Latest Updates from Industry

      
      

To provide relief to 2nd hand property buyers facing legalities for property ownership, the Insurance Regulatory and Development Authority of India (IRDAI) has set up a committee to launch Title ...

IRDAI has given its first phase of licence to ITI Reinsurance, thus clearing the first ever Indian private sector reinsurance company in the country.


The IRDAI board in a meeting in Hyderabad ...

The insurance regulator has banned life insurers from offering indemnity-based health products, which constitute 90 per cent of the health insurance market, dealing a blow to their business plans.


...

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

Lloyd's of London chairman John Nelson has said the 325-year old insurance giant can help support the expansion of insurance penetration in India and limit the economic impacts of catastrophes and ...

The Comptroller and Auditor General (CAG) will conduct a performance audit of crop insurance schemes in nine states to examine the efficacy of providing relief to farmers in the event of crop damage.

...

SBI Life Insurance has launched higher income individual focused market-linked life insurance plan - Smart Privilege.


The product provides both life insurance as well as the opportunity to increase ...

Two of India's leading private-sector insurers are looking to raise over $1 billion this financial year in the sector's first initial public offerings (IPOs), as insurance companies' rush to take ...

Insurers, particularly those promoted by non-banking companies, are likely to see a major boost in insurance distribution, as banks can now start selling products of multiple insurers.


Future ...

Edelweiss General Insurance Company (EGIC) cleared the first step in becoming an insurance company in India with the Insurance Regulatory and Development Authority of India (IRDAI) approving its ...

Electronic insurance will become mandatory for annual premium equal to or above Rs 10,000 (single/annual premium) in life insurance policies. IRDAI in its Issuance of e-Insurance Policies ...

IRDAI is planning to put in place an insurance self-network platform which could be used by an agent to sell and service products on behalf of registered insurers.


"The insurance self-network ...

Oriental Insurance has for the first time tied up with a private online insurance broker 'Coverfox' to sell its comprehensive motor insurance product for both four and two wheelers and for Coverfox ...

Insurance companies are enthusiastic about the proposed guidelines on selling and servicing of policies through e-commerce platform that aims to do away completely with any kind of physical ...

With an increase in number of Indian tourists indulging in Adventure Sports like bungee jumping, parasailing and mountaineering, insurers see a new market. Bajaj Allianz has for the first time come ...


The new premium collected by life insurers rose by 26.6 per cent in May to Rs 10,610.10 crore. The insurers had collected new premium of Rs 8,382.67 crore in the same month of 2015.


Of all the 24 ...

Reliance Life Insurance's chief executive of three years, Anup Rau has quit the company, said three people familiar with the development.


Rau's exit from the company comes after it posted a Rs 200 ...

Exide Life Insurance has announced India cricket team captain Mahendra Singh Dhoni as its brand ambassador. Dhoni, who represents the aspirations of millions, has a strong mass appeal and following ...

Heavy discounts in insurance segments such as group health would soon come under the scanner of the Insurance Regulatory and Development Authority of India (IRDAI).


The regulator has come up with a ...

IRDAI 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. ...

To provide relief to 2nd hand property buyers facing legalities for property ownership, the Insurance Regulatory and Development Authority of India (IRDAI) has set up a committee to launch Title Insurance.


Popular in the US and Europe, the policy protects an owner's or lender's financial interest in property against loss because of title defects and other matters. "It defends against a lawsuit contesting the title, or reimburses the policyholder for the monetary loss incurred, up to the amount of insurance provided by the policy," says an official of a general insurance company. The official says this will be a product essentially for the retail individual category but will be sold to institutions such as banks and non-banking finance companies.


"The current method is expensive and time consuming. Though courts do favour buyers who have done due-diligence, it can take decades to finally win the case at different courts. Title insurance can further minimise such risks," says Ashutosh Limaye, head of research & REIS at property advisory firm JLL. He says it can be cheaper for a flat and more expensive for a piece of land. That's because evaluating a land title is more cumbersome where a lawyer would need to go through multiple government offices and development plans over the years.

IRDAI has given its first phase of licence to ITI Reinsurance, thus clearing the first ever Indian private sector reinsurance company in the country.


The IRDAI board in a meeting in Hyderabad approved the initial license - known as R1 in regulatory parlance - to ITI Reinsurance, promoted by a firm controlled by Sun Pharma co-promoter Sudhir Valia.


Four global players - Munich Re, Hannover from Germany, Swiss Re from Switzerland and French major SCOR - have also received R1 licences and they are awaiting final clearance from the regulator. Lloyd's of London has also got the initial clearance from the IRDAI.


ITI Reinsurance is owned by Fortune Financial Services, in which Valia and others have a majority stake. PK Shah who had earlier worked in New India Assurance and Reliance Industries has been appointed as the MD & CEO of the company.


