AVINASH DEGREE COLLEGE KUKATPALLY

COURSE : INSURANCE PAPER CODE : DSC 503

PROGRAM : BBA (F) COURSE TYPE : 503 (a)
SEMESTER:V FACILITATOR : Ms.Pranusha

UNIT I
INTRODUCTION TO INSURANCE

A. Choose the correct answers

Q.no 1 2 3 4 5 6 7 8 9 10
Ans
Q.no 11 12 13 14 15 16 17 18 19 20
Ans
Q.no 21 22 23 24 25
Ans

1. In India the Insurance business was nationalized in

A. 1947 B. 1950
C. 1956 D. 1990

2. Minimum capital required to form a life insurance company is

A. 100 cores B. 150 cores
C.10 cores D. 200 cores

3. IRDA stands for

A. Insurance recharges developing authority B. Insurance regulatory developing authority
C. Insurance regulatory and development D. Insurance risk development
Authority authority

4. Pricing of insurance and calculation of insurance is known as

A. Re-insurance B. Securitization of risk
C. Rate making D. All the above

5. Which of the following are Insurance Intermediaries?

A. Agents B. Brokers
C. Insurance D. All the above.

6. The company purchasing Re-insurance is known as

A. Assuming Insurer B. Ceding Insurer
C. Re-insurer D. Original Insurer.
7. Under Re-insurance, this type of insurance covers insures against a specific risk factor.
A. Treaty Re-Insurance B. General Insurance
C. Life Insurance D. Facultative Re-insurance.

8. In which year IRDA act was duly passed by the Government of India.
A. 1938 B. 1963
C. 1999 D. 2006

9. The interest which the insured has in the subject matter of insurance is called ________
A. Premium B. Insurance interest
C. Both (a) & (b) D. None

10. The person or the organization covered by Insurance policy is known

A. Insured B. Insurer
C. Underwriter D. Individual

11. The probable no. of losses that may occur during the given period of time
A. Loss frequency
B. Loss servile
C. Loss estimation
D. Loss potential
12. Which of the following factors are considered by customers while purchasing insurance
Policy?
A. Age B. Savings
C. Insurance premium D. All the above

13. One of the main objectives of re-insurance is to

A. Expand the business B. Secure profits
C. Stabilize loss expansion D. Risk mitigation

14. . Indemnity is one of the principles of insurance. Which of the following ways of
Compensation would not generally used by the insurers?
A. Paying cash B. Repairing
C. Reinstatement D. Abandonment

15. The ________ is the party who gets his life or property insured against risks.
A. Insured B. Insurer
C. Assurer D. None

16. Except the life insurance contract all the other types are called
A. Contract of indemnity B. Contract of LIC
C. Lawful contract D. Free consent

17. Substituting one creditor from another is called

A. Repair and pay B. Principle of subrogation
C. Principle of contribution D. Principle of interest
 18. Principle of indemnity is corollary of
A. Repair and pay B. Principle of subrogation
C. Principle of contribution D. Principle of interest

19. Full disclosure of principle is relevant to

A. Repair and pay B. Principle of subrogation
C. Principle of contribution D. Principle of Relevant info disclosure

20. "Uberrimae fidei" is also called as

A. Utmost good faith B. Subrogation
C. Free consent D. Lawful object

21. IRDA certificate is registered in

A. 6th Dec 1906 B. 4th Dec 1983
C. 30th March 1984 D. 2nd may 2001

22. IFFCO TOKIO General Insurance headquarters is at

A. Punjab B. Gurgaon
C. Delhi D. Mumbai

23. Independent insurance agent is also known as

A. Client agent’s B. Independent agent
C. Insurance sale agent D. Property agent

24. The Basis of risk is

A. liability B. uncertainty
C. possibility of loss D. insurance

25. Insurance provides security against ________

A. Risk B. Losses
C. Both (a) & (b) D. None of them

B. Fill in the blanks :

1. An insurance premium is the money charged by insurance companies for ____________

2. _______means that an insurer who has assumed a large risk may arrange with another
insurer to insurance a proportion of insured risk.
3. The ________ objective is to create the leading diversified specialty insurance and
reinsurance.
4. _________ may be defined as increase in capital stock of the country plants, equipment,
machinery etc.
5. LIC headquarters is located at _________
 6. IRDAI Is __________
7. ING Vysya Life Insurance Headquartered in _________

8. The very basic and primary principal of insurance is _________

9. Insurance is all about __________
10. _________ is introduced by Private Players for the benefit of life insurance
policy.
11. SBI General Insurance company Limited is a joint Venture between the
_________
12. Risk assessment is also known as _________
13. Probability refers to the ________ or ______ of occurring an event.
14. Insurance is a contract where one accepts the risk for a consideration called _______
15. Insurer means __________
16. Indemnity means a promise to ________
17. The principle of indemnity does not apply to _________ contract.
18. Proximate cause means ________
19. _________is the person who gets the benefit of the life insurance contract.
20. _______ is the type of life insurance policy it is a permanent policy as it covers the entire
life of the insured.

C. Concept based Questions

1. Actual loss
2. Consequential loss
3. Co-insurance
4. Double insurance
5. Re-insurance
6. Insurance Agent
7. Broker
8. Who is an insurer
9. Objectives of IRDA
10. Underwriting
 11. Contingent contract
12. Wagering contract
13. Principles of utmost good faith
14. Principles of insuranble insurance
15. Principle of indeminety
16. Principle of subrogation
17. Principle of proximate cause
18. Principle of contribution
19. Concept of life insurance
20. Premium
21. General Insurance
22. Mention types pf life insurance
23. Annuity
24. engineering insurance
25. whole life insurance

KEY ANSWERS:

A. Multiple choice questions:

Q.no 1 2 3 4 5 6 7 8 9 10
Ans C A C C A B D C B A
A 11 12 13 14 15 16 17 18 19 20
Ans A D C D A A B C D A
D 21 22 23 24 25
Ans D B C C C

Concept notes

1. The Government of India, therefore, decided to nationalize the insurance business. An

Ordinance issued on 19th January 1956 nationalized the Life Insurance sector and Life
Insurance Corporation of India (LIC) came into existence in the same year. The LIC
absorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies.
2. Under the current guidelines set by the Insurance Regulatory and Development
Authority (Irda), the minimum paid-up capital requirement for life or
general insurance companies, including standalone health insurers, is Rs 100 core. This
is applicable for all irrespective of product portfolio or geographic presence.
3. IRDA:
The Insurance Regulatory and Development Authority of India (IRDAI) is an
autonomous, statutory body tasked with regulating and promoting the insurance and re-
insurance industries in India. It was constituted by the Insurance Regulatory and
Development Authority Act, 1999, an Act of Parliament passed by the Government of
India.
4. Rate making, or insurance pricing:
Rate making or insurance pricing is the determination of rates charged by insurance
companies. The benefit of rate making is to ensure insurance companies are setting fair
and adequate premiums given the competitive nature.
5. Agent in Insurance:
An agent is a person who represents an insurance firm and sells insurance policies on its
behalf. Description: Generally, there are two types of such agents who reach the
prospective parties that may be interested in buying insurance. These are independent
agents and captive or exclusive agents.
6. Reinsurance is the practice whereby insurers transfer portions of their risk portfolios to
other parties by some form of agreement to reduce the likelihood of paying a large
obligation resulting from an insurance claim. The party that diversifies its insurance
portfolio is known as the ceding party.
7. Facultative reinsurance is coverage purchased by a primary insurer to cover a single
risk—or a block of risks—held in the primary insurer's book of business. Facultative
reinsurance is one of two types of reinsurance (the other type of reinsurance is called
treaty reinsurance)
8. The IRDA Bill was passed in December 1999 and became an Act in April 2000.
9. Insurable interest :
Insurable interest is defined as the reasonable concern of a person to obtain insurance for
any individual or property against unforeseen events such as death, losses, etc.
10. Insured:
A person or organization covered by insurance. The person, group of people, or
organization that is insured in a particular agreement
11. The probable no. of losses that may occur during the given period of time
Loss frequency :
Loss frequency  is how often losses will occur. Loss frequency is used to predict the
likelihood of similar losses occurring in the future. An example is loss frequency for
water damage if your business is located on a flood plain is likely high.
12. The main factors for insurance are:
 Geographical location.
 Age.
 Gender.
 Marital status.
 Claims history.
 Credit history
13. Objectives of Reinsurance
(a) Risk transfer
(b) Income smoothing
(c) Surplus relief
(d) Creating a manageable and profitable portfolio of insured risks
(e) Reinsurer’s expertise
14. Indemnity is one of the principles of insurance. Which of the following ways of
Compensation would not generally used by the insurers?
A. Paying cash
B. Repairing
C. Reinstatement
15. Insured:
A person or organization covered by insurance. The person, group of people, or
organization that is insured in a particular agreement
16. Contract of Indemnity:
 A contract, by which one party promises to save the other from loss caused to him by the
conduct of the promisor himself, or by the conduct of any other person, is called a
“contract of indemnity”.
17. Principle of Subrogation:
Principle of Subrogation is a term describing a legal right held by most insurance carriers
to legally pursue a third party that caused an insurance loss to the insured. This is done in
order to recover the amount of the claim paid by the insurance carrier to the insured for
the loss.
18. Principle of Contribution:
The principle of contribution is implemented when multiple insurance policies are
covering the same property or loss; the total payment for actual loss is proportionally
divided among all insurance companies. ... It is used to will maintain continued existence
to preserve the principle of indemnity.
19. Principle of Relevant information disclosure:
The full disclosure principle is a concept that requires a business to report all
necessary information about their financial statements and other relevant information to
any persons who are accustomed to reading this information.
20. Principle of Utmost Good Faith:
The principle of Utmost Good Faith is also known as Uberrimae Fides. It means that both
the policyholder and the insurer need to disclose all material and relevant information to
each other before commencement of the contract. In the event of failure to disclose
material facts, the contract can be held null and void.
21. IRDI:
The Insurance Regulatory and Development Authority of India (IRDAI) is an
autonomous, statutory body tasked with regulating and promoting the insurance and re-
insurance industries in India. It was constituted by the Insurance Regulatory and
Development Authority Act, 1999, an Act of Parliament passed by the Government of
India. The agency's headquarters are in Hyderabad, Telangana, where it moved
from Delhi in 2001
22. IFFCO TOKIO:
 IFFCO Tokio happens to be the very first insurance company in India (Gurugram) to
underwrite mega policies for an automobile company and a fertilizer firm. This all-
inclusive plan by IFFCO Tokio is designed on the basis of international rates and offer
coverage against all risks in spite of optimizing premium for clients
23. Independent insurance agents:
Independent insurance agent’s also known as insurance sales agents or "producers",
typically sell a variety of insurance and financial products, including property insurance
and casualty insurance, life insurance, health insurance, disability insurance, and long-
term care insurance.
24. Risk:
Risk is the possibility of something bad happening. Risk involves uncertainty about the
effects/implications of an activity with respect to something that humans value, often
focusing on negative, undesirable consequences.
25. Insurance provide financial support and reduce uncertainties in business and human life.
It provides safety and security against particular event.

