Latest Updates from Industry

      
      

The tenure of New India Assurance Company's CMD, G Srinivasan was today extended for little over two years, till July 2018.

 

The Appointments Committee of the Cabinet has approved further ...

New India Assurance and General Insurance Corporation have obtained approval from their respective boards for listing of their shares in an initial public offering (IPO). With the companies looking ...

LIC will get 1.6 million shares at Rs 96.63 each, a slight discount to the market price of Rs 97.95. Even so, there's a rider. The bank has mentioned in the EGM notice that, "The voting of LIC is ...

Life Insurance Corporation increased its stake in all the three listed automobile companies, Maruti Suzuki, Tata Motors and Mahindra & Mahindra. The country's largest institutional investor ...

LIC has had a good run in the Gulf countries with its Bahrain-based arm LIC International that manages the GCC markets becoming the best among its eight international subsidiaries in terms of new ...

The Insurance Regulatory and Development Authority of India has granted special approval to 23 Cross Border Reinsurers (CBR) for the year 2016-17.


This will allow Indian insurers to make ...

Use of data analytics will improve product design and distribution which will expand the reach of insurance, according to T S Vijayan, Chairman, IRDAI.

 

Proper collection and deployment of data ...

The additional tier-1 (AT-1) bond market, which has been witnessing subdued demand, is likely to see some activity with the possibility of the Insurance Regulatory Development Authority of India ...

IRDAI has approved as many as 16 proposals amounting to Rs 14,591.9 crore as foreign investment. "Post notification of the Insurance Laws (Amendment) Act, 2015, IRDAI has approved 16 proposals ...

United India Insurance has received a claim from the Federation of Indian Chambers of Commerce and Industry (FICCI) for the damage caused by a massive fire to its building in the National Capital.

...

Finance minister Arun Jaitley may have cleared the way for public listing of state-owned general insurers, but National Insurance and New India Assurance may first go for strategic stake sale to ...

Country's largest non-life insurer New India Assurance is targeting to achieve a global premium of Rs 20,800 crore in the current fiscal, a top company official said. The company recorded a global ...

India’s first insurance policy covering public liability to an atomic power plant operator has been issued to Nuclear Power Corporation of India Ltd (NPCIL) but the reinstatement of insurance value ...

Insurance schemes under the Pradhan Mantri Jan Suraksha Yojana will not see any premium increase this financial year. While pure-term insurance and personal accident policies under the scheme have ...

With the authorities tightening the screws on directors and senior corporate bosses after Láffaire Vijay Mallya and the Panama Papers revelations, there has been a scramble by companies to get ...

Private insurance companies are using drones to photograph farms and if permitted by the agriculture ministry these could provide data to calculate crop yield.


Insurers are using unmanned aerial ...

Life Insurance Corporation of India has used market volatility during the March quarter to raise its stake in companies on the Sensex, including Housing Development Finance Corporation (HDFC), HDFC ...

LIC owns about 15% in Axis Bank, but now it's pushing Axis bank to sell insurance policies through its more than 2,500 branches, testing its existing partnership with Max Life.


"We are in talks ...

LIC is aiming to double its business in terms of new policy issuance to four crore in the current fiscal and will hire two lakh new agents to augment its field strength. Life Insurance Corporation ...

Insurance Regulatory and Development Authority of India (IRDAI) will make certain changes to its guidelines for facilitating insurance companies to go public, according to a top official.


Insurers ...

The tenure of New India Assurance Company's CMD, G Srinivasan was today extended for little over two years, till July 2018.

 

The Appointments Committee of the Cabinet has approved further extension of tenure of Srinivasan, Chairman and Managing Director of the New India Assurance Company Limited with effect from April 16, 2016 to July 31, 2018 i.e. the date of his attaining the age of superannuation, an order issued by Department of Personnel and Training said.

New India Assurance and General Insurance Corporation have obtained approval from their respective boards for listing of their shares in an initial public offering (IPO). With the companies looking at selling around 10-15% of their equity, the government could raise close to Rs 10,000 crore from the sale of shares.


"Our board has already approved listing of the shares and we have sent our proposal to the government for approval," said G Srinivasan, chairman, New India Assurance. He said that he expected the company to go for a listing within six months of the government's approval. Although listing of these two public sector insurance was part of the budget announcement, typically PSU divestment is cleared by the cabinet.


New India has not yet gone for a valuation. But insiders feel it should be close to Rs 50,000 crore. There are no listed insurance companies. However, recent M&A activity provides an idea of the valuation of general insurers. 

LIC will get 1.6 million shares at Rs 96.63 each, a slight discount to the market price of Rs 97.95. Even so, there's a rider. The bank has mentioned in the EGM notice that, "The voting of LIC is restricted to 10 per cent of the total voting. Hence, issuance of fresh shares will not increase their voting right."