After providing the R1 clearance, the regulator now is conducting the due diligence for granting the final approvals (R2) to the global reinsurers to set up direct operations and the process may take some time.


GIC Re has been the country's sole reinsurance company so far. "We don't see any threat. There's ample room for anyone - both domestic and foreign - in India. Growth is in this part of the world and we are an established reinsurer," GIC Re chairman and MD Alice Vaidyan said on the imminent entry of several global reinsurance companies into India.

The insurance regulator has banned life insurers from offering indemnity-based health products, which constitute 90 per cent of the health insurance market, dealing a blow to their business plans.


Indemnity-based plans are those where one can claim reimbursement after visiting a doctor.


The Insurance Regulatory and Development Authority (IRDAI) has asked insurance companies offering these products to withdraw them by giving three months' notice to policyholders and to continue the existing contracts till the end of their policy term.


"We will have to withdraw our indemnity health insurance products," said RM Vishakha, MD and CEO, IndiaFirst Life Insurance. IRDAI has allowed insurance companies to offer a combined health and savings product.


It has allowed general and standalone health insurance companies to offer long-term health insurance products for a minimum period of one year and a maximum period of three years with no premium changes. These do not include personal accident and travel.

New India Assurance and General Insurance Corporation have obtained board 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.


The General Insurance Corporation (GIC Re) - the only reinsurance company in the country -has also obtained its board clearance for an IPO. This was disclosed by the corporation's chairman Alice Vaidyan while unveiling the financial performance.

Lloyd's of London chairman John Nelson has said the 325-year old insurance giant can help support the expansion of insurance penetration in India and limit the economic impacts of catastrophes and other major events that can hamper the growth of the insurance industry and the economy in general.


The world's largest insurance platform is gearing up to start its India operations in Mumbai by early 2017. Lloyd's has already applied for a license to insurance regulator IRDAI to operate in India and currently underwrites Indian business on an off-shore basis.


"We will start our India operation with just couple of syndicates and would scale up gradually. We would target 8-10 per cent growth in Indian markets,'' Nelson said. Currently Lloyd's underwrites around $175-200 million of business in different segments like marine, liability, property, aviation and energy.

The Comptroller and Auditor General (CAG) will conduct a performance audit of crop insurance schemes in nine states to examine the efficacy of providing relief to farmers in the event of crop damage.


The performance audit will include examination of records of Department of Agriculture Cooperation and Farmers Welfare, Agriculture Insurance Company of India Limited, State Agriculture Department and other departments, the RBI said while asking banks to provide access to related records to CAG.


"This audit is proposed to be conducted in Andhra Pradesh, Assam, Gujarat, Haryana, Himachal Pradesh, Odisha, Maharashtra, Rajasthan and Telangana with the help of the offices of the Principal Accountant General/Accountant General (Audit) in the respective states," the RBI said.

SBI Life Insurance has launched higher income individual focused market-linked life insurance plan - Smart Privilege.


The product provides both life insurance as well as the opportunity to increase wealth through investments in eight select funds (in any combination of customers choice), with the flexibility of fund switching and premium redirections, unlimited number of times, throughout the term of the plan, SBI Life said in a release.


The minimum entry age is 8 years for regular or limited premium policies and 13 years for single premium policies and the maximum age is 55 years. The policy term is 10 to 30 years for regular or limited premium policies and 5 to 30 years for single premium policies.


The premium paying frequency options are single, yearly, half yearly, quarterly and monthly.

Two of India's leading private-sector insurers are looking to raise over $1 billion this financial year in the sector's first initial public offerings (IPOs), as insurance companies' rush to take advantage of a change in ownership rules.


ICICI Prudential Life Insurance and HDFC Standard Life Insurance will likely be followed by SBI Life Insurance in reacting to a relaxation in foreign investment regulation last year that made share sales more feasible, in a country where most life insurers are part-foreign owned.


"The business potential for insurance companies is large. But too many players are in the market, competition is going up," said New Delhi-based R.K. Gupta, Managing Director at Taurus Asset Management.

Insurers, particularly those promoted by non-banking companies, are likely to see a major boost in insurance distribution, as banks can now start selling products of multiple insurers.


Future Generali Life, which did not have a bancassurance partner, announced a partnership with Saraswat Bank, which has a tie-up with HDFC Life for distribution of life insurance products.


Industry experts say that other non-bank-promoted insurers, such as Birla Sun Life, Reliance Life, Bajaj Allianz, Aegon Life and Shriram Life, are also likely to get into similar tie-ups with leading banks.


Nilesh Sathe, Member-Life at the Insurance Regulatory and Development Authority of India (IRDAI), said 25-30 banks will start distributing products of more than one insurer.


