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 process of determining the cost of an insurance policy based on the actual loss experience determined as an adjustment to the initial premium payment is termed as _______
a) Universal Life Insurance
b) Unauthorized Reinsurance
c) Unearned Premium
d) Retrospective Rating
e) None of these
2) The portion of risk that a reinsurance company cedes or amount of insurance the company chooses not to retain is called ______
a) Universal Life Insurance
b) Unauthorized Reinsurance
c) Retro cession
d) Retrospective Rating
e) None of these
3) Circumstance including possibility of loss or no loss but no possibility of gain is termed as ______
a) Product Liability
b) Pure Risk
c) Pure Premium
d) Retrospective Rating
e) None of these
4) An insurance company not licensed to do business within a given state is called _____
a) Product Liability
b) Pure Risk
c) Non-admitted Insurer
d) Proximate Clause
e) None of these
5) Selling insurance through groups is called ________
a) Affinity sales
b) Provisions
c) Annuitization
d) Proximate Clause
e) None of these
6) An amount of premium for which payment has been made by the policyholder but coverage has not yet been provided is known as ______
a) Universal Life Insurance
b) Unauthorized Reinsurance
c) Unearned Premium
d) Unpaid losses
e) None of these
7) What does the term ‘bancassurance’ mean?
a) Assurance from the bank to its account holder regarding the safety of his money
b) A special product designed by the bank
c) Selling of insurance policies by banks
d) The understanding between banks and insurance companies
e) None of the given options is true
8) Which body/official determines the risk coverage for calculation of premium for life insurance policies?
a) Actuary of the life insurance company
b) IRDAI
c) The chief executive of the life insurance company
d) The board of directors of the life insurance company
e) None of the given options is true
9)What do you understand by term “Revival Period” used extensively in insurance sector?
a) Period offered by the insurer to revive the policy before grace period
b) Period offered by the insurer to revive the policy post grace period
c) Period to claim the policy post maturity
d) Period to reclaim the unearned premium after termination
e) Period allowed to claim maturity amount
10) An AP is a Point of Sale (PoS) appointed by Insurance Repository and will be working on behalf of Insurance Repository to extend the IR services. What is A in AP?
a) Authorized
b) Approved
c) Accountant
d) Addressed
e) None of these
Answers :
1) Answer: d)
An insurance policy with a premium that adjusts according to the losses experienced by the insured company, rather than according to an industry-wide loss experience is called Retrospective Rating.
2) Answer: c)
A transaction wherein a re-insurer cedes the reinsurance they have assumed to another re-insurer is called Retro cession.
3) Answer: b)
Pure risk, also called absolute risk, is a category of threat that is beyond human control and has only one possible outcome: loss. Pure risk includes such things as natural disasters, fire or untimely death.
4) Answer: c)
An insurance company that is “non-admitted” has not been approved by the state’s insurance department.
5) Answer: a)
The sale of insurance through groups such as business or professional associations is known as Affinity sales
6) Answer: c)
Unearned premium is the premium corresponding to the time period remaining on an insurance policy.
7) Answer: c)
Bancassurance means selling insurance product through banks. Banks and insurance company come up in a partnership wherein the bank sells the tied insurance company’s insurance products to its clients.
8) Answer: a)
Actuary of the life insurance company determines the risk coverage for calculation of premium for life insurance policies.
9) Answer: b)
Insurance policy lapses when the insured defaults on the payments of renewal premium beyond a grace period. Insurance companies provide an option of reactivating the lapsed policy, within a specific period of time post the grace period. This period offered by the insurer to revive the policy and avail benefits pertaining to it is termed as revival period.
10) Answer:b)
An Approved Person is a Point of Sale (PoS) appointed by Insurance Repository and will be working on behalf of Insurance Repository to extend the IR services
