Principles Of Insurance Set 3

Bachelor of Commerce (B Com)

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This set of Principles of Insurance Multiple Choice Questions & Answers (MCQs) focuses on Principles Of Insurance Set 3

Q1 | Which one of the following comes under miscellaneous insurance?
  • Marine Insurance
  • Motor Insurance
  • Fire Insurance
  • Group Insurance
Answer: Motor Insurance
Q2 | __________ policy matures on the assured death or on his attainment of a particular age whichever occurs earlier.
  • Endowment.
  • Money back.
  • Joint life
  • Single premium.
Answer: Endowment.
Q3 | On the death of the bread-earner, two losses occur in the family-one is loss of human life and the other
  • Earning power of family
  • Loss of insurance
  • Loss of investments
  • Loss of bank deposits
Answer: Earning power of family
Q4 | The principle of indemnity is applicable to _______ only.
  • Life Insurance
  • Personal accident insurance
  • Proximate Cause
  • Property insurance
Answer: Property insurance
Q5 | Insurance is based on the principle of _______.
  • co-operation.
  • Democracy
  • Equality
  • welfare
Answer: co-operation.
Q6 | ______ are those terms, which are written on the policy.
  • Express Warranties
  • Implied Warranties
  • Memorandum Warranties
  • Valuation Clause
Answer: Express Warranties
Q7 | Which of the following statements is true: Under a fire policy
  • Insurance is a transfer of risk mechanism.
  • Insurance gives physical protection to the assets.
  • Statement A
  • Statement B
Answer: Insurance is a transfer of risk mechanism.
Q8 | Which of the following statements is correct?
  • One of the methods of risk retention is by way of voluntary excess or deductible available under the policy.
  • Another method of retention of risk is to absorb small losses as normal operating expenses of business.
  • Statement A
  • Statement B
Answer: Statement A
Q9 | Which of the following types of loss exposures are best met by the use of avoidance?
  • low-frequency, low-severity
  • low-frequency, high-severity
  • high-frequency, low-severity
  • high-frequency, high-severity
Answer: high-frequency, high-severity
Q10 | Which of the following statements is correct?
  • People do not see the need for life insurance as top priority.
  • People hesitate to buy life insurance because they prefer to enjoy the present.
  • Both the statements are correct.
  • Both the statements are wrong.
Answer: Both the statements are correct.
Q11 | The principle of utmost good faith does not apply to :
  • Facts of common knowledge
  • Facts of Law
  • Facts which are not material for underwriting
  • All the three kinds of facts mentioned above.
Answer: All the three kinds of facts mentioned above.
Q12 | Which of the statement is correct? A. Existence of the subject-matter is an express condition. B. There are no implied conditions in insurance contracts
  • A. is correct
  • B. is correct
  • Neither is correct
  • Both the correct
Answer: Neither is correct
Q13 | Endorsement can be used in a policy giving effect to
  • Renewal
  • Change in premium
  • Change in subject-matter of insurance
  • All of the above
Answer: All of the above
Q14 | Policy stamp needs to be affixed on the
  • Endorsement
  • Cover note
  • Policy
  • All of the above
Answer: Policy
Q15 | Cover note can be issued by
  • Agents
  • Development officers
  • Insurers
  • All of the above, depending on company guidelines
Answer: All of the above, depending on company guidelines
Q16 | What is the minimum age for a person to effect a contract of insurance?
  • 25 years
  • 18 years
  • 12 years
  • 20 years
Answer: 18 years
Q17 | Insurable Interest is defined by:
  • The Insurance Act
  • The Contracts Act
  • By IRDA
  • Not defined in any written law
Answer: Not defined in any written law
Q18 | Which of the following is true? A. Policy form is a legal document. B. The warranties inserted in a policy safeguard the interest of the insured.
  • A is True
  • B is True
  • Both are true
  • Neither is true
Answer: B is True
Q19 | In case of life insurance, insurable insurance should not exist?
  • At the inception of the policy.
  • At the time of a claim.
  • At the time of every renewal premium payment.
  • All the above occasions.
Answer: At the inception of the policy.
Q20 | Notification of Alterations in Risk is a condition
  • Precedent to liability
  • Subsequent to liability
  • Precedent to the contract
  • Subsequent to the contract
Answer: Precedent to liability
Q21 | A person’s insurable interest in his own life is:
  • Unlimited
  • Limited
  • 10 times the husband’s salary
  • None of the above
Answer: Unlimited
Q22 | Consideration on the part of the life insured in respect of a life insurance contract is
  • A promise to take a new policy
  • The insured’s promise to pay the premium under the policy.
  • The payment made towards premium by the insured.
  • Proposal completed and signed by the person.
Answer: The insured’s promise to pay the premium under the policy.
Q23 | The policy holder’s duty to disclose material fact lies at the time of
  • Taking a policy
  • Revival of policy
  • Reinstatement of surrendered policy
  • All of the above
Answer: All of the above
Q24 | Which of the following is an evidence of insurance contract?
  • Policy of insurance
  • Payment of premium
  • Cover note
  • Acceptance of proposal
Answer: Policy of insurance
Q25 | The clause which sets out the essence of the contract is
  • The Preamble
  • Recital Clause
  • Conditions
  • Operative Clause
Answer: Operative Clause
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