indian hands. Kotak Bank holds 74 per cent in its life insurance arm. HDFC holds 74 per cent in HDFC Standard Life while the UK based Standard Life holds the balance stake. 

Life Insurance Corporation had committed to invest Rs 1.5 lakh crore in Indian railways over the next five years. As per the terms of the MOU inked by the two organisations, the railways will use the funds to enhance its capacity.

 

LIC will invest in bonds issued by various railway entities such as Indian Railways Finance Corporation, beginning next fiscal. There would be a five-year moratorium in interest and loan repayment. The bonds will have a tenor of 30 years and will be disbursed over the next five years.

IRDA EXAM: Sample Questions for 50 hours exam

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Created on 12 February 2012 Published Date

Sample solved Question Papers for IRDA 50 hours Agents Training Exam. The answers are marked in bold. From Sashi Publications, Kolkata

1. The concept of insurance involves a transfer of

A. liability.

B. needs.

C. ownership.

D. risk.

2. Rakesh recently bought a health insurance policy and a personal accident policy. What main section(s) of the insurance market do these products normally fall into?

A. Life insurance in both cases.

B. Life insurance for health and non-life insurance for personal accident.

C. Non-life insurance in both cases.

D. Non-life insurance for health and life insurance for personal accident.

 

3. The main role of an underwriter in a non-life insurance company is normally to

A. assess the acceptability of particular risks.

B. certify a loss when claims are submitted.

C. design the structure of the products to be offered.

D. negotiate with the industry regulator.

 

4. Akshat is a relatively cautious person. In insurance terms, this will normally increase the likelihood that he will

A. be considered an above average insurance risk.

B. be considered a below average insurance risk.

C. require insurance cover.

D. require reinsurance cover.

 

5. How are perils and hazards normally distinguished under term insurance policies?

A. Perils are medical factors which influence the risk of dying and hazards are lifestyle activities which influence the risk of dying.

B. Perils are risks that policyholders will die before a specified date and hazards are factors which could influence that risk.

C. Perils are factors which affect the risk being insured and hazards are the size of the risk being insured.

D. Perils are factors which could influence an insured event occurring and hazards are the actual events which will trigger a payout.

 

6. In insurance terms, the risk of suffering a disability is best described as what type of risk?

A. Financial.

B. Fundamental.

C. Homogenous.

D. Speculative.

 

7. For a household insurance policy, insurable interest need only exist at outset and at what other point?

A. The date the cancellation period expires.

B. The date a claim occurs.

C. The date the policy document is received.

D. The termination date.

 

8. Rahul is employed by Sunny. In respect of this employment, Rahul automatically has insurable interest in Sunny’s life up to what limit, if any?

A. Rahul’s monthly salary.

B. Rahul’s pension fund value.

C. Sunny’s annual profit.

D. There is no limit.Sample Questions IC-33 7

9. Arun started a 20-year term insurance policy. Once established, when, if at all, is the insurer next entitled to ask him for proof of continuing good health?

A. At no point.

B. After the end of the first 12 months.

C. At the point when he changes occupation or retires.

D. When a lapsed policy is revived.

 

10. The concept of indemnity is based on the key principle that policyholders should be prevented from

A. insuring existing losses.

B. making false insurance claims.

C. paying excessively for insurance cover.

D. profiting from insurance.

 

11. Once an absolute assignment is effected under a life insurance policy, who will be the titleholder(s) of this policy?

A. The assignor in all cases.

B. The assignee in all cases.

C. Either the assignor or assignee depending on the type of policy involved.

D. The assignor and assignee jointly.

 

12. How long is the free look-in period under a term insurance policy from the date of receipt of the policy document?

A. 5 days.

B. 10 days.

C. 15 days.

D. 20 days.

 

13. A life insurer issued a quotation on 10 February, guaranteed for 14 days, which was accepted by the customer on day 10. Consequently the insurer can only decline this risk if the

A. customer submits a second quotation request.

B. insurer increases its underlying premium rates.

C. market place experiences a significant downturn.

D. material facts change.

 

14. A policy document for a money-back policy includes the statement ‘the proposal and declaration signed by the proposer form the basis of the contract’. In which main section of the policy document will this normally appear?

A. Attestation.

B. Operative clause.

C. Preamble.

D. Terms and conditions.

 

15. A life insurance policy can only be made paid up if what particular policy feature exists?

A. Indexing contribution.

B. Nomination facility.

C. Rider benefits.

D. Savings element.

16. The main reason why a life insurance proposal form often asks for the proposer’s height is to enable a reasonable comparison with the proposer’s

A. age.

B. gender.

C. occupation.

D. weight.

 

17. Where annually increasing flexible premiums operate under a life insurance policy, what rate of increase will generally apply?