B. Fill in the Blanks Answers:

1. Coverage
2. Reinsurance
3. AXIS Capital corporate
4. Capital formation
5. Mumbai
6. Insurance regulatory development authority of India
7. Bangalore
8. Utmost good faith
9. Risk cover and protection
10. unit link insurance plans
11. State bank of India and Insurance Australia group
12. Risk Measurement
13. Like hood, Chance
14. Premium
15. Insurance Company
16. Compensate the loss
17. Life Insurance
18. Nearest cause
19. Beneficiary
20. Whole life
C. Concept based question answers
1. Actual Loss:
Actual loss may be defined as a financial loss generated or caused due to physical
destruction or damage or theft of the property. Such losses are related with damage or
loss of goods, repair and renovation of machineries, payment of the claims of insured
parties etc. It can be illustrated from the example a Multiple Departmental store is
getting destroyed by fire, then the Physical damage caused to the store is treated as
“Actual Loss”
2. Consequential Loss:
Consequential loss may be defined as the Financial loss comes in as the post effect of
actual losses. These losses are caused due to the side effects or consequences of the
direct losses. It may be considered as the concept of loss of profits. These losses don’t
occur immediately and difficult to assess. If we take in to consideration the above
mentioned example, then we can find the consequential loss in the form of loss of
profit and the extra expenditures incurred in reconstruction of the departmental
building.
3. Co-Insurance:
Co-insurance is referred as a co-sharing agreement made between the insured and the
insurer under a health insurance policy. It provides that the insured will cover a
specific proportion of the covered costs after the deductible has been paid. Co-
insurance distributes the risk of loss as per the amount of insurance purchased by the
insured for the payment of consideration known as premium. Such premium charged
by the insurance company based on the value of the property covered.
4. Double Insurance:
It refers to buying of more than one policy for the same subject. A person may get
two or more policies on his life. He can claim the amount on all these policies. The
implications of double insurance are different in fire and marine insurance. When a
person purchases two or more policies for his property, he can not claim the same
amount in case of occurrence of laws from different companies. He will be able to
claim only total loss from one or more companies.
5. Re-insurance:
 An insurance company basically undertakes the risks as per capacity. It helps in
sharing the risk with some other company in case of its occurrence. When the
insurance company provides insures the risk with some other insurance company, it is
called Re-insurance.
6. Insurance agent:
An agent may be regarded as person acts on behalf of another person if appointed and
authorized to do so. According to 183 of Indian contract act , “Any person who is of
the age majority according to the law to when he is subject and who is of sound mind
may employ an agent.
7. Broker:
A Broker is defined as an individual or a company or a firm completely associated
with the insurance business. Broker deals in placing insurance business with the
insurance providers. Insurance brokers are independent professionals engaged in
insurance business.
8. Insurer:
An insurer may be a person, individual or company deals in proving insurance
services to the general public in the society, they are selling different types of
insurance products to their customers to protect their life and properties from the
different perils and hazards.
9. Objectives of IRDA:
i. To protect, promote and safeguard the interest and rights of policy holders.
ii. To ensure growth and expansion of insurance industry.
iii. To facilitate the quick settlement of genuine clients and to prevent fords and
mall practices
iv. To bring transparency and orderly conduct of in financial markets dealing
with insurance.
10. Underwriting:
It is regarded as function of insurance service deals in evaluation and classification of
the degree of risks involved in the insurance proposal for taking decision about
acceptance or rejection of the same. It is considered as the first step taken for
execution of insurance contact.
 11. Contingent Contract:
It is defined as a contract to do or not to do something, if some event, collateral to such
contact does or does not happen. The performance of such contract is dependent on the
happening or non-happening of an uncertain event, collateral to such contract.
12. Wagering agreement:
The word wager refers to a bet which represent something to be lost or one on the result
of a doubtful issue. So, the wagering agreements are regarded as ordinary betting
agreements.
13. Principle of utmost good faith:
The principle of utmost good faith, uberrimae fidei, states that the insurer and the insured
must disclose all material facts before the policy inception. Facts which may enhance the
level of risk are called material facts.The insurer or insurance company needs to declare
all public disclosures and investment strategies while the insured needs to declare health
condition, family medical history, lifestyle, food habits, smoking and alcohol history etc.
14. Principle of insurable interest:
The principle of insurable interest on life insurance is that a person or organization can
obtain an insurance policy on the life of another person if the person or organization
obtaining the insurance values the life of the insured more than the amount of the policy.
In this way, insurance can compensate for loss.
15. Principle of indemnity:
Indemnity is a guarantee to restore the insured to the position he or she was in before the
uncertain incident that caused a loss for the insured. .The insurance company promises to
compensate the policyholder for the amount of the loss up to the amount agreed upon in
the contract.
16. Principle of subrogation:
Subrogation is a term describing a legal right held by most insurance carriers to legally
pursue a third party that caused an insurance loss to the insured. This is done in order to
recover the amount of the claim paid by the insurance carrier to the insured for the loss.
17. Principle of proximate cause:
Proximate cause is a key principle of Insurance and is concerned with how the loss or
damage actually occurred. There are several competing theories of proximate cause (see
 other factors). For an act to be deemed to cause harm both tests must be met; proximate
cause is a legal limitation on cause-in-fact.
18. Principle of contribution:
The contribution principle governs relationships between insurance companies. The
contribution principle in insurance is a rule that specifies what happens when a person
buys insurance from multiple companies to cover the same event, and that event occur.
19. Life insurance:
Life insurance is a contract between an insurance policy holder and an insurer or assurer,
where the insurer promises to pay a designated beneficiary a sum of money in exchange
for a premium, upon the death of an insured person
20. Premium:
Premium has multiple meanings in finance, with the first being the total cost to buy an
option. A premium is also the difference between the price paid for a fixed-income
security and the security's face amount at issue. Finally, premium is also the specified
amount of payment required periodically by an insurer to provide coverage under a given
insurance plan for a defined period of time.
21. General Insurance:
General insurance refers to the insurance contract that does not come under the field of
life insurance. The difference forms of general insurance or fire, Marine, motor,
accident and miscellaneous no-life insurance.
22. ULIP:
ULIP is life insurance plan, which offers the dual benefits of protection as well as
savings. The protection component is the insurance cover while the savings component is
that portion of the premium that is invested by the insurance company on your behalf of
in funds of your choice. The first one is called death benefit and the second is maturity
benefit.
23. Annuity:
An annuity is long term investment that is insured by an insurance company designed to
help protect you from the risk of outliving your income. Through annuitization your
purchase payments (What you contribute) or converted into periodic payments that can
last for life.
 24. Engineering Insurance:
It is a type of insurance policy prepared by the insurance service providers to protect the
interest of contractors and owners of civil engineering project. Such projects are basically
connected with construction of buildings, roads, bridges, dams, tunnels etc. This
Insurance policy provides complete risk cover to the insured.
25. Whole life Policy:
Whole life policies are issued for the life insurance. In the policy, the policy amount will
be paid at the death of the insured person. It is regarded as a policy under which the
assured sum becomes due for payment to the beneficiary only after his death. It means
that the insurer has to pay premium on such policy throughout his life-time.

UNIT II
LIFE INSURANCE
A. Choose the correct answers

Q.no 1 2 3 4 5 6 7 8 9 10
Ans
Q.no 11 12 13 14 15 16 17 18 19 20
Ans
Q.no 21 22 23 24 25
Ans

A. Multiple Choice Questions

1.Which one of the following does not belong to the main products of life insurance?
A. Endowment life insurance policy B. Personal accident insurance
C. Term life insurance policy D. Whole life insurance policy

2. Which one of the following does not belong to the major general insurance private sector
companies in India?
A. Bajaj Allianz General Insurance B. Reliance General Insurance
C. Royal Sundaram Alliance Insurance D. Life insurance corporation of India

3. When was the Oriental Life Insurance Company Established?

 A. 1818 B. 1834
C. 1907 D. 1938

4. Insurance works on the principle of:

A. Sharing of losses B. Probabilities
C. Large numbers D. All of the above

5. Insurance helps to:

A. Prevent adverse situations from occurring B. Reduce the financial consequences of
Adverse situations
C. Negate all consequences of adverse situations D. . All of the above
6. In cases where a Life Insurance Agent collects the premium from the policyholder and remits
it to the insurer’s office, he is acting as an agent of _____
A. IRDA B. The Insurance Company
C. The Policyholder D. The broker

7. A policy where the policyholder makes a one-time payment of premium is known as a

______________:
A. Money-back policy B. Single premium policy
C. Salary Savings Scheme policy D. Annual policy
8. .____________ may be described as a social device to reduce or eliminate risk of loss to life
and property.
A. Investment B. Saving
C. Insurance D. Loan

9. Insurance cannot prevent the occurrence of risk but it provides for the………
A. Losses of risk B. Occurrence of risk
C. Chance of risk D. None of these

10. The document which embodies the contract in insurance is called…………

A. Security B. Policy
C. Certificate D. None of these

11. The Sanskrit term …, the name of LIC of India corporate headquarters, is found in Rig Veda.
A. Yogaraksha B. Yogakarma
C. Yogakshema D. All of these