Regulation 12(2) of the Banking Regulation Act said, "No person holding shares in a banking company shall, in respect of any shares held by him, exercise voting right (on Poll) in excess of 10 per cent of the total voting rights of all the shareholders of the banking company."


Further in terms of Section 3 (2E) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, the voting right of LIC will be restricted to 10 per cent of the total voting right of all shareholders of a bank.

Life Insurance Corporation increased its stake in all the three listed automobile companies, Maruti Suzuki, Tata Motors and Mahindra & Mahindra. The country's largest institutional investor also raised its stake in Hero MotoCorp.


The government-owned insurance firm has booked profit in Ashok Leyland and marginally brought down shareholding in TVS Motor and Bajaj Auto in the year ended March 31, 2016.


Interestingly, stock prices of all these companies, barring Tata Motors, have seen an appreciation in the year ended March 31. Significant appreciation has happened in Ashok Leyland (47.6 per cent), TVS Motor (22.33 per cent) and Bajaj Auto (19.26 per cent).

 

The rest have seen single-digit gains. LIC's decision to reduce stake in Ashok Leyland and TVS Motor is in line with the sharp run seen in both these stocks. "LIC has booked profits after the run-up in these stocks," said S P Tulsian, an investment advisor.

LIC has had a good run in the Gulf countries with its Bahrain-based arm LIC International that manages the GCC markets becoming the best among its eight international subsidiaries in terms of new business premium collection in 2015.

 

The Bahrain-headquartered LIC International is present in five Gulf Cooperation Council (GCC) countries of Bahrain, Dubai, Kuwait, Oman and Qatar. This subsidiary has contributed over 80 per cent of the Corporation's total overseas business in terms of new business in 2015.

 

The Corporation also has eight overseas subsidiaries - Britain, Fiji, Mauritius, Bahrain, Nepal, Sri Lanka, Kenya and Saudi Arabia.

 

"New business premium of LIC International grew by a whopping 197 per cent at USD 121 million in 2015," chief executive and managing director of LIC International Rajesh Kandwal told.

 

"We sold 13,120 policies in 2015, which is a growth of over 16 per cent over previous year. In terms of the number of policies, we enjoy over 88 per cent of market share in Bahrain in 2014," he added.

The Insurance Regulatory and Development Authority of India has granted special approval to 23 Cross Border Reinsurers (CBR) for the year 2016-17.


This will allow Indian insurers to make reinsurance placements with a large number of reinsurers. Cross-border reinsurers are those who do not have a physical presence in India but carry on reinsurance business with Indian insurance companies.


According to PJ Joseph, Member (Non-Life), IRDAI, approvals were given on the basis of submissions made by CBRs and the recommendations made by the insurers and GIC Re in line with the guidelines issued by the authority earlier.


The approved CBRs include Ingosstrakh Joint Stock Insurance Company (Russia), Asian Reinsurance Corporation (Thailand), Trust Re (Bahrain), United Overseas Insurance Company (Singapore), Equator Reinsurances Ltd (Bermuda), East Africa Reinsurance Company Ltd (Nairobi), Vietnam National Reinsurance Corporation (Vietnam), CICA Re (Kenya), Arab Insurance Group (Labuan) and Union Insurance Company (UAE), among others.


Reinsurance assumes significance as it is important to maintain solvency of the insurer and to ensure that the claims/other clauses are honoured as and when they arise. In the year 2015-16, the regulator had recognised 244 reinsurers and 90 Lloyds Syndicates.

Use of data analytics will improve product design and distribution which will expand the reach of insurance, according to T S Vijayan, Chairman, IRDAI.

 

Proper collection and deployment of data for analysis will help filling existing gaps in key areas such as auto, health insurance and disaster management/ insurance, he said adding that the data must be put to appropriate use.

 

R Raghavan, Chief Executive Officer, IIB said the objective of the conference was to learn from the Asian experience and also offer Indian expertise in data collection and analytics to the participating countries.

The additional tier-1 (AT-1) bond market, which has been witnessing subdued demand, is likely to see some activity with the possibility of the Insurance Regulatory Development Authority of India allowing insurers to invest in this category of bonds issued by banks.


The regulator is considering allowing insurers to buy hybrid AT-1 bonds issued by banks, senior official VR Iyer quoted.


AT-1 bonds do not have a fixed maturity date, and investors demand for a higher yield because of their perpetual nature and risk associated with the instrument.

IRDAI has approved as many as 16 proposals amounting to Rs 14,591.9 crore as foreign investment. "Post notification of the Insurance Laws (Amendment) Act, 2015, IRDAI has approved 16 proposals amounting to Rs 14,591.89 crore as foreign investment in the insurance sector," Minister of State for Finance Jayant Sinha said in a written reply in the Rajya Sabha.