A. 2.5%

B. 3.0%

C. 5.0%

D. 7.5%

 

18. The amount paid out by the insurer under a 30-year life insurance policy exceeded the sum insured plus revisionary bonuses. The excess is likely to result from?

A. charges refunded.

B. a frequency loading.

C. a tax rebate.

D. a terminal bonus.

 

19. What normally happens to the sum insured under a life insurance policy once the period of the lien expires?

A. It reduces.

B. It increases.

C. It is temporarily suspended.

D. It is replaced by a newly-underwritten sum insured.

 

20. The main protection need of a 19-year-old is most likely to be

A. self-protection.

B. home loan protection.

C. protection of dependants.

D. protection of children’s future.

 

21. Raunak recently arranged a life insurance policy under which he is classed as the master policyholder. This addresses his role as

A. a creditor.

B. a debtor.

C. an employee.

D. an employer.

 

22. The need for investment advice from an insurance agent normally results from what overriding key factor?

A. Absence of any long-term goals.

B. Inability to prioritise future financial needs.

C. Lack of market knowledge.

D. Shortage of available funds.

 

23. When undertaking financial planning for individuals without capital, what savings need is likely to be addressed in every single case?

A. Emergency funds.

B. Funds for children’s savings.

C. Funds for educational costs.

D. House purchase funds.Sample Questions IC-33 9

24. Naveen is addressing his income needs by investing directly in corporate bonds. In what form will he receive this income?

A. Annuity instalments.

B. Dividend payments.

C. Interest payments.

D. Rental payments.

 

25. Nikhil is looking for tax-efficient savings methods for his disposable income. He is considering an equity-linked savings scheme, national savings certificates and an endowment insurance policy. Premiums for which of these investments are allowed to be deducted from his taxable income?

A. The national savings certificates only.

B. The equity-linked savings scheme and the national savings certificates only.

C. The national savings certificates and the endowment insurance policy only.

D. The equity-linked savings scheme, the national savings certificates and the endowment insurance policy.

 

26. An investor holds a wide range of shares. If the Reserve Bank of India announces a series of significant interest rate increases, the prices of these shares are most likely to

A. become volatile.

B. decrease.

C. increase.

D. stagnate.

 

27. The main purpose of the guaranteed insurability rider benefit is to give the policyholder the right to

A. cancel a health-based exclusion after a symptom-free period.

B. include his parents under the policy.

C. increase cover when a key life event occurs.

D. maintain cover despite a fall in investment value.

 

28. The changes in healthcare costs over recent years has had what general impact on healthcare insurance?

A. A fall in average premium levels.

B. A reduction in underwriting requirements.

C. A rise in the need for cover.

D. A strengthening of the insurable interest rules.

 

29. The general need for a pension policy results from the existence of what key problem?

A. Anticipated fall in income.

B. Lack of employment opportunities.

C. Likely deterioration in health.

D. Uncertainty over investment performance.

 

30. Yash pays health insurance premiums for himself, his wife and his two children aged 13 and 8. Premiums for which of these individuals will qualify as deductible from Yash’s taxable income?

A. Yash only.

B. Yash and his wife only.

C. Yash, his wife and his oldest child.

D. Yash, his wife and both his children.

31. The sole focus during a client’s fact-find session was healthcare requirements and estate planning. Which main life stage is he most likely to fall into?

A. Young married.

B. Young married with children.

C. Pre-retirement.

D. Retirement.

 

32. Apart from the salary level, what other key feature of Alok’s job is likely to have a major impact on the level of his pension, life insurance and health insurance needs?

A. Whether the job is office or field-based.

B. The normal retirement age in relation to the job.

C. Whether the job is in the public or private sector.

D. Whether the job is manual or non-manual.

 

33. In the context of financial planning, how is the difference between real needs and perceived needs best described?

A. Real needs are financial needs and perceived needs are non-financial needs.

B. Real needs are actual needs and perceived needs are based on a client’s thoughts and desires.

C. Real needs are identified by the insurance agent and perceived needs are identified by the client.

D. Real needs are needs which satisfy an objective and perceived needs are needs which do not satisfy an objective.

 

34. In order to fulfil the ‘know your customer’ procedures, at what stage in the financial planning process is the insurance agent most likely to request a copy of the customer’s photograph?