12. Life Insurance Corporation was found on:

A. 1st April, 1955 B. 6th December, 1960
C. 4th September, 1956 D. 1st September, 1956

13. Which of the following is not the principle of insurance:

A. Utmost Good Faith B. Principle of Contribution
C. Maximization of Profit D. Causa Proxima

14. What percent are shares of New India Assurance Co Ltd owned by Government of India?
 A. 50% B. 85%
C. 99.4% D. 100%
15. Which was an oldest insurance company, found in 1906?
A. LIC B. National Insurance Company
C. Agriculture Insurance Company of India D. United India Insurance Company

16. Insurable interest means ________ interest

A. Individual B. Social
C. Monetary D. All of these

17. LIC means ________

A. Life India Corporation B. Life Insurance Corporation of India
C. Life Insurance Contract D. None of these

18. ________ insurance is not a contract of indemnity

A. Fire B. Marine
C. Health D. Life

19. The term ________ is referred only Life Insurance business

A. Warranties B. Utmost good faith
C. Assurance D. None

20. IRDA refers to ________

A. Indian Regulatory Development Authority B. Insurance Regulatory Development
Association
C. Institute of Regulation Development D. Insurance Regulatory Development
21. In which year insurance began in India
A. 1870 B. 1818
C. 1897 D. 1896

22. Re-instatement policy is also known as

A. Replacement policy B. Replacement policy
C. Both A & B D. None

23.The document, which embodies the contract in insurance, is called

A. Security B. Policy
C. Certificate D. None of these\

24. The main role of an underwriter in a non-life insurance company is normally to

A. Assess the acceptability of particular risks. B. Certify a loss when claims are submitted.
C. Design the structure of the products to be D. Negotiate with the industry regulator.
offered.
25. The need for investment advice from an insurance agent normally results from what
overriding key factor?
A. Absence of any long-term goals. B. Inability to prioritize future financial
needs.
 C. Lack of market knowledge. D. Shortage of available funds.

B. Fill in the Blanks

1. Life Insurance is a contractual agreement between _____________________
2. Policy holder agrees to pay ____________
3. A policy that covers a set time period, such as five to ten years, is called __________
4. Life insurance policies are often offered as _______________ for credit
5. The Insurance Amendment Act of __________ abolished Principal Agencies
6. ICICI Prudential offers _________ key retirement plans.
7. Headquarters of ING Vysya Life insurance company is located in _________
8. Bajaj Allianz Insurance co  Ltd is a joint venture of _______________
9. Subrogation means ______________
10. __________________ is the amount you receive in case you don’t wish to continue with
Policy.
11. ____________________ is a person who receives the death benefits under life insurance
Policy

12. Insurance claim is considered as ___________made by the insured person or to the nominee.
13. Permanent disability can give rise to _________.
14. Two classifications for Death are _________.
15. The policy issued by the Life insurance Corporation is ________
16. Securities of short-term nature are called _________
17. _________has no fixed tenure on open ended schemes.
18. First Mutual Funds to be set up was the _____
19. ________is the most important source of revenue of the state government.
20. _________is the process of meeting your life goals through proper management of your
finance.

C. SHORT QUESTIONS
1. Life insurance
2. Principles of life insurance
3. Group insurance
4. Who is agent in life insurance
5. Term plan
6. Endowment plan
7. Money back insurance plan
8. Whole life insurance plan
9. ULIP
10. Joint life insurance plan
11. Settlement of claim
12. Need of underwriting
13. Key parties of annuity
14. Types of riders
15. Premium loading
 16. Rebate
17. Survival benefit
18. Death claim
19. Underwriting
20. List of the types of life insurance claims
21. Capital market
22. Policy claim
23. Waiver of evidence
24. Classification of mutual fund
25. Secondary market.

Key answers
A. Multiple Choice Questions.

Q.no 1 2 3 4 5 6 7 8 9 10
Ans B D A D D B B C A B
Q.no 11 12 13 14 15 16 17 18 19 20
Ans C C C D B C B D C D
Q.no 21 22 23 24 25
Ans D C B A C

CONCEPT NOTES
1. Personal Accident insurance: PA insurance is an annual policy which provides
compensation in the event of injuries, disability or death caused solely by violent, accidental,
external and visible events.
2. Life Insurance Corporation of India (abbreviated as LIC) is an Indian state-owned
insurance group and investment corporation owned by the Government of India.
3. Oriental Insurance was incorporated on 12 September 1947 as a government-owned non-
life insurance company. It was established as a completely owned subsidiary of Oriental
Government Security Life Assurance Company Ltd. to execute its parent body's general
insurance operations.
4. Insurance works on the principle of Trust, Sharing and Randomness.
5. Insurance helps to :
 Protection for you and your family
 Reduce stress during difficult times
 To enjoy financial security
 Peace of mind
6. Insurance company: a financial institution which UNDERWRITES the risk of loss of, or
damage to, personal and business assets (general INSURANCE) and life and limb (life and
accident insurance.
7. A single premium is a premium that is paid in one lump sum rather than regularly in
instalments. With a single premium or immediate annuity, the annuitant pays for the annuity
with a single lump sum.
8. Insurance is a contract, represented by a policy, in which an individual or entity receives
financial protection or reimbursement against losses from an insurance company. The
company pools clients' risks to make payments more affordable for the insured.
9. Insurance provides for the prevent the losses of risk
10. Policy : a document that contains the agreement that an insurance company and a person
have made(insured)
11. In Rigveda, there is a concept called Yogakshema, which means prosperity, well-being and
security of people.
LIC- “I shall ensure the safety and well-being of my devotees”
12. The Life insurance Corporation of India was founded on September 1, 1956
13. Principles of insurance
 Utmost Good Faith.
 Insurable Interest.
 Proximate Cause.
 Indemnity.
 Subrogation.
 Contribution.
 Loss Minimization.
14. The New India Assurance Co. Ltd., based in Mumbai, Maharashtra is a public sector general
insurance company of India. "It is the largest general insuran ce company of India on the
basis of gross premium collection inclusive of foreign operations”. It was founded by Sir
Dorabji Tata in 1919, and was nationalized in 1973.
15. National Insurance Company Limited (NICL) is a state-owned general insurance
company in India. Its catch line is "Trusted Since 1906" in italic. The company
headquartered at Kolkata was established in 1906 and nationalized in 1972. Its portfolio
consists of a multitude of general insurance policies, offered to a wide arena of clients
encompassing different sectors of the economy.
16. Tax evasion is an illegal activity in which a person or entity deliberately avoids paying a true
tax liability. Those caught evading taxes are generally subject to criminal charges and
substantial penalties.
17. Tax incidence (or incidence of tax) is an economic term for understanding the division of a
Tax burden between stakeholders, such as buyers and sellers or producers and consumers.
18. A person or entity has an insurable interest in an item, event or action when the damage or
loss of the object would cause a financial loss or other hardships. To have an insurable
Interest a person or entity would take out an insurance policy protecting the person, item or
Event in question.
19. Fire insurance is property insurance that covers damage and losses caused by fire. The
purchase of fire insurance in addition to homeowners or property insurance helps to cover
the cost of replacement, repair, or reconstruction of property, above the limit set by the
property insurance policy.
20. Marine insurance covers the loss or damage of ships, cargo, terminals, and any transport
by which the property is transferred, acquired, or held between the points of origin and the
final destination.
21. Health insurance is an insurance that covers the whole or a part of the risk of a person
incurring medical expenses, spreading the risk over numerous persons. By estimating the
overall risk of health care and health system expenses over the risk pool, an insurer can
develop a routine finance structure, such as a monthly premium or payroll tax, to provide
the money to pay for the health care benefits specified in the insurance agreement.
22. The modern form of Life Insurance came to India from England in the year 1818. Oriental
Life Insurance Company started by Europeans in Calcutta was the first life insurance
Company on Indian Soil.
23. Financial planning is the process of meeting your life goals through the proper
Management of your finances. It includes elements of protection, wealth creation, planning
for contingencies and emergencies, as well as planning for specific milestones in life.
24. Financial planning is the process of meeting your life goals through the proper management
of your finances. It includes elements of protection, wealth creation, planning for
Contingencies and emergencies, as well as planning for specific milestones in life.
25. Claim settlement means paying back the money by the insurance company to the insurance
Policy holder

b. Fill in the blanks

1. Policy holder and life insurance Company

2. Premium
3. Term life insurance
4. Collateral security
5. 1950
6. Two
7. Bangalore
8. Allianz group and Bajaj motor
9. Substituting one creditor from another
10. Surrender value
11. Nominee
12. Formal communication
13. Riders
14. Early death and non-early death
15. Evidence to the contract
16. Money market funds
17. Mutual fund schemes
18. Unit trust of India
19. The sales tax
20. Financial planning

c. Concept based questions:

1. Life insurance- Meaning
 Life Insurance can be defined as a contract between an insurance policy holder and an
insurance company, where the insurer promises to pay a sum of money in exchange for a
premium, upon the death of an insured person or after a set period.
2. Principles of life insurance
There are seven basic principles that create an insurance contract between the insured and the
insurer:
1. Utmost Good Faith
2. Insurable Interest
3. Proximate Cause
4. Indemnity
5. Subrogation
6. Contribution
7. Loss Minimization
3. Group insurance:
Group Insurance plans cover a group of people with a single insurance policy. These plans
can be bought by organizations for providing cover to their members. The members covered
under the single insurance policy are collectively referred to as a ‘Group’.