At present, most major public and private sector banks, such as State Bank of India, Union Bank of India, Bank of Baroda, Canara Bank, Bank of India, Punjab National Bank, Andhra Bank, ICICI Bank and IDBI Bank, have promoted insurance companies.

Edelweiss General Insurance Company (EGIC) cleared the first step in becoming an insurance company in India with the Insurance Regulatory and Development Authority of India (IRDAI) approving its registration application, as disclosed by Edelweiss Financial Services Ltd. in a corporate filing.


EGIC will be a wholly owned subsidiary of Edelweiss Financial Services Ltd., according to the corporate announcement.


Edelweiss mainly focuses on general insurance broking market and its services include risk monitoring and management in business firms, managing insurance portfolio, designing insurance programs for companies and management services.


The company also offers insurance products covering asset/property insurance, marine insurance, personal insurance, business interruption insurance, liability insurance and financial insurance.

Electronic insurance will become mandatory for annual premium equal to or above Rs 10,000 (single/annual premium) in life insurance policies. IRDAI in its Issuance of e-Insurance Policies Regulations, 2016, said these norms would come into force from October 1.


Customers would have an e-insurance account, which will be an electronic account opened by a person with an insurance repository where the portfolios of insurance policies of a policyholder are held in an electronic form.


IRDAI has asked every insurer soliciting insurance business through electronic mode to create an e-proposal form similar to the physical proposal form approved by IRDAI.


Such a form should enable capturing of information in electronic form that would enable easy processing and servicing. The e-proposal form will also have a provision to capture the electronic Insurance Account (eIA) number. Micro-insurance policies are exempt from these norms.

IRDAI is planning to put in place an insurance self-network platform which could be used by an agent to sell and service products on behalf of registered insurers.


"The insurance self-network platform will be available as a regular internet website or as a mobile app or both," Randip Singh Jagpal, Senior Joint Director, IRDAI, said.


The objective is to promote e-commerce in the insurance space, which will lower the cost of transacting insurance business and bring higher efficiencies and greater reach.


"E-commerce is seen as an effective medium to increase insurance penetration and bring financial inclusion in a cost-efficient manner," Jagpal said.


All products approved under the regulations will be allowed to be sold through these platforms and they should be prefixed with the letter "i-" to distinguish them from regular products.


From both the industry and consumer angles this move will have significant implications. Till now, only insurers and web-aggregators were allowed to sell online. But now, many others in the distribution chain will also be able to sell online, according to Sanjay Tripathy, Senior Executive Vice-President - Marketing, Product, Analytics Digital & E-commerce, HDFC Life.


"This is the first time that IRDAI has recognised such a platform with robust security features. Even differential pricing of products will be permitted," he said, adding that the move will help insurers cut costs.

Oriental Insurance has for the first time tied up with a private online insurance broker 'Coverfox' to sell its comprehensive motor insurance product for both four and two wheelers and for Coverfox too this is the first engagement with a public sector general insurer. Coverfox operates the online insurance portal coverfox.com.


Currently, auto insurance is the largest selling category for Coverfox. Founded in 2013, Coverfox sells insurance online and offers car, health, home and travel insurance.


Talking about the partnership, Varun Dua, CEO and Co-Founder, Coverfox.com, said, "We are indeed thrilled by this partnership with Oriental Insurance, one of the most prestigious PSUs (public sector units) in the insurance sector today.”


"We appreciate the trust that Oriental Insurance has placed in us through this collaboration. This broadens and gives much-needed depth of choice to our customers",he added.


Coverfox is the second-largest online auto insurance provider in India. It also sells health and travel policies. It sells nearly 10,000 policies (auto, health and travel put together) a month and is witnessing steady growth of about 20 per cent month-on-month.

Insurance companies are enthusiastic about the proposed guidelines on selling and servicing of policies through e-commerce platform that aims to do away completely with any kind of physical intervention.


The Insurance Regulatory and Development Authority of India (IRDAI) has come out with the exposure draft on selling and servicing insurance policies through e-commerce platform for comments before final regulation is notified.


"This will go a long way in penetration of insurance products. It is a great effort and it will induce lot of benefits to the customers of smaller towns not encouraged by agents and advisors due to lack of adequate remuneration for them," Bajaj Capital group CEO and director Anil Kumar Chopra said.


Chopra said the country's accumulated number of issued polices is 12.5 crore and coverage of population will be far low as there would be multiple policies by a single person for health, motor and life.


National Insurance Corporation Chairman and Managing Director K. Sanath Kumar said the company is examining the e-commerce selling and servicing front.

With an increase in number of Indian tourists indulging in Adventure Sports like bungee jumping, parasailing and mountaineering, insurers see a new market. Bajaj Allianz has for the first time come out with a specialized personal accident policy to cover such risks, which until now were excluded.