A. At the end of the fact-find meeting.

B. At the end of the presentation meeting.

C. As soon as the application is accepted by the insurer.

D. As soon as the insurer is ready to issue the policy document.

 

35. An agent has recommended an investment product with non-guaranteed benefits. The benefit illustration passed to his client will therefore use assumed annual growth rates of

A. 5% and 8%

B. 5% and 10%

C. 6% and 8%

D. 6% and 10%

 

36. The main purpose of including commission details in the documentation to clients is to increase

A. competitiveness.

B. efficiency.

C. flexibility.

D. transparency.

 

37. A client has been recommended a low-risk investment product by his insurance agent, but the client insists the agent arranges for the money to be invested in a higher risk product. What action should the agent take?

A. Carry out these instructions, but document that this contradicts the recommendation.

B. Conduct a new fact-find.

C. Invest a reduced amount of money in this product.

D. Refuse to act for the client.Sample Questions IC-33 11

38. An insurance agent has advised a client to surrender an existing investment product and start a new investment product. What key indicator should be used to determine whether this advice was ethical?

A. The best interests of the client.

B. The difference in potential income and capital growth between the two products.

C. The flexibility of the new product compared to the old one.

D. The views expressed by the client.

 

39. What key impact will low persistency levels have on insurance policyholders?

A. An enhancement in product choice.

B. An improvement in investment performance.

C. An increase in insurance cover.

D. A reduction in benefits.

 

40. Raju died 5 years before the end of his 30-year endowment insurance policy. What factor most likely caused the insurer to investigate the claim using the early death claim procedures?

A. He paid the most recent premium during the period of grace.

B. His cover was originally accepted with a premium loading on medical grounds.

C. His death resulted from a recently acquired sudden illness.

D. The policy had lapsed and was revived shortly before he died.

 

41. A claim under a term insurance policy is submitted by an individual who has substantially understated his age. As an alternative to paying out the full claim the insurer is most likely to take what action?

A. Deduct the underpaid premiums from the sum insured.

B. Make the policy paid up.

C. Pay out the surrender value.

D. Reject the claim on the grounds of misrepresentation.

 

42. On the maturity of an endowment policy, a reduced sum insured is paid out. What is the most likely reason for this?

A. The instalments were commuted by the policyholder.

B. The policyholder’s health seriously deteriorated during the policy term.

C. The policy was made paid up during the policy term.

D. The policy was subject to a lien.

 

43. What key event is most likely to prevent insurers from ensuring that each insured person brings a fair premium to the pool for the risk presented?

A. A fraudulent claim.

B. A policy assignment.

C. A steep rise in inflation.

D. A sudden illness.

 

44. An insurance agent served an insurer continually and exclusively for 20 years, after which he retired from work. In accordance with Section 44 of the Insurance Act 1938, renewal commission due to him after the termination of his agency can only be withheld if

A. he ceases to remain a resident of India for tax purposes.

B. he survives beyond the age of 75.

C. there has been a change in regulator.

D. there is fraud involved.

45. Legislation gives which body the power to specify a code of conduct for surveyors and loss assessors?

A. Institute of Insurance and Risk Management.

B. Insurance Regulatory and Development Authority.

C. Life Insurance Council.

D. Securities and Exchange Board of India.

 

46. What key legacy has been left by the activities of the Tariff Advisory Committee?

A. A central compensation fund.

B. Customer classification status.

C. Illustrative projection rates.

D. Standard policy wordings.

 

47. Apart from conducting a comprehensive fact-find, the other main action that an insurance agent can take at outset to minimise the risk of subsequently receiving a customer complaint is to

A. ask for referrals.

B. offer commission rebates.

C. provide detailed disclosures.

D. register with the Insurance Ombudsman.

 

48. An award made by the Insurance Ombudsman will only be binding on the insurer if the

A. complainant accepts this decision.

B. Consumer Forum is involved in the case.

C. insurer signs a disclaimer.

D. value of the award is less than 2 lakhs.

 

49. A policyholder asked his insurance agent for guidance on submitting a claim for the maturity benefit under his life insurance policy. Due to pressure of work, the agent declined to assist. Consequently, this action is deemed to be a breach of the

A. General Insurance Council’s guidelines.

B. Insurance Regulatory and Development Authority’s Code of Conduct.

C. Insurance Ombudsman’s protocols.

D. Insurance Brokers Association of India’s membership rules.

 

50. During the process of applying for life insurance, the customer discloses confidentially to the insurance agent that he had a mild stroke four months ago, however this was NOT mentioned on the application form. In accordance with the Insurance Regulatory and Development Authority’s Code of Conduct, how should the insurance agent deal with this information?

A. Ask the policyholder’s doctor to send details to the insurer.

B. Notify the insurer of this matter.

C. Refuse to act for the customer in this case.

D. Respect this confidentiality by not discussing it with anyone else.


© Prepared by The Chartered Insurance Institute 2011

 

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