Groups can be of two types:

1. Formal Groups (Employer-Employee)
2. Informal groups (Non-employer - Employee)
4. Agent: An agent is a person who represents an insurance firm and sells insurance policies on its
behalf. Generally, there are two types of such agents who reach the prospective parties that may be
interested in buying insurance. These are independent agents and captive or exclusive agents.
5. Term insurance: It is a type of life insurance policy that provides coverage for a certain period of
time or a specified "term" of years. If the insured dies during the time period specified in the policy
and the policy is active, or in force, a death benefit will be paid.
6. An endowment policy: It is essentially a life insurance policy which, apart from covering the life of
the insured, helps the policyholder save regularly over a specific period of time so that he/she is able
to get a lump sum amount on the policy maturity in case he/she survives the policy term.
7. Money Back Policy: In a money back plan, the insured person gets a percentage of sum
assured at regular intervals, instead of getting the lump sum amount at the end of the term. It
is an endowment plan with the benefit of liquidity.
8. Whole life insurance plan: Whole life insurance plans are a type of life insurance plan
which provides insurance coverage to the policyholder for the whole life i.e. up to 100 years
of age, provided the policyholder pays the premiums of the policy on time. A whole life
insurance plan offers guaranteed death benefit to the beneficiary of the policy in the event of
unfortunate demise of the policyholder during the tenure of the policy. The insurance holder
can decide the sum assured amount at the time of policy purchase
9. Unit Linked Insurance Plan (ULIP): It is a mix of insurance along with investment. From a
ULIP, the goal is to provide wealth creation along with life cover where the insurance
company puts a portion of your investment towards life insurance and rest into a fund that is
based on equity or debt or both and matches with your long-term goals. These goals could be
retirement planning, children’s education or another important event you may wish to save
for.
10. A Joint Life Policy: is the insurance cover that you get on a first - death basis. It is a pay out
which an insurer receives in case of death of his other insured partner during the period.
 Usually, when you apply for a life insurance policy, you mention a nominee or beneficiary.
In Joint Life Insurance, both you and your partner will be the owner as well as the
beneficiary. So, in case something happens to one of you, the other will receive the benefit of
the life cover.
11. Settlement of claim: A claim is the payment made by the insurer to the insured or claimant
on the occurrence of the event specified in the contract, in return for the premiums paid for
the insured. The easy and timely settlement of a valid claim is an important function of an
insurance company. As per the regulation 8 of the IRDA (Policy holder's Interest)
Regulations, 2002, the insurer is required to settle a claim within 30 days of receipt of all
documents including clarification sought by the insurer. If the claim requires further
investigation, the insurer has to complete its procedures within six months from receiving the
written intimation of claim.
12. Need of underwriting:
 Helps in risk pooling and fair pricing
 Ascertaining group and individual insurance plans
 Need in case of private insurance market
 Ascertaining fair price
 Helps avoid adverse selection
13. Key parties of annuity:
 Contract owner
 Annuitant
 Beneficiary
 Insurance carrier
14. Types of riders:
 Critical illness rider
 Disability rider
 Accidental death benefit rider
 Term rider
 Waiver of premium rider
15. Premium loading: premium loading is the amount an insurer needs to cover its expenses
and generate profit. Fair premium is determined using premium loading and pure premium.
Loading primarily occurs in life as well as health insurance plans. In general insurance there is
usually underwriting – based loading and claim based loading.
16. Rebate: Rebate is a portion of the agent’s commission returned to an insured or anything
else of value given an insured as an inducement to buy. The payment of policy dividends,
retroactive rate adjustments and reduced premiums that reflect the savings of direct payment to
an agent or home office are not usually considered rebates.

17. Survival benefit: Guaranteed survival benefits are benefit given to the policy holder
during or upon completion of the policy tenure. In the case of money back policies, a certain
pre-determined amount is paid to the insured after regular intervals. Survival benefit applies
only in the case the insured is alive. If not, the insured is entitled to receive death benefits.
18. Death claims: Death benefit is the amount on a life insurance policy, annuity or pension
that is payable to the beneficiary when the insured or annuitant passes away. Alternatively, a
death benefit may be a large lump sum payment from a life insurance policy.

19.Underwriting: The process of identifying and classification of the risks involved in the
insurance policies is termed as underwriting. Insurer should act as an underwriter to select the
qualified applicants with minimum risk. Applicants with risk less than average standards can be
offered the insurance policies. In property and liability insurance agent are provided with an
underwriting authority Whereas, in life insurance policy agents are mostly not provided with
underwriting activities but they need to assess the risks associated with prior to their screening
by actual underwriters.
20.Types of insurance claims: The life insurance claims are classified into three types
 Death claims
 Maturity claims
 Survival claims
21. Capital market: Capital markets are venues where savings and investments are
channelled between the suppliers who have capital and those who are in need of capital. The
entities that have capital include retail and institutional investors while those who seek capital
are businesses, governments, and people.
22. Policy claim: Policy Claim means an obligation incurred under a contract or policy of
insurance issued by an unauthorized insurer as described by Chapter 101. The term does not
include claims under reinsurance contracts or claims of other creditors.
23. Waiver of evidence: A waiver is the voluntary relinquishment or surrender of some
known right or privilege. Death claim becomes payable so long as the policy is kept inforce by
payment of due premium. In other words if the payment of premium is stopped and the grace
period expires and if the death occurs thereafter the policy is treated as lapsed or paid up
depending upon whether the premium has been paid for less than 3 years or 3 years and more.
Under a lapsed policy no claim is payable. In case of a paid up policy, only the paid up value is
payable.
24. Classification of mutual fund:
Depending upon the requirement/ expectations of the investors a tailored made.
 Open ended scheme
 Close ended scheme
 Interval schemes
25. Secondary market: secondary market is the market in which existing securities are
bought and sold. Existing securities are bought and sold on the stock exchanges with the help of
brokers. The secondary ,asset is the financial market in which previously issued financial
instruments such as stock, bonds, options and futures are bought and sold
 UNIT III
GENERAL INSURANCE
A. Choose the correct answers

Q.no 1 2 3 4 5 6 7 8 9 10
Ans
Q.no 11 12 13 14 15 16 17 18 19 20
Ans
Q.no 21 22 23 24 25
Ans

Multiple Choice Questions

1. The contract of marine insurance is based on the principle of utmost ________ or

________
A. Good faith or trust B. Good relation or trust
C. Trust or understanding D. None of the above

2. Insurance is a __________ between Insurance company and policy holder

A. Contract B. Co-operation
C. Agreement D. Deal

3. Policy holder is also called ______________

A. Insured B. Client
C. Agent D. None

4. ____________ Accepts the offer made by policyholder

A. Insurer B. Insured
C. Agent D. Broker

5. An insurance company protects the__________ risk which can be measured

A. Technical B. Legal
C. Financial D. Ethical

6. Insurance is based upon certain principles like:

A. Good faith B. Subrogation
C. Contribution D. All of the above

7. Functions of insurance can be divided into _____ broad categories

A. 2 B. 3
C.4 D. None of the above

8. In __________policy, a fixed amount is paid as compensation irrespective of the loss.

 A. Valued B. Fixed
C. Mandatory D. Legal

9. With which of the following did the State Bank of India enter into a joint venture
agreement for undertaking general insurance business?
A. New India Assurance Ltd. B. Insurance Australia Group
C. Lehman Brothers Holdings Inc. D. Allianz

10. Which of the following public sector companies/organizations provides insurance cover
to exporters?
A. ECGC B. NABARD
C. SIDBI D. IRDA

11. Which of the following insurance companies gives the slogan Prithvi, Agni, Jal, Akash -
Sab ki Surakhsa Hamare Paas?
A. Life Insurance Corporation B. Oriental Insurance Company
C. New India Assurance D. General Insurance Company

12. “Sampann Bharath ki pehchan,Beemith Phasal Khusal Kisan”is the tagline of which
insurance company?
A. LIC B. National Insurance
C. New India Assurance D. Agricultural Insurance
13. Co-operative societies registered under ________ Act
A. 1910 B. 1911
C. 1912 D.1913
14. ___________ Policy is generally issued to cover from one port to another and from one
place to another
A. Voyage B. General
C. Life D. None

15. Mixed policy is a combination of voyage and ________ policy

A. Valued B. Time
C. Floating D. Blanket

16. _______ policy includes the amount of insured cargo, specified or mentioned details
A. Named B. Floating
C .Unvalued D. Mixed
17. Insurance period in case of engineering insurance is
A. 1 year B. 10 years
C. life time of the insurer D. construction period of the project

18. SBI General insurance company limited is a joint venture between

A. SBI and ICICI bank B. SBI and PNB
C. SBI and insurance Australia groupD. SBI and insurance America group
19. __________ decides whether to accept or to reject the insurance proposal. If the proposal
is accepted at what price it should be accepted.
A. Agent B. Intermediaries
C. Actuaries D. Underwriters.

20. The insurance which covers the loss or damage of vessels at sea or on inland waterways,
and of cargo in transit is covered under
A. Health insurance B. Travel insurance
C. Marine insurance D. Aviation insurance
21. When was the Oriental Life Insurance Company established?
A. 1815 B. 1818
C. 1821 D. 1833

22. When was the General Insurance Council formed?

A. 1955 B. 1956
C. 1957 D. 1958

23. When was the Export Credit Guarantee Corporation of India established?
A. 1955 B. 1956
C. 1957 D. 1958

24. When was general insurance business nationalized?

A. 1970 B. 1971
C. 1972 D. 1973

25. TPA stands for

A. Third Party Assignee B. Third Payment Administrator
C. Third Payee Assignor D. Third Party Administrator

B. Fill in the Blanks

1. The policy holder has to intimate the insurance providers regarding the happening of
_______ or destruction of the policy document.
2. _________ And Uncertainties affect the people’s life in many respects.
3. The Insured person has to pay the ________ on the due date to the insurance companies.
4. In case a policy has lapsed due to non-payment of the premium by the insured party, the
insurer may provide an option to the policyholder to _________ the policy.
5. Insurance is a process in which uncertainties are made __________.
6. Insurance may be defined on two different basis namely functional and ___________
7. If the insurance company provides insures the risk with some other insurance company, it
is called ______________
8. An insurance company basically undertakes the risk as per its ___________
9. _____________ is referred as a co-sharing agreement made between the insured and the
insurer under a health insurance policy.
10. Absence of insurance makes the contract null and _______.
11. Under Insurance contract both ________ and insurer should have faith over each other.
12. Insurance contract can result in cancellation of _________ if any fraud or
misrepresentations of facts are found.
13. ECGC stands for _______________________
14. __________ Policy is regarded as a policy under which the insurer promises to pay the
insured the value of the property declared in the policy.
15. _____________ Insurance is one of the oldest forms of insurance concerned with
overseas trade.
16. IIRM stands for ______ .
17. RMAC stands for ______.
18. ______ means that the premiums and losses of each member of a group of Policy holders
are allocated within the group.
19. ORMC stands for _____.
20. ________ is the Premium concern in the general insurance business which is received in
advance by insurance company

