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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
  • 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.