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This set of Principles of Insurance Multiple Choice Questions & Answers (MCQs) focuses on Principles Of Insurance Set 2
Q1 | Which of the following is the similarity between insurance and gambling:
- The amount of loss to be paid is known before hand.
- Promise to pay on the happening of the event
- Both the parties win on happening of an event.
- Both are enforceable at law.
Q2 | The business of insurance is related to protection of:
- savings
- status
- profits
- economic value of assets
Q3 | The concept of insurance is
- to share losses by many
- to make money out of death
- to earn interest
- to earn a status
Q4 | Insurance covers the risk of the most certain event -
- Death of a person
- protection of the childhood
- protection of old age
- all of the above
Q5 | Insurance cover
- Protects assets
- prevents loss
- reduces the impact of loss
- insures immortality
Q6 | The company doing insurance business is called:
- mutual funds
- non-banking firm
- banking company
- an insurance company
Q7 | All of the following are disadvantages of using insurance EXCEPT
- There is an opportunity cost because premiums must be paid in advance.
- Considerable time and effort must be spent selecting and negotiating coverages.
- It results in considerable fluctuations in earnings after a loss occurs.
- Attitudes toward loss control may become lax.
Q8 | All of the following can be classified as casualty insurance EXCEPT
- Marine insurance.
- General liability insurance.
- Workers compensation insurance.
- Burglary and theft insurance.
Q9 | Insurance eliminates or decreases the uncertainty associated with occurrence of an event
- Correct
- Wrong
- Partially correct C.
- Totally misleading
Q10 | The insurance plays a role in the economic development of the country in following ways:
- Release capital for new investments.
- The job potential increases
- Money collected is invested in infrastructure
- All of the above
Q11 | Insurance brokers are governed by
- Sale of Goods Act
- Agency Law
- IRDA Act. 1999
- Mercantile Law
Q12 | A reinsurance of insurance refers to ________.
- line.
- retention.
- retrocession.
- cession.
Q13 | IRDA Act. 1999 defines insurance intermediary as one including also
- Insurance broker
- UTI Agent
- Sarpanch
- Medical Examiner
Q14 | Insurance reduces the extent of financial loss connected with uncertain events
- TRUE
- FALSE
- To the extent of insurance cover
- Does not reduce the loss at all
Q15 | The business of insurance is related to protection of
- Savings
- Status
- Profits
- Economic value of assets
Q16 | Which of the following is the similarity between insurance and gambling?
- The amount of loss to be paid is known beforehand
- Promise to pay on the happening of an event
- Both the parties win on happening of an event
- Both are enforceable at law
Q17 | What is underwriting in Insurance ?
- Process of investing the premiums which insurance provider collect from insured parties.
- A claim arises on the occurrence of a specified event
- Process by which insurers select the risks to insure and decide how much in premiums to charge for
- The ratio of losses and expenses to premium
Q18 | Insurance Sector in India is regulated by IRDA. What is full name of IRDA?
- Insurance Regulating and Development Agency
- Insurance Rules and Development Authority
- Insurance Rules and Deployment Authority
- Insurance Regulatory and Development Authority
Q19 | When was IRDA Act passed?
- 1972
- 1999
- 1989
- 2000
Q20 | Which of the following is the main objective of IRDA:
- To take care of the policy holder interest
- To open the insurance sector for private sectors
- To supervise the activities of intermediaries
- All of above
Q21 | The general insurance business in India was nationalized in the year.
- 1976
- 1956
- 1983
- 1972
Q22 | The main role of an underwriter in a non-life insurance company is normally to
- assess the acceptability of particular risks
- certify a loss when claims are submitted.
- design the structure of the products to be offered.
- negotiate with the industry regulator.
Q23 | Akshat is a relatively cautious person. In insurance terms, this will normally increase thelikelihood that he will
- be considered an above average insurance risk.
- be considered a below average insurance risk.
- require insurance cover.
- require reinsurance cover.
Q24 | Which of the statements is correct? A. Insurance is a transfer of risk mechanism. B. Insurance gives physical protection to assets.
- Statement A.
- Statement B.
- Both the statements.
- Neither of the statements
Q25 | Transfer of rights and remedies of the insured to the insurer after indemnity has beeneffected is called __________.
- Insurable interest.
- Subrogation
- Proximate clause.
- Money back policy.