C. CONCEPT BASED QUESTIONS

1. General insurance.
2. list out various general insurance companies
3. List out various roles in insurance industry
4. Different types of general insurance products
5. Functions of insurer
6. Personal accident
7. Engineering insurance
8. Marine insurance
9. Fire insurance
10. Objectives of IRDA
11. Differences between life insurance and general insurance
12. Motor insurance
13. Liability insurance
14. Travel insurance
15. Property insurance
16. Crop insurance
17. Health insurance
18. Aviation insurance
19. Disability insurance
20. Short note on GIC
21. Re insurance
 22. Risk Financing
23. Insurance fraud
24. Loss prevention
25. Loss Reduction

KEY ANSWERS:

A. MULTIPLE CHOICE ANSWERS:

Q.NO 1 2 3 4 5 6 7 8 9 10
Ans A A A C D D B A B A
B 11 12 13 14 15 16 17 18 19 20
Ans B D A A B A D C D C
B 21 22 23 24 25
Ans B C C C D

Concept notes:

1. Good faith: The doctrine of good faith requires that both parties to an insurance contract
must honestly disclose all relevant information. As applied to the insurance company, this
means honestly providing premium figures and coverage limitations. Applicants must
truthfully disclose all requested pertinent personal information
2. Insurance contract: An insurance contract is a document representing the agreement
between an insurance company and the insured. Central to any insurance contract is the
insuring agreement, which specifies the risks that are covered, the limits of the policy,
and the term of the policy.
3. Insured: a person whose interests are protected by an insurance policy; a person who
contracts for an insurance policy that indemnifies him against loss of property or life or
health etc
4. Insurer: The insurer is the insurance company that provides the insurance cover.
5. Financial risk: Financial risk is any of various types of risk associated with financing,
including financial transactions that include company loans in risk of default.
6. Principles of insurance
 Utmost Good Faith.
 Insurable Interest.
 Proximate Cause.
 Indemnity.
 Subrogation.
 Contribution.
 Loss Minimization
7. Functions of insurance
 Primary Functions of Insurance
 Secondary Functions of Insurance
 Other Functions of Insurance

8. A valued policy is an insurance policy in which the amount payable for a claim is agreed
upon when the policy is issued, and is not related to the actual value of a loss. With a
valued policy, the insurer pays a specified amount of money to or on behalf of the insured
upon the occurrence of a defined loss.

9. Insurance Australia Group Limited (IAG) and State Bank of India (SBI) announced that
they have signed a joint venture agreement to establish a general insurance company in
India, which is expected to commence trading in 2009.

10. The ECGC Limited (Formerly Export Credit Guarantee Corporation of India Ltd) is a
company wholly owned by the Government of India based in Mumbai, Maharashtra. It
provides export credit insurance support to Indian exporters and is controlled by the
Ministry of Commerce.

11. Oriental Insurance Company Ltd. is one of the public sector non-life insurance company
in India. The headquarters of the company is located in New Delhi with 30 regional
offices and more than 1800 active branches across the country.

12. Agriculture Insurance Company of India Limited a public sector insurance company that
offers yield-based and weather-based crop insurance programs in almost 500 districts of
India.
13. the Co-operative Societies Act, 1912. (2) It extends to 1 [the whole of India except 2 [the
territories which, immediately before the 1st November, 1956, were comprised in Part B
States]]. (g) “rules” means rules made under this Act.
14. A voyage policy is marine insurance coverage for risks to a ship's cargo during a specific
voyage. Unlike most insurance policies it is not time-based but expires when the ship
arrives at its destination. ... A voyage policy is also known as marine cargo insurance.

15. Marine insurance Time policy which is issued for a fixed period of time is known as time
policy. A marine insurance policy is valid for a specified time period generally valid for a
year. All the marine perils during that period are insured. This type of policy is suitable
for full insurance.

16. Named Policy: In this type of marine insurance coverage, ships are covered under its
name. The name of the ship is mentioned in the insurance document. Blanket Policy:
 Maximum protection amount is paid at the time of buying the policy. The amount is
adjusted after compensation is paid.

17. Engineering insurance refers to the insurance that provides economic safeguard to the
risks faced by the ongoing construction project, installation project, and machines and
equipment in project operation.

18. Insurance Australia Group Limited (IAG) and State Bank of India (SBI) announced that
they have signed a joint venture agreement to establish a general insurance company in
India, which is expected to commence trading in 2009.

19. An underwriter is any party that evaluates and assumes another party's risk for a fee. The
fee paid to an underwriter often takes the form of a commission, premium, spread, or
interest.
20. Marine insurance covers the loss or damage of ships, cargo, terminals, and any transport
by which the property is transferred, acquired, or held between the points of origin and
the final destination.
21. The Oriental Life Insurance Company was started by Europeans in Calcutta in 1818 to
cater to the growing numbers of British’s in India.
22. The general insurance council was formed in 1957. The General Insurance Council was
established under the Indian Insurance Act 1938. It designed a code of conduct to ensure
fair business practices.
23. The Export Credit Guarantee Corporation of India was established in 1957. ECGC Ltd.
(Formerly known as Export Credit Guarantee Corporation of India Ltd.) wholly owned
by Government of India, was set up in 1957 with the objective of promoting exports from
the country by providing credit risk insurance and related services for exports.
24. As per the General Insurance Business (Nationalization) Act, 1972, the General
Insurance Corporation of India (GIC) was founded in 1972 and has headquarters in
Mumbai. It was formed to control and operate the business of general insurance in India.
25. TPA stands for Third Party Administrator. It is an intermediary company between an
insured and insurer. It provides a supporting role to the insurer in terms of claim
settlement. This body obtains a license from IRDA in order to function in the insurance
industry. TPA is licensed by the IRDA. TPA shall obtain from the IRDA Authority a
license prior to commission of functions.

B. FILL IN THE BLANKS ANSWERS:

1. Loss
2. Risk
3. Premium
 4. Revive
5. Certain
6. Legal
7. Reinsurance
8. capacity
9. coinsurance
10. void
11. insured
12. contract
13. Export credit Guarantee corporation
14. Valued
15. Marine
16. The institute of insurance and risk management
17. Risk Management Advisory Committee
18. Risk Sharing
19. Operational Risk Management Committee
20. Reserved for unexpired risk

C. CONCEPT QUESTION ANSWERS:

1. General insurance: It is a contract that offers financial compensation on any loss other than
death. It insures everything apart from life. A general insurance compensates you for
financial loss due to liabilities related to your house, car, bike, health, travel, etc. The
insurance company promises to pay you a sum assured to cover damages to your vehicle,
medical treatments to cure health problems, losses due to theft or fire, or even financial
problems during travel.

2. List of various General Insurance companies in INDIA

1. Agriculture Insurance Co. of India Ltd.
2. Bajaj Allianz General Insurance Co. Ltd.
3. Bharti Axa General Insurance Co. Ltd.
4. Cholamandalam MS General Insurance Co. Ltd.
5. Manipal Cigna Health Insurance Co.Ltd.
6. Export Credit Guarantee Corporation of India Ltd.
7. Future Generali India Insurance Co. Ltd.
8. HDFC ERGO General Insurance Co. Ltd.
9. ICICI Lombard General Insurance Co. Ltd.
10. IFFCO Tokio General Insurance Co. Ltd.
11. L&T General Insurance Co. Ltd.
12. Liberty Videocon General Insurance Co. Ltd.
13. Magma HDI General Insurance Co. Ltd.
14. Max Bupa Health Insurance Co. Ltd.
15. National Insurance Co. Ltd.
16. The New India Assurance Co. Ltd.
17. The Oriental Insurance Co. Ltd.
18. Raheja QBE General Insurance Co. Ltd.
19. Reliance General Insurance Co. Ltd.
 20. Religare Health Insurance Co. Ltd.

3. List of various roles in insurance industry

1. Agents
2. Brokers
3. Actuaries
4. Corporate agents
5. Intermediaries
6. Third party administrators
7. Underwriters

4. Different types of insurance products:

There are two categories of general insurance products, one which falls under the Commercial
Lines offered to businesses/corporations and the second one is offered under Personal Lines,
designed specifically for the public.
Personal Lines
 Motor Insurance
 Fire / House owner / Householder Insurance
 Medical & Health Insurance
 Personal Accident Insurance
 Travel Insurance
Commercial Lines
 Liability Insurance
 Fire Business Interruption Insurance
 Goods in Transit Insurance
 Money Insurance
 Burglary / Theft Insurance
 Fidelity Guarantee Insurance
 Engineering Insurance
 Marine Insurance
 Aviation Insurance

5. Functions of insurer
The following are the various functions or operations performed by the insurance companies:
 Production
 Underwriting
 Rate making
 Managing losses and claims
 Investing
 Financing
 Accounting and record keeping

6. Personal accident insurance:

It aims at paying a fixed amount of compensation to person who met with an accident
leading to death or disablement in body due to accidental injury. During policy period, if
 policy holder gets injured solely and directly from accident then insurer pay then policy
amount to insured or to his legal nominee in case of death, permanent disablement, partial
disablement etc.

7. Engineering insurance:
Engineering Insurance is an insurance policy that covers a wide range of engineering related
risks. It is a comprehensive insurance that provides complete protection against risks
associated with erection, resting and working of any machinery, plant or equipment.

8. Marine insurance:
Marine Insurance is a type of insurance that covers cargo losses or damage caused to ships,
cargo vessels, terminals, and any transport in which goods are transferred or acquired
between different points of origin and their final destination.

9. Fire insurance:
Fire insurance is property insurance that covers damage and losses caused by fire. The
purchase of fire insurance in addition to homeowners or property insurance helps to cover
the cost of replacement, repair, or reconstruction of property, above the limit set by the
property insurance policy.

10. Objectives of IRDA:

 To promote the interests and rights of the policyholders.
 To promote and monitor the growth of the insurance industry.
 To prevent frauds and misselling of insurance product and ensure speedy settlement of
genuine claims
 To bring transparency and proper code of conduct in financial markets dealing with
insurance

11. Differences between life insurance and general insurance:

 12. Motor Insurance:
Motor insurance is an insurance policy that covers the policyholder in case of financial
losses – resulting from an accident or other damages – sustained by the insured vehicle. A
comprehensive motor insurance policy covers damages to third-party and third-party
property along with compensating for own losses as well.

