Dear Aspirants, LIC AAO is one the most important exam in the competitive examination. LIC AAO mains exam consists of four sections i.e. Reasoning ability, Data Analysis & Interpretation, General knowledge & Current affairs and Insurance & Financial Market Awareness. Insurance & Financial Market Awareness section comprises of 30 questions. Insurance & Financial Market Awareness questions plays an important role in boosting up the score in mains examination and also helps in interview. Here we are providing new series of Practice Questions on Insurance awareness. Aspirants can make use of it, to improve score in Insurance & Financial Market Awareness section.
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1) The term ‘insurable interest’ is related to which of the following types of insurance ?
a) Life Insurance
b) Fire Insurance
c) Marine Insurance
d) General Insurance
e) All of the above
2) Which of the following is an exception to the ‘Principle of indemnity’?
a) Marine Insurance
b) Life Insurance
c) Fire Insurance
d) Crop Insurance
e) None of the above
3) A type of insurance that is designed to provide insurance cover to couples or partners is known as?
a) Group Life Insurance
b) Joint Life Insurance
c) Couple Life Insurance
d) Partner Life Insurance
e) None is correct
4) The “Doctrine of Basic Structure” applies to?
a) Only to executive orders
b) Both ordinary laws and constitutional amendment
c) Only constitutional amendment
d) Every law that violates fundamental rights
e) Related to public interest litigation
5) A sum of money charged by the insurer from the policy holder to provide life cover is ________ ?
a) Coverage Charge
b) Service Charge
c) Policy Charge
d) Mortality Charge
e) Hidden Charge
6) What is Micro Insurance Plan?
a) Insurance given to small group of people.
b) Insurance given to villagers.
c) Insurance given to low income households
d) Insurance given to single entity
e) All of the above
7) What does the principle of loss minimisation means?
a) The least possible loss will be repaid by insurance company.
b) It is the duty of the insurer to keep a check on insured property for minimum loss.
c) It is the duty of insured to take reasonable care to minimise the loss.
d) A and C both are true
e) All are true
8) Which of the following term defines BoP (Balance of Payment)?
a) Transactions relating to receipts and payment of invisibles
b) Transactions relating only to exports and imports
c) Systematic record of all its economic transaction with the rest of the world
d) All the above
e) None of the above
9) Sometimes due to lack of money people get a term insurance but later on change it to a permanent policy. This is known as ________
a) Convertible Insurance Plan
b) Revamp Insurance Plan
c) Changeable Insurance Plan
d) Flexible Insurance Plan
e) None of the above
10) Which of the following are true about non-debt receipts of the centre in the budget year 2017 – 2018?
a) The gross tax collection is unstable in the last decade
b) The non-tax receipts have visibly under-performed
c) Non-debt capital receipts are mainly are from recovery of loans
d) Non-debt receipts is projected to be less compared to last year’s receipts
e) Borrowing from International organisations will come under non-debt receipts
Answers :
1) Answer: e)
Insurable interest refers to the interest in the property or thing insured. • Only the owner can have the insurable interest in the property. • It is related to all types of insurance. • In case of life insurance it is related to the life of insured person and in other cases it is related to the subject matter that is insured.
2) Answer: b)
According to the principle of indemnity, the insured person should get back into the position as he was before the damage or loss. • In this, the person is repaid the losses. • This is not applicable to life insurance.
3) Answer: b)
Joint Life Insurance is designed to provide insurance cover to couples or partners. • In case of death of one insurer, the partner gets the sum assured. • Whereas, Group life insurance is offered to a group like employees of a company
4) Answer: c)
The basic structure doctrine is an Indian judicial principle emerged after Kesavananda bharati case in 1973, that the Constitution of India has certain basic features that cannot be altered or destroyed through amendments by the parliament. It forms the basis for Supreme Court to review and strike down constitutional amendments enacted by the Parliament which conflict with or seek to alter this “basic structure” of the Constitution. The basic structure doctrine applies only to constitutional amendments. Recently 124th constitutional amendment act has been challenged in Supreme Court on the basis that it is against the basic structure of the constitution.
5) Answer: d)
The insurer company charges a sum of money from the policy holder to maintain the policy. This is known as the Mortality Charge. • It is also known as the cost of Insurance.
6) Answer: c)
Micro Insurance Plan refers to the insurance plan given to the low income households. • This is like any other insurance plan but it focuses on low income peoples. • Under this the premium paid is very low.
7) Answer: c)
According to the principle of loss minimisation, it is the duty of the insured to take reasonable care to minimise the loss. • The insured person has to make every possible effort to keep the property safe.
8) Answer: c)
A systematic record of all its economic transaction with the rest of the world. A Balance of Payment Account is a systematic record of all economic transactions between residents of a country and the rest of the world carried out in a specific period of time. Briefly put, ‘Balance of Payment Account is a summary of international transactions of a country for a given period’ (i.e., financial year). It records a country’s transactions with the rest of the world involving inflow and outflow of foreign exchange. In short BOP Account is a summary statement of transactions in foreign exchange in a year.
9) Answer: a)
Convertible Insurance Plan allows converting term insurance into a permanent policy. • This allows people with low income to modulate policy according to their pockets.
10) Answer: b)
There are three distinct patterns on the revenue front till November 2017, the confluence of which is reflected in the trends in non-debt receipts of the Centre. i) The gross tax collections are reasonably on track. ii) The non-tax revenues have visibly under-performed. iii) Non-debt capital receipts, mainly proceeds from disinvestment, are doing well. – As against last year’s achievement of Rs. 46,247 crore realized from 16 transactions of disinvestment, the budget estimate for 2017-18 was set at Rs. 72,500 crore, split into Rs. 46,500 crore from disinvestment of Central Public Sector Enterprises (CPSEs), Rs. 15,000 crore from strategic disinvestment and Rs. 11,000 crore from listing of insurance companies.
