Q.1 What is the primary purpose of insurance?
To provide a savings plan
To protect against financial loss
To increase income
To avoid paying taxes
Explanation - Insurance is a risk management tool designed to provide financial protection against potential losses.
Correct answer is: To protect against financial loss
Q.2 Which of the following is an example of life insurance?
Health insurance
Term insurance
Car insurance
Travel insurance
Explanation - Term insurance provides a sum assured to the beneficiary upon the death of the insured within a specified period.
Correct answer is: Term insurance
Q.3 In insurance terms, what does 'premium' mean?
The total compensation for loss
The regular payment made to the insurer
The policyholder's liability
The period of insurance coverage
Explanation - A premium is the amount paid by the policyholder to the insurer to maintain the insurance coverage.
Correct answer is: The regular payment made to the insurer
Q.4 Which principle of insurance requires the insured to disclose all material facts?
Utmost good faith
Indemnity
Contribution
Subrogation
Explanation - The principle of utmost good faith requires both parties to disclose all material facts to ensure a fair contract.
Correct answer is: Utmost good faith
Q.5 Which type of insurance covers losses due to fire, theft, or natural disasters?
Life insurance
Marine insurance
General insurance
Health insurance
Explanation - General insurance protects against specific risks affecting property or liability, such as fire, theft, or natural disasters.
Correct answer is: General insurance
Q.6 What does the principle of indemnity mean?
The insurer compensates for actual financial loss
The insurer guarantees profit
The policy cannot be transferred
Premiums are refundable
Explanation - Indemnity ensures that the insured is restored to the same financial position as before the loss, without profit.
Correct answer is: The insurer compensates for actual financial loss
Q.7 Which insurance is compulsory under motor vehicle laws in most countries?
Life insurance
Third-party liability insurance
Health insurance
Fire insurance
Explanation - Third-party liability insurance covers damages to other people or property caused by the vehicle, as mandated by law.
Correct answer is: Third-party liability insurance
Q.8 Who is the 'insured' in an insurance contract?
The insurance company
The policyholder
The regulator
The beneficiary
Explanation - The insured, or policyholder, is the person or entity whose risk is covered under the insurance contract.
Correct answer is: The policyholder
Q.9 What is a 'beneficiary' in life insurance?
Person paying the premium
Person receiving the policy payout
Insurance agent
Regulatory authority
Explanation - A beneficiary is the individual or entity entitled to receive the insurance proceeds upon the insured event, such as death.
Correct answer is: Person receiving the policy payout
Q.10 Which of the following is an example of health insurance?
Term insurance
Critical illness cover
Marine insurance
Property insurance
Explanation - Critical illness cover provides financial protection against specified illnesses and medical conditions.
Correct answer is: Critical illness cover
Q.11 What is the function of a reinsurance company?
To provide insurance to individuals
To insure other insurance companies
To regulate insurance premiums
To sell policies directly to customers
Explanation - Reinsurance companies accept risks from primary insurers to reduce their exposure and stabilize losses.
Correct answer is: To insure other insurance companies
Q.12 Which document serves as proof of insurance coverage?
Policy schedule
Invoice
License
Premium receipt
Explanation - The policy schedule outlines the terms, coverage, and conditions of the insurance contract and serves as proof of coverage.
Correct answer is: Policy schedule
Q.13 Which type of insurance provides coverage for goods in transit by sea?
Fire insurance
Marine insurance
Life insurance
Health insurance
Explanation - Marine insurance protects goods, cargo, and vessels during transit over water against specific risks.
Correct answer is: Marine insurance
Q.14 Which principle restricts the insured from profiting from insurance?
Utmost good faith
Indemnity
Contribution
Subrogation
Explanation - The principle of indemnity ensures compensation equals the loss, preventing the insured from gaining financially.
Correct answer is: Indemnity
Q.15 What does the principle of 'contribution' in insurance refer to?
Sharing of premiums between insurers
Sharing the compensation among multiple insurers if multiple policies cover the same risk
Policy transfer to another person
Insurer paying extra benefits
Explanation - Contribution prevents overcompensation when the insured has multiple policies for the same risk.
Correct answer is: Sharing the compensation among multiple insurers if multiple policies cover the same risk
Q.16 Which insurance policy combines savings and protection?
Term insurance
Endowment policy
Marine insurance
Health insurance
Explanation - Endowment policies provide a combination of life coverage and a maturity benefit, serving both protection and savings purposes.
Correct answer is: Endowment policy
Q.17 Which of the following is an example of personal accident insurance?
Car insurance
Travel insurance
Motor third-party insurance
Accidental death and disability cover
Explanation - Personal accident insurance compensates the insured in case of injury, disability, or death due to an accident.
Correct answer is: Accidental death and disability cover
Q.18 What is the main role of an insurance regulator?
Sell insurance policies
Supervise and regulate insurance companies
Provide claims settlement
Set premium for individual customers
Explanation - Insurance regulators ensure that insurance companies operate fairly, maintain solvency, and comply with laws.
Correct answer is: Supervise and regulate insurance companies
Q.19 Which insurance principle allows the insurer to pursue recovery from a third party who caused the loss?
Subrogation
Indemnity
Contribution
Utmost good faith
Explanation - Subrogation gives the insurer the right to recover the loss amount from the party responsible for the insured loss.
Correct answer is: Subrogation
Q.20 What is a 'claim' in insurance?
The premium payment
A request for payment from the insurer for a covered loss
A type of insurance policy
The insured event itself
Explanation - A claim is submitted by the insured to the insurer to receive compensation for the loss covered under the policy.
Correct answer is: A request for payment from the insurer for a covered loss
Q.21 Which of the following is a non-life insurance?
Whole life insurance
Health insurance
Term insurance
Endowment policy
Explanation - Non-life insurance includes policies like health, fire, marine, and motor insurance that cover risks other than life.
Correct answer is: Health insurance
Q.22 Which type of insurance policy pays a fixed amount on death or after a fixed period?
Term insurance
Endowment policy
Marine insurance
Accident insurance
Explanation - Endowment policies pay the sum assured either on the death of the insured or at the end of a specified period.
Correct answer is: Endowment policy
Q.23 Which principle requires the insurance contract to be based on complete honesty?
Utmost good faith
Indemnity
Contribution
Subrogation
Explanation - Both the insurer and insured must disclose all material facts to prevent disputes and ensure fairness.
Correct answer is: Utmost good faith
Q.24 Which type of insurance protects businesses against losses due to lawsuits?
Liability insurance
Life insurance
Health insurance
Marine insurance
Explanation - Liability insurance covers legal liabilities arising from injury, property damage, or negligence claims.
Correct answer is: Liability insurance