13. Liability Insurance:

Liability insurance provides the insured party with protection against claims resulting from
injuries and damage to people and/or property. Liability insurance is a part of the general
insurance system of risk financing to protect the purchaser from the risks of liabilities
imposed by lawsuits and similar claims and protects the insured if the purchaser is sued for
claims that come within the coverage of the insurance policy.

14. Travel Insurance:

Travel insurance is a type of insurance that covers the costs and losses associated with
traveling. It is useful protection for those traveling domestically or abroad.

15. Property Insurance:

Property insurance provides protection against most risks to property, such as fire, theft and
some weather damage. This includes specialized forms of insurance such as fire insurance,
flood insurance, earthquake insurance, home insurance, or boiler insurance.

16. Crop Insurance:

Crop insurance is purchased by agricultural producers, and subsidized by the federal
government, to protect against either the loss of their crops due to natural disasters, such as
 hail, drought, and floods, or the loss of revenue due to declines in the prices of agricultural
commodities.

17.. Health Insurance:

Health insurance is an insurance product which covers medical and surgical expenses of an
insured individual. It reimburses the expenses incurred due to illness or injury or pays the
care provider of the insured individual directly.

18. Aviation insurance:

Aviation insurance is a policy that offers property and liability coverage for aircraft. It
covers losses resulting from aviation risks that come about due to the maintenance and use
of aircraft, property damage, loss of cargo, or injury to people. It protects both its owners
and aircraft operators from unforeseen losses. Aviation insurance is also known as aircraft
insurance.

19. . Disability insurance:

Disability insurance is insurance that pays disability benefit as a partial replacement of
income lost due to illness or injury. ... Long-term disability insurance provides coverage in
the form of monthly income payments for as long as the insured remains disabled.

20. Short note on GIC:

The general insurance industry in India was nationalised and a government company known
as General Insurance Corporation (GIC) was formed by Central Government in 1972.With
effect from January 1, 1973, the erstwhile 107 Indian and foreign insurers who were
operating in the country prior to nationalisation, were grouped into four operating
companies, namely, (a) National Insurance Company Limited; (b) New India Assurance
Company Limited; (c) Oriental Insurance Company Limited and (d) United Insurance
Company Limited. Except for aviation insurance of national airlines and crop insurance
which is handled by GIC, all the four subsidiaries operate all over the country competing
with one another in underwriting various classes of general insurance.

21. Re insurance:
Reinsurance is the practice whereby insurers transfer portions of their risk portfolios to other
parties by some form of agreement to reduce the likelihood of paying a large obligation
resulting from an insurance claim. The party that diversifies its insurance portfolio is known
as the ceding party.

22. Risk Financing:

Risk financing is a term used to describe the consumption of resources that occurs when a
company sustains financial losses in the course of conducting business. The financing has to do
with securing resources that can be used to offset the losses, allowing the company to manage
losses without negatively impacting the day to day operation of the business.

23. Insurance fraud:

Insurance fraud can be defined as a fraud which occurs when an individual or entity intentionally
lies or commits 3 fraudulent act to gain a benefit or compensation to which they are not
otherwise entitled. Insurance fraud can occur in any form, such as, a person filing a fake
insurance claim or overstating their losses, damages and injuries to obtain benefits which are
fraudulent during an insurance claim. It is also considered as insurance fraud if an insurance
company intentionally denies the claims which are genuinely due.
not
24.. Loss prevention: Loss Prevention reduces the frequency or likelihood of a particular loss.
Example includes:
 Improve security measures to reduce the possibility of arson or theft.
 Improve maintenance of facilities to reduce the possibility of a tripping hazard
25. Loss reduction: Loss Reduction reduces the severity or cost of a particular loss. Examples
includes

 Require the use of seatbelts to reduce the chance of bodily injury in a vehicle collision
 Requires the use of hearing protection to reduce the chance of hearing loss
 Reduce the cost of worker’s compensation claims through the use of return to work
programs.
 UNIT IV
POLICY DOCUMENTS AND ASSIGNMENT , NOMINATION AND
SURRENDER OF POLICY:
A. Choose the correct answers

Q.no 1 2 3 4 5 6 7 8 9 10
Ans
Q.no 11 12 13 14 15 16 17 18 19 20
Ans
Q.no 21 22 23 24 25
Ans

Multiple Choice Questions

1. A nomination can be made only in favor of ________________
A. spouse and children with guardian
B. spouse and minor children
C. parents, spouse and children
D. any individual
2. Select the expanded form of SA as commonly used in life insurance
A. Sum Assured
B. Surrender of Assurance
C. Supplementary Assurance
D. Stamp Act
3. The document which embodies the contract in insurance is called…………
A. security
B. policy
C. certificate
D. none of these
4. Which of the following form is designed to be used by many different insurers and has
exactly the same provisions?
A. Guaranteed Replacement Form
B. Standard insurance Form
C. Standard Endorsement Form
D. Standard Policy Form
5. The written insurance contract that may include all clauses, riders and endorsements. It is
called?
A. Installment
B. Premium
C. Policy
D. Assets
6. A coverage that protects businesses engaged in electronic commerce from losses caused
by hackers is termed as _______
A. Hospital Insurance B. Hospital Insurance C. Hacker Insurance D.
Identity theft Insurance
7. Changes in nomination can be made by making _________
A. endorsement B. Will C. Both (A) and (B) D. Application
8. A policy Document exhibits ________________
A. Definition of Risk
B. Duration of Risk
C. Premium and amount of Insurance
D. All the Above
9. In policy document, the purpose of the parties to the contract in specific and general
terms is explained under ________________.
A. preamble
B. Heading
C. provision
D. Schedule
10. Policy schedule is also referred as _____________
A. Schedule of insurer
B. schedule of insurance
C. Schedule of claim
D. None of the above
11. _______________ refers to the process of closing the policy of policy holder if their
outstanding loan and unpaid interest is equal to surrender value of policy.
A. Foreclosure
 B. Revival
C. Surrender
D. Assignment
12. The voluntary termination of a contract by a policy holder is referred
as_________________
A. assignment
B. Surrender
C. Revival
D. None of the above
13. Different types of assignment that are available are ____________
A. absolute assignment
B. Conditional Asssignemnt
C. Both (A) & (B)
D. voluntary assignment
14. A notice of nomination is required for _______________.
A. invalidation of nomination
B. modification in nomination
C. All successive nominations after first
D. All the above
15. The married Women’s Property Act is taken on life of _____________
A. Married Man
B. Married Women
C. Unmarried Man
D. Unmarried Women
16. Statement of doctors/hospital authorities, statement of medical attendant, statement of
witness of funeral are required in case of ____________.
A. maturity claim
B. Death claim
C. Revival of policy
D. None of the Above.
17. Every person is competent to contract,
 A. who is of the age of majority
B. who is of unsound mind
C. who is disqualified from contract
D. who is a minor
18. The date on which an insurance policy comes to an End s referred to as,
A. Date of Claim
B. surrender value
C. expiration Date
D. Premium payment date.
19. Which of the following factors are considered by customer while purchasing an insurance
policy?
A. Age
B. savings
C. policy Premium
D. All the above
20. An Individual who work as broker for few insurers and work as agent for other insurers is
known as,
A. Broker
B. Agent
C. Broker Agent
D. Insured.
21. As per the Insurance Act, every insurer has to prepare at the end of financial year
A. Balance Sheet
B. Profit and Loss Account
C. Revenue Account for each class of Insurance business
D. Accounts of receipts and payments in respect of shareholders’ funds
E. All of the above
22. . When the amount for which a subject matter is insured is more than its actual value, it is
called______
A. Cover note
B. Reinsurance
 C. Co-insurance
D. Double Insurance
23. ______ can transfer the rights, title and interest in the life insurance policy to the
assignee.
A. Assignee
B. assignor
C. insurance company
D. heirs of the policy holder
24. According to Insurance Act, ________ Section _______ transfer or assignment of a life
insurance policy can be done by endorsement or an instrument.
A. 1936; 36 (2)
B. 1938; 38 (1)
C. 1940; 40 (1)
D. 1942; 42 (a)
25. Nomination can be done …
A. at the time of proposal
B. at any time during the currency of the policy
C. (a) & (b) both
D. none of these
B. Fill in the Blanks

1) A nomination can be done by _______ or _______.

2) Nomination must be communicated to _________ and should be registered by
________.
3) Nomination can be cancelled or changed by the policy holder By____________
4) When a policy is assigned or transferred, the existing nomination is automatically
____.
5) When the policy is _______ to the life assured, he will have to make _______.
6) In case of a minor the policy holder should appoint _______.
7) The appointee must affix his signature to the endorsement either in _______ or on
the _______.
 8) In case of minor the appointee loses his status, when the nominee becomes
________.
9) After _______ the assignee is the owner of the policy.
10) _________ has no right to sue under policy but ________ has right to sue under
the policy.
11) Life insurance policy is a ________ of the policy holder.
12) ____________ is made by proposer to disclose information required for insurance
contract.
13) A document issued in advance before the issue of the policy is _________
14) _________ is the Additional period allowed by insurance company after specified
period of insurance to insurer for paying the premium.
15) ___________is a right of insured to nominate a person as a nominee to receive his
claim in case of event of death.
16) Transfer of all rights, titles and liabilities related to policy to another is known as
__________.
17) ______________ of life insurance policy means to bring back the lapsed policy
into effect.
18) ___________is issued in case of loss or misplace of original policy.
19) An assignment where in the assignor and assignee agrees to enter into a contact to
meet certain conditions is termed as _______________.
20) An assignee at the time of currency of the policy may reassign the interest related
to policy to the previous assignor is known as __________.