The Global Personal Accident Cover is targeted at travelers who engage in adventure sports and allows them to choose from a host of covers, such as adventure sports, air ambulance evacuation and accident hospitalization. While most of the covers are available worldwide, the air ambulance evacuation is available only in India.


"The personal accident cover that is sold in India is a 40-year-old product. But the customer behaviour has changed considerably. Today, many travelers engage in adventure sport activities like bungee jumping or mountaineering. An accident would require immediate response within the golden hour, which is not available under the conventional policy," said Tapan Singhel, MD & CEO, Bajaj Allianz General Insurance.


For a premium of Rs 4,000, the policy covers personal accident cover up to Rs 50 lakh and will also cover accident hospitalization and air ambulance. In addition, the policyholder can also get EMI protection, where the insurance company will pay the monthly instalments of any personal loan taken by the insured. Singhel said that the cover is available for everyone within 70 years of age at the same premium. "We have seen senior citizens also engage in adventure sports," he said.


The new premium collected by life insurers rose by 26.6 per cent in May to Rs 10,610.10 crore. The insurers had collected new premium of Rs 8,382.67 crore in the same month of 2015.


Of all the 24 life insurers, private sector companies witnessed an increase of 25.8 per cent in new premium collection at Rs 3,248.35 crore for the month of May. It was at Rs 2,580.89 crore a year ago, data from insurance regulator IRDAI showed.


However, for Life Insurance Corporation of India (LIC), the collection from new premium rose to Rs 7,361.75 crore in May, up 27 per cent from the year-ago period. Its new business premium stood at Rs 5,801.78 crore in the same month of 2015. Among the top private sector performers, SBI Life, HDFC Standard Life, Exide Life, Kotak Mahindra Old Mutual Life showed healthy rise in their new business premium.


Their new collection rose to Rs 842.08 crore, up 156 per cent (from Rs 328.62 crore year ago); Rs 502.59 crore, up 38.3 per cent; Rs 127.46 crore, up 256 per cent and Rs 197.66 crore, up 41.4 per cent, respectively.


"We have effectively activated the various channels of our premium collection. Of the four-five such channels, individual agents and bank channels have been activated the most. Earlier the company was tapping potential from only a limited bank branches", Arijit Basu, MD & CEO SBI Life Insurance said.

Reliance Life Insurance's chief executive of three years, Anup Rau has quit the company, said three people familiar with the development.


Rau's exit from the company comes after it posted a Rs 200 crore loss for fiscal year 2016 and a possible dispute over priorities of the company as competition cripples growth, they added.


"Anup Rau has put in his papers that he quits due to differences over business goals with the management," said one of the people cited above. "Rau's focus was on improving reserves and persistency."


The company declined to comment about the issue and Anup Rau did not respond to calls and messages.


Indian life insurers are getting squeezed by competition from HDFC Life, Max, and Prudential who have turned aggressive after the government increased foreign direct investment to 49% from 26%.


Reliance Life's persistency, the proportion of policies that are kept alive, rose to 60% from 57% a year earlier. Yet another reason for the loss has also been a fall in income from unclaimed premium lying with the company.

Exide Life Insurance has announced India cricket team captain Mahendra Singh Dhoni as its brand ambassador. Dhoni, who represents the aspirations of millions, has a strong mass appeal and following compared to any other sporting icon in India, Exide Life Insurance said in a statement.


Dhoni has appeal that cuts across geography, gender and age groups, it said, adding, he is one of India's most celebrated cricketers, and the most successful captain of the Indian team and we are extremely excited to be associated with him.


Speaking about his partnership with Exide Life, Dhoni said, "This is my first endorsement deal in the insurance category. It helps Indians prepare financially for their long and happy life. Long term relationships build trust and I have always planned for the long term in all aspects of my life”.

Heavy discounts in insurance segments such as group health would soon come under the scanner of the Insurance Regulatory and Development Authority of India (IRDAI).


The regulator has come up with a new set of norms for maintaining the solvency ratio of insurance companies, based on each line of business. For segments like health, motor and liability, the insurer would be required to maintain a higher solvency ratio since not only the premiums, the incurred claims are also high. With the regulator asking insurers to maintain higher solvency for these segments, insurance companies would be required to reinvent their business strategies.


According to IRDAI, Available Solvency Margin (ASM) is calculated as, the excess of value of assets over the value of liabilities. Solvency ratio means the ratio of the amount of ASM to the amount of required solvency margin. The higher the solvency ratio, the more financially sound a company is considered to be. The required solvency ratio, according to IRDAI norms, currently is 150 per cent, which is the minimum amount to be maintained at all times.


"Bigger insurers have made pricing so tough that it is difficult for others to offer such rates. Now with the regulator's command, these practices would have to discontinue since additional solvency has to be maintained if claims are high," said the head of underwriting at a mid-sized private general insurer.

IRDAI 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. 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.

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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