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. Â 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) When a person dominates the will of another person and uses their position to obtain undue advantage over the other, it is known as _________
a) Undue influence
b) Coercion
c) Fraud
d) Mistake
e) Either a) or b)
2) Which of the following is true about the term ‘material facts’ in an insurance contract?
I. It includes a list of properties of the insured.
II. It has an effect on whether the insurer would accept the risk.
III. It may impact the premium rate and other conditions.
a) Only II
b) Only III
c) Only I and III
d) Only II and III
e) All of the above
3) When the insured is silent about material facts because the insurer did not raise any specific enquiry is known as __________
a) Innocent misrepresentation
b) Non-disclosure
c) Fraudulent misrepresentation
d) Concealment
e) None of the above
4) The concept of Human Life Value in insurance helps us understand __________
a) The extent of insurance that is considered adequate for a person.
b) The exact value of a human life measured by considering life expectancy.
c) The extent of insurance cover that fulfils basic family obligations.
d) The amount of extra premium to be paid keeping in mind the health condition of the insured.
e) None of the above
5) The least amount of savings element is present in which of the following policy types?
a) Endowment plan
b) Term insurance
c) Money back plan
d) Whole Life plan
e) None of the above
6) Consent cannot be said to be free in an insurance contract when caused by _____________
a) Agreement
b) Mutual benefit
c) Coercion
d) Consensus
e) None of the above
7) Which of the following is a necessary condition to enter into an insurance contract?
I. Both parties must be of legal age.
II.Both parties must be competent.
III. Both parties must be of sound mind.
a) Only II
b) Only I and III
c) Only II and III
d) Only I and II
e) All of the above
8) The premiums collected are held in trust by the insurance companyand the amount so collected is called a ____________
a) Back up
b) Super annuation fund
c) Reserve
d) Trust Fund
e) None of the above
9) The saving component of the level premium is known as ___________
a) Term component
b) Protection component
c) Cash component
d) Risk component
e) None of the above
10) The Insurance Act was passed in year _____
a) 1912
b) 1934
c) 1938
d) 1939
e) 1944
Answers:
1) Answer: a)
Undue Influence is when a person dominates the will of another person and uses their position to obtain undue advantage over the other.
2) Answer: d)
A material fact has been defined as a fact that would affect the judgment of an insurance underwriter in deciding whether to accept the risk and if so, the rate of premium and the terms and conditions.
Statement I is irrelevant and incorrect as per this while II and III are correct
3) Answer: b)
Non-disclosure is when the insured is silent about material facts because the insurer did not raise any specific enquiry.
4) Answer: a)
Human Life Value considers human life as a kind of property or asset that earns an income. It thus measures the value of human life based on an individual’s expected net future earnings. HLV helps to determine how much insurance one should have for full protection. It also tells us the upper limit beyond which life insurance would be speculative.
5) Answer: b)
The premium can be divided into two parts where the first part is used to cover the risk while the second part is used for saving. A term insurance plan has the least amount of savings element.
6) Answer: c)
Consent is said to be free when it is not caused by coercion, undue influence, fraud, misrepresentation and mistake.
7) Answer: e)
All the statements are necessary condition to enter into an insurance contract.
8) Answer: c)
Premiums collected in early years of the contract are held in trust by the insurance company for the benefit of its policyholders. The amount so collected is called a Reserve.
9) Answer: d)
The level premium has two components.
i).The first is known as the term or protection component, consisting of that portion of premium actually needed to pay the cost of the risk.
ii).The second is known as the cash value element. It is made up of accumulated excess payments of the policyholder. It constitutes the savings component.
10) Answer: c)
The Insurance Act 1938 was the first legislation enacted to regulate the conduct of insurance companies in India. This Act, as amended from time to time continues to be in force.The Controller of Insurance was appointed by the Government under the provisions of the Insurance Act.