C. CONCEPT BASED QUESTIONS

1. Define assignment
2. Policy form
3. Nomination
4. Proposal form
5. Policy document
6. Surrender value
7. Conditional assignment
8. Absolute assignment
9. Foreclosure of insurance policies
10. Duplicate policies
11. Assignee
 12. Assignor
13. Associate
14. Collateral assignment
15. Cover note
16. Custodian
17. Defer Decision
18. warranties
19. Master policy
20. Grace period
21. Maturity claims
22. Money laundering
23. Net premium
24. Policy issuance
25. Surrender claims

KEY ANSWERS:

A. MULTIPLE CHOICE ANSWERS:

Q.NO 1 2 3 4 5 6 7 8 9 10
Ans D A B D C C C D A B
Q.NO 11 12 13 14 15 16 17 18 19 20
Ans A B C D A B A C D C
Q.NO 21 22 23 24 25
Ans E D B B C

CONCEPT NOTES FOR MCQ’s

1. A nominee holds the owner’s assets in trust after his/her death. If the deceased person
leaves a will, the proceeds are paid out as per its provisions.
Nomination is the process by which the policyholder appoints a person or persons to receive
policy benefits in case of a death claim. So in case of an eventuality, the life insurance
company pays the policy proceeds to the appointed person - called Nominee.
2. Sum assured is a pre-defined sum that the insurance company agrees to pay to you or
your nominee if the insured event happens or at the end of the insurance term. The sum
assured in insurance is determined at the time of policy purchase.
3. policy refers to the contract between an insurance provider and an individual. As per the
agreement, the policyholders pay a certain amount as the policy premium while the insurer
pays a specific amount to their family on untimely demise of life insured.
4. A standard policy is an insurance policy that covers standard risks or one that provides
mandated or government recommended coverage. In other words, standard policies are
insurance policies that provide coverage for general or normal risks within a particular field
of insurance.
5. policy refers to the contract between an insurance provider and an individual. As per the
agreement, the policyholders pay a certain amount as the policy premium while the insurer
pays a specific amount to their family on untimely demise of life insured.
6. Hacker insurer: Cyber insurance (also referred to as cyber risk or cyber liability
insurance) is a form of cover designed to protect your business from threats in the digital age,
such as data breaches or malicious cyber hacks on work computer systems.
7. Changes in nomination can be made by making endorsement and will.
8. A policy document exhibits definition, duration of risk and specify premium and amount
of insurance.
9. Preamble: In policy document, the purpose of the parties to the contract in specific and
general terms is explained.
10. It is the part of the insurance contract that identifies the policyholder and details the
property and persons covered the amount of coverage, the exclusions, the deductibles, and
the payment mode and schedule. policy schedule is also known as a schedule of insurance.

11. Foreclosure: Foreclosure is the legal process by which a lender attempts to recover the
amount owed on a defaulted loan by taking ownership of the mortgaged property and selling
it.
12. Surrender: it means terminating the policy before its maturity. So, if you surrender a
policy in the mid-term, you would get a sum (surrender value) of what has been allocated
towards savings and earnings. Besides, a surrender charge also gets deducted from this
amount, which varies from policy to policy.
13. There are two types of conventional insurance policy assignments:
  An absolute assignment is typically intended to transfer all your interests, rights and
ownership in the policy to an assignee. ...
 A collateral assignment is a more limited type of transfer.
14. A notice of nomination is required for all successive nominations after first .
15. The Section 6 of the MWP Act covers life insurance plans. Any married man can take a life
insurance policy under MWP Act. This includes divorced persons and widowers. The policy can
be taken only on one's own name, i.e., the life assured has to be the proposer himself.
16. A death claim is an official request made by the nominees of the life insurance policy. The
nominee asks for the payment of the Life cover amount in case of the insured's demise. The
beneficiaries use the death claim amount to ease the financial burden.
17. Every person is who the age of majority competent to contact .
18. on the expiration date on which an insurance policy comes to an end.
19. While purchasing an insurance policy the following factors are considered by customer
o Assess your insurance needs. ...
o Compare insurance policies. ...
o Choose a cover that you can afford. ...
o Evaluate the future of your insurance policy. ...
o Check the claim settlement history of the insurance company.
20. An insurance broker is a professional who acts as an intermediary between a consumer and
an insurance company, helping the former find a policy that best suits their needs. Insurance
brokers represent consumers, not insurance companies, and therefore they can't bind coverage on
behalf of the insurer.
21. As per the Insurance Act, every insurer has to prepare at the end of financial year Balance
Sheet, Profit and Loss Account, Revenue Account for each class of Insurance business, Accounts
of receipts and payments in respect of shareholders’ funds, all of the above.
22. Double Insurance:
Double insurance arises where the same party is insured with two or more insurers in
respect of the same interest on the same subject matter against the same risk and for the same
period of time. ... Same interest: The policies must also cover the same interest.
23. Assignor:
 An assignor is a person, company, or other entity who transfers rights that they hold to
another entity.
24. According to Insurance Act, 1938 Section 38(1) transfer or assignment of a life insurance
policy can be done by endorsement or an instrument.
25. Nomination can be done at the time of proposal & at any time during the currency of
the policy
B. FILL IN THE BLANKS ANSWERS:

1. Endorsement & separate piece of paper.

2. Insurer; insurer

3. Making another endorsement.

4. Cancelled.

5. Reassigned; A fresh nomination.

6. Appointee.

7. Assignment; nomination.

8. Major.

9. Assignment.

10. Nominee; Assignee

11. Asset.

12. Proposal form

13. Cover note

14. Grace period.

15. Nomination.

16. Assignment.

17. Revival
 18. Duplicate policy

19. Conditional Assignment.

20. Reassignment.

C. CONCEPT BASED QUESTIONS AND ANSWERS

1. Assignment
Assignment — a transfer of legal rights under, or interest in , an insurance policy
to another party. In most instances, the assignment of such rights can only be
effected with the written consent of the insurer.

2. Policy form
Policy form means the form on which the policy is delivered or issued for delivery
by the issuer. ... Policy form means the form on which the policy is delivered or
issued for delivery by the issuer.

3. Nomination
Nomination is the process by which the policyholder appoints a person or persons
to receive policy benefits in case of a death claim. So in case of an eventuality, the
life insurance company pays the policy proceeds to the appointed person - called
Nominee.

4. Proposal form
A proposal form is a legal document that seeks relevant information from you so
that the insurance company understands you well. A proposal form in insurance is
not just about giving out your details such as your name, age, gender and address.

5. Policy document
The policy document is a. formal document that is regarded as a legally binding
document and therefore its purpose, definitions and the responsibilities outlined
within its content must be upheld in order that it may. be used to support an
individual or the Trust during legal action.

6. Surrender value
Cash surrender value is the accumulated portion of a permanent life insurance
policy's cash value that is available to the policyholder upon surrender of the
policy. Depending on the age of the policy, the cash surrender value could be less
than the actual cash value.
7. Conditional assignment
Conditional Assignment means that the Transfer of Rights will happen from the
Assignor to the Assignee subject to certain terms and conditions. Once the
conditions are fulfilled, the policy automatically gets transferred back to the
original owner.

8. Absolute assignment
An absolute assignment is the act of complete transfer of the ownership (all rights,
benefits and liabilities) of the policy completely to other party without any terms
and condition.

9. Foreclosure of insurance policies

Foreclosure is an action of closing the policy due to default in payment of
outstanding loan and/or loan interest on due date.

10.Duplicate policy
A Duplicate Policy is defined as two or more policies where the Producer,
Location State Code, Location County Code and Commodity Code are the same. ...
If any combinations of duplicate or possible duplicate policies exist, no premium
or loss will be accepted for any of the policies.

11.Assignee
Assignee is the person to whom the title, rights and benefits under a life policy are
assigned.

12.Assignor:
An assignor is a person, company, or other entity who transfers rights that they
hold to another entity. The assignor transfers to the assignee.

13.Associate:
The Associate in Insurance Services, or AIS, is a professional designation in the
insurance industry. The designation stresses general knowledge about the industry,
its practices, and regulatory rules.

14.Collateral Assignment:
A collateral assignment of life insurance is a conditional assignment appointing a
lender as the primary beneficiary of a death benefit to use as collateral for a loan. If
the borrower is unable to pay, the lender can cash in the life insurance policy and
recover what is owed.
15.A cover note is a temporary certificate of insurance issued by the Insurer before
the issuance of a policy after the Insured has given a duly filled in proposal form
and has paid the premium in full.

16.Custodian
A custodian, also known as a custodian bank, refers to a financial institution that
holds the possession of customers' securities to reduce the possibility of theft or
loss.

17.Certificate of Insurance:
A certificate of insurance (COI) is a document from an insurer to show you have
business insurance. This is also called a certificate of liability insurance or proof of
insurance. With a COI, your clients can make sure you have the right insurance
before they start working with you.

18.Warranties:
Warranty in insurance is an agreement between the two parties (the insured and the
insurer) that must be carried out with full responsibility by the insured. A warranty
in an insurance policy is a promise by the insured party that statements affecting
the validity of the contract are true. Most insurance contracts require the insured to
make certain warranties.

19.Master policy:
Master policy is an insurance contract issued to a policyholder that combines what
would have been several separate policies into one. Instead of issuing a separate
policy for each location or operation, a master policy combines them all into one
policy.

20.Grace period: An insurance grace period is the specified time wherein the
policyholder is allowed to make payments towards the premium to avoid lapses in
the coverage. The provider can revise the grace period, depending on the type of
policy and the insurer.
The insurance grace period can vary from as low as 24 hours to as much as 30
days, depending on the policy the individual has subscribed to. The insurance
policy agreement states the grace period given and making the payments after the
due date can attract additional charges in the form of a penalty.

21.Maturity claims: An insurance grace period is the specified time wherein the
policyholder is allowed to make payments towards the premium to avoid lapses in
 the coverage. The provider can revise the grace period, depending on the type of
policy and the insurer
The insurance grace period can vary from as low as 24 hours to as much as 30
days, depending on the policy the individual has subscribed to. The insurance
policy agreement states the grace period given and making the payments after the
due date can attract additional charges in the form of a penalty.

22.Money laundering
Money laundering is the illegal process of making large amounts of money
generated by a criminal activity, such as drug trafficking or terrorist funding,
appear to have come from a legitimate source. The money from the criminal
activity is considered dirty, and the process "launders" it to make it look clean.