The government had notified the Indian Insurance Companies (Foreign Investment) Rules, 2015, to facilitate foreign investment in the insurance sector. To bring clarity on Indian owned and controlled, the Insurance Regulatory and Development Authority of India has issued guidelines on the same.

United India Insurance has received a claim from the Federation of Indian Chambers of Commerce and Industry (FICCI) for the damage caused by a massive fire to its building in the National Capital.


The iconic National Museum of Natural History, which was housed in the FICCI building, was destroyed.


Milind Kharat, Chairman and Managing Director of United Insurance, said FICCI has lodged a claim with the company and the size of the cover is Rs 45 crore.


Industry experts said that it is yet to be ascertained if the National Museum was also separately insured.


According to reports, the three floors that housed the displays were gutted and museum officials have not yet managed to take stock of what they can salvage from the thousands of artifacts that were a part of its collection.


The fire, which broke out in the wee hours on April 26, could potentially have destroyed several fossils, including a 160-million-year-old dinosaur skeleton, a collection of bird eggs, and several stuffed animals, besides preserved butterflies, amphibian and reptile specimens.


M Ravichandran, President-Insurance, Tata AIG General Insurance, said the increasing damages in recent fire incidents concern insurers due to the difficulty posed in fire-fighting operations, such as hindrance in accessing building/structure due to clogging of entry points, poor maintenance of fire protection system/equipment, and lack of awareness in operating/handling fire-fighting equipment.

 

 

 

Finance minister Arun Jaitley may have cleared the way for public listing of state-owned general insurers, but National Insurance and New India Assurance may first go for strategic stake sale to arrive at a valuation before their initial public offerings.

 

A senior executive of New India Assurance said, "We have not decided on the quantum but we want to explore the idea of strategic stake sale." The official also said that the company is waiting for directions from the government on how to go ahead with listing. "We would like to open many more branches and for which we need capital."

 

The finance minister had in his budget speech last month proposed to list New India Assurance, National Insurance, United India and Oriental Insurance and reinsurance company General Insurance Corporation. 

Country's largest non-life insurer New India Assurance is targeting to achieve a global premium of Rs 20,800 crore in the current fiscal, a top company official said. The company recorded a global premium growth of 14.46% in 2015-16 at Rs 18,371 crore.

 

While domestic operations rose 14.47%, foreign operations recorded a growth of 15.10% during the reporting period.

 

"We have done well in the year due to recovery in the country's economy and we are quite upbeat about registering a better growth during the current fiscal too. NIA's market share increase has happened for a third year in succession," New India Assurance (NIA) Chairman and Managing Director G Srinivasan said.

 

The net worth of the company, including fair value of investments, stood at Rs 28,845 crore in 2015-16. The asset base of the company was around Rs 62,880 crore during the reporting period.

India’s first insurance policy covering public liability to an atomic power plant operator has been issued to Nuclear Power Corporation of India Ltd (NPCIL) but the reinstatement of insurance value post a claim will be decided later, industry officials said. The insurance policy was issued by the country’s largest non-life insurer New India Assurance Company Ltd.

 

“We recently got the insurance policy covering all our atomic power plants. The total premium came around Rs. 100 crore for a risk cover of Rs. 1,500 crore,” S. K. Sharma, Chairman and Managing Director, NPCIL, said.

 

The policy complies with all the provisions of the Civil Liability for Nuclear Damage Act (CLND), said a known insurance industry official.

 

The policy would cover the liability towards public as a consequence of any nuclear accident in the plants covered under the policy and also the right of recourse of NPCIL against equipment suppliers.

 

The insurance coverage will be for all the NPCIL’s plants— like a floater cover.

Insurance schemes under the Pradhan Mantri Jan Suraksha Yojana will not see any premium increase this financial year. While pure-term insurance and personal accident policies under the scheme have seen claims being reported and paid, the price of the cover has not been revised upwards.


Insurers expecting some upward movement due to claims will now have to provide the cover at the same cost. Besides, a pension scheme (Atal Pension Yojana), the scheme provides term insurance and an accident insurance scheme - Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY). Eleven months since launch, the schemes have sold almost 124 million policies.


"Volumes have been big and, hence, the sector has faced claims as well. Some premium increase was expected but we are told that there would not be any in this financial year," said a senior general insurance executive. There could, he said, be some revisions from FY18, based on data. The plans have a cover of Rs 2 lakh each, with a premium of only Rs 12 a year for accident insurance and Rs 330 for the life product.

With the authorities tightening the screws on directors and senior corporate bosses after Láffaire Vijay Mallya and the Panama Papers revelations, there has been a scramble by companies to get large Directors and Officers Liability (D&O) insurance policies.


Corporates are opting for covers as large as Rs 500 crore, says Mahesh Chainani, Senior VP at Howden India Insurance brokers, which specialises in D&O policies.


Premiums in this segment have crashed almost 60 per cent in the last five years due to rising competition among insurers, Chainani adds.


However, a key exclusion in the D&O policy is loss arising from dishonesty, fraudulent conduct and self-admission (of wrongdoing), but the policy will cover all innocent employees, say insurers.


KG Krishnamoorthy Rao, MD & CEO, Future Generali says, "Initially, D&O policies were taken only by listed companies. However, in the last two years, there has been a demand for such policies by non-listed companies such as SMEs and start-ups as well."


Insurers also say that with increasing litigation and widening corporate exposure, the coverage sought has widened beyond the basic policy.

Private insurance companies are using drones to photograph farms and if permitted by the agriculture ministry these could provide data to calculate crop yield.


Insurers are using unmanned aerial vehicles as a pilot scheme. The agriculture ministry has called for use of such modern technology for the Pradhan Mantri Fasal Bima Yojana (PMFBY).


Drones have not gained widespread commercial use, as individuals need permission from local governments and other regulatory bodies to fly them. The government is also keen on using technology such as Smartphones and remote sensing to reduce crop cutting experiments and help cut delay in payments to farmers. The government is planning to spend Rs 5,500 crore on the crop insurance scheme.


Anuj Tyagi, member of executive management at HDFC ERGO General Insurance, said his company had conducted a project with drones in Rajasthan.


"We think using drones will be a successful experiment," he added. He said in Rajasthan, his company had looked at data collected by drones as well as satellite images, and they were happy with the results. ICICI Lombard is also using drones for crop yield data.

Life Insurance Corporation of India has used market volatility during the March quarter to raise its stake in companies on the Sensex, including Housing Development Finance Corporation (HDFC), HDFC Bank, Tata Motors, TCS (Tata Consultancy Services), and Maruti Suzuki.


Of the 27 companies where shareholding pattern data for the March quarter is available, LIC raised its stake in 13 companies during the January-March quarter from the level seen in the preceding three months. In seven companies, the holding declined, while in the remaining seven the stake remained unchanged.


"This is a well-known pattern. Whenever the markets are in a correction or a volatile phase, or even when the foreign institutional investors (FIIs) are selling, LIC comes in and buys or raises stake in stocks of blue-chip companies. And the companies it has raised stake in the March quarter have good stocks. These stocks will do well and generate a good return for LIC. The move also acts as a counter-balance to the FII selling," says Dhananjay Sinha, head of institutional research at Emkay Global Financial Services.

LIC owns about 15% in Axis Bank, but now it's pushing Axis bank to sell insurance policies through its more than 2,500 branches, testing its existing partnership with Max Life.


"We are in talks with Axis Bank to sell LIC's products through their branches," said an executive at the country's largest financial institution. If Axis Bank begins the work, it would be an opening that could lead to several such tie-ups in the future as a new rule permits banks to tie up with more than one insurance company.


But that could be a drawback for those like Max Life which already have an alliance to sell their products exclusively.


LIC, which gets less than 5% premium income through banks, would immensely benefit if Axis agrees since banks are key growth drivers. Other insurers get as much as a quarter of their overall new premium income selling via banks. The share of banks in new business was 20.84% for the private sector industry in 2014-15, data from the insurance regulator shows.

LIC is aiming to double its business in terms of new policy issuance to four crore in the current fiscal and will hire two lakh new agents to augment its field strength. Life Insurance Corporation (LIC) currently has an agency force of over 10 lakh.


These targets were set out for LIC by Chairman S K Roy and said, "During Fiscal year 2016-17, let us commit ourselves to set new records in sales and exponentially expand on individual non-single premium segments.


We should target a minimum 4 crore lives to be covered and minimum two lakh agents to be added in 2016-17". His optimism comes from the robust growth the Corporation could record in financial year 2015-16, wherein it grew by close to 25 per cent in terms of new policy issuances.


"Financial Year 2015-16 was a year of recovery for us. We recovered from below-par performance in fiscal 2014-15 to show positive results. On the basis of reporting of figures to the IRDAI, we have grown by 24.74 per cent growth in first year premium and 1.86 per cent growth in policies/ schemes," Roy said.

Insurance Regulatory and Development Authority of India (IRDAI) will make certain changes to its guidelines for facilitating insurance companies to go public, according to a top official.


Insurers at present has to take the Authority's permission for selling more than one per cent of equity. This stipulation has to be changed when they plan to make an IPO, according to T. S. Vijayan, Chairman, IRDAI.


The IRDAI, he said, was also in the process of announcing a timeframe after which insurers could make an IPO. "We are working with the companies... not decided on the timing (minimum years of operation before going public)," he said.


Listing of the shares would contribute towards better corporate governance and transparency, he said.


IRDAI's move comes in the backdrop of at least two life insurers exploring the prospects of coming out with an IPO.

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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