23.Net premium: Net premiums written is the sum of premiums written by an

insurance company over the course of a period of time, minus premiums ceded to
reinsurance companies, plus any reinsurance assumed.

24.Policy issuance:
Policy issuance is the process of creating an insurance policy and providing it to
the policyholder.
25.Surrender claims
It is the amount the policyholder will get from the life insurance company if he
decides to exit the policy before maturity.
As per a recent Insurance and Regulatory Development Authority (IRDA)
directive, life insurance companies have been asked not to levy surrender charges
if the policyholder chooses to terminate the cover after five years.
 UNIT V
POLICY CLAIMS
Choose the correct answers

Q.no 1 2 3 4 5 6 7 8 9 10
Ans
Q.no 11 12 13 14 15 16 17 18 19 20
Ans
Q.no 21 22 23 24 25
Ans

A. MULTIPLE CHOICE QUESTIONS

1. Different types of life insurance claims are _____________

A. Death claim B. maturity Claim C. survival Benefit
D. All of the Above
2. Insurer will pay the claim if death occurs due to exceptional reason like :
A. Defense personal B. Hunter C. both (A) & (B)
D. Accountant.
3. Claims made when Life assured dies in less than 3 years from commencement of policy are
______________
A. Non early claims B. Early claims C. maturity claims D. Survival claims
4. Unnatural causes of death includes
A. suicide B. Accident C. Both (A)& (B) D. Old age
5. An interest at __________ over bank rate is paid to claimant in case of any delay in claim
settlement because of insurer.
A. 2% B. 5% C. 10% D. 8%
6. In _____________-, claim for full sum assured will be paid under a reduced paid up policy.
A. claim concession B. Extended claim concession C. strategic claim concession
D. provisional claim concession.
7. A person insured his goods worth Rs. 2000 for Rs. 1600 and suffers a loss of Rs. 1800. His
claim can be for__________.
A. Rs. 2000. B. Rs. 1800. C. Rs. 1600. D. Rs. 3800.
8. The IRDA has replaced ___________.
A. The controller of insurance. B. The LIC chairman. C. Department of insurance.
D. Department of commerce.
9. Which of the following is a children policy of LIC?.
A. Jeevan Sneha. B. Jeevan Vishwas. C. Jeevan Dhara.
D. Jeevan Sukanya.
10. Claim is processed on the basis of ___________.
A. Claim form and agents opinion. B. Legal opinion.
C. Claim form, survey report etc., other documents and any evidence secured by the insurer.
D. Survey report.
11. The concept of bancassurance originated in ___________.
A. France. B. U.S.A. C. England. D. Italy.
12. The proportion of the risk which the direct insurer holds on his own account refers to
___________.
A. Line. B. Retention C. Retrocession D. Ceding insurer
13. Credit Insurance Covers
A. Coverage against bad debts B. Coverage against fire loss
C. Coverage against Marine loss D. Coverage against burglary
14. Claim forms are not compulsorily used in ________.
A. Fidelity guarantees. B. Marine cargo. C. Machinery breakdown.
D. Others.
15. For settlement of claims, Insurer requires proper knowledge of ___________.
A. Law, principles and practice of insurance. B. Law only. C. Principles and
practice of insurance. D. Law, principles, practice of insurance, terms and
conditions of policies, extensions and modifications.
16. As the age increases risk on the life _______.
A. Increases. B. Decreases. C. does not change. D. Moderate.
17. What is meant by a claim under an insurance policy?.
A. Any demand made by the policyholder on the insurer.
B. A demand to fulfill the policyholder’s obligation.
C. A demand to fulfill the insurers obligations.
 D. A demand to fulfill the third party.
18. If a life insured has died a few days before the date of maturity, but after signing discharge
from, to whom should the claim be paid?
A. Surviving heirs. B. Nominee. C. The policy holders bank account.
D. Any of the above three above mentioned.
19. In life insurance, profit is determined by____________.
A. The accountant who prepares the balance sheet. B. The actuary who makes a
valuation. C. The auditor who certifies the annual accounts. D. The third party.
20. Which of the following statements in respect of riders is incorrect?
A. Rider means the basic death cover of a life insurance policy
B. A rider is a provision typically added through an endorsement
C. Riders refer to supplementary benefits in life insurance policies
D. Riders help customize individual's preferences
21. Which of the following are true with regards to MWP Act cases?
I: Death claims are settled in favour of nominees.
II: Death claims are settled in favour of trustees.
A. I is true B. II is true C. Both I and II are true D. Neither I nor II is true
22. As per Section 45 of Insurance Act, 1938, an insurance company can reject a claim after 2
years from issuance of policy if the material facts in the proposal are _________ made.
A. Innocently B. Falsely C. Frantically D. Fraudulently
23. What is the set time limit for completing a claim investigation?
A.1 month B.6 months C.1 year D.2 years
24. If there is any delay in settlement of claim within 30 days, other than an early claim, the
insurer has to pay _________ rate of interest.
A. Savings bank account B. Bank interest + 2% C.5.00% D. 10%
25. ________ may deal with more than one life insurance Company or general insurance
company or both.
A. An agent B. A surveyor C. A composite agent D. None of the three
 B. FILL IN THE BLANKS
1. _______________Is an agreement entered into by a company with a financial agency, in
order to ensure that the public will subscribe for the entire issue of share or debentures made
by the company.
2. The financial agency which enters for understanding of the shares is called _________.
3. ______ underwriting is one in which two or more agencies or an underwriter jointly
underwrites an issue of securities.
4. An insurance ____________is a formal request to an insurance company for coverage or
compensation for required loss or policy event.
5. _____________is the money that is earmarked for the eventual claim payment.
6. _____________refers to the demand made by an insured or beneficiary to the insurer to
make payment of insurance policy benefits.
7. The insurance claims are divided into ____________types.
8. The process of identifying and classification of the risk involved in the insurance policies is
termed as_____________.
9. If an insured dies before expiry of term of policy then the results in _______________.
10. If person is not heard for 7 years and found missing then court issue decree of ___________.
11. Under IRDA regulations, insurer must take decision within _____________of receiving
claim papers whether to accept or reject a death claim.
12. A considerable amount is taken by the insurance company to bear the risk of insured which is
known ass ________.
13. A guaranteed annual payment by insurance company to insurer up to his life time or for a
particular period is known as _____________.
14. Bancassurance as a term first appeared in France in the______________
15. __________________is a document issued by a carrier to acknowledge receipt of cargo for
shipment.
16. ______________are the extra benefits that a policyholder can buy to add on to a life
insurance policy.
17. ____________ is a document that includes the employee's “declaration that you have been
offered a plan, however, have chosen to refuse” the coverage offered.
18. Death claims are settled in the favour of ____________not in the favour of _____
19. ________________professionals hired by insurance companies to assess the actual loss
arising on the occurrence of fortuitous events such as fire, burglary and so on for settlement
of claims. 
20. _________________partial loss (i.e., any loss other than a total loss). It is due to an insured
peril and is not a general average loss.

C. CONCEPT BASED QUESTIONS

1. What is claim settlement?
2. Define underwriting.
3. What is financial planning?
4. List the types of life insurance claims.
5. Write about death claim.
6. What is insurance claim?
7. What is claim management?
8. What is insurance claim fraud?
9. What is insurance reserve?
10. What is insurance accounting?
11. Presumption of death
12. Rider benefit
13. Bill lading
14. Partial average loss.
15. What is policy claim,
16. Survival benefit.
17. Maturity claim.
18. Early claim.
19. Non – early claim.
20. Insurance waiver.
21. Claim concession.
22. Capital market
23. Accidental death benefit rider
 24. Permanent death benefit Rider.
25. Surveyors & Loss Assessors

KEY ANSWERS:

A. MULTIPLE CHOICE ANSWERS:

Q.NO 1 2 3 4 5 6 7 8 9 10
Ans D C B C A B C A D C
Q.NO 11 12 13 14 15 16 17 18 19 20
Ans A B A B D A C B B A
Q.NO 21 22 23 24 25
Ans B D B B C

CONCEPT NOTES FOR MCQ’s

1. Claims in Life Insurance are of 3 types:
 Maturity Claim
 Death Claim
 Survival benefit
2. Insurer will pay the claim if death occurs due to exceptional reason like defense personnel,
hunter.
3. Early claims' are defined as life claims that come within 2-3 years of policy issuance. If the
insured person dies within three years of the term plan period, it is called an early death.
While claims in themselves impact the insurer's overall profitability, carriers are usually
prepared for them
4. Unnatural death includes unintentional injuries (accidental poisoning and other accidents)
and intentional injuries (suicide and homicide). Other accidents: all accidents other than
poisoning combined, e.g. traffic accidents, accidental falls, accidental drowning, burns.
5. If there is any delay in settlement of claim within 30 days, other than an early claim, the
insurer has to pay Bank interest + 2% rate of interest.
6. Companies provide certain concessions with regard to the claim payment, if the policy has
run for 3 yrs or more:
1. If the premiums under a policy have been paid for a minimum period of three full
years, and the life assured has died within 6 months from the date of the first unpaid
premium insurer pays the full sum assured instead of the paid up value and only the
unpaid premiums for the policy year are deducted from the claim amount.
2. This concession is extended to a period of twelve months and the full sum assured
is paid if the life assured dies within one year from the due date of the first unpaid
premium, provided the premiums have been paid for a minimum period of 5 years
subject to deduction of the unpaid premiums for the policy year.
7. An insurance claim is a formal request to your insurance provider for reimbursement
against losses covered under your insurance policy. ... The purpose is to notify the insurer
that the event for which you have opted for an insurance has occurred and the insurer
should pay the claim amount.
8. Controller of insurance: Insurance Regulatory and Development Authority of India
(IRDAI), is a statutory body formed under an Act of Parliament, i.e., Insurance Regulatory
and Development Authority Act, 1999 (IRDAI Act 1999) for overall supervision and
development of the Insurance sector in India.
9. Jeevan sukanya: LIC Jeevan Sukanya plan is specially designed and it is exclusively for
female children aged between 1 to 12 years.
LIC Jeevan Sukanya plan is a limited premium payment plan which provides risk
cover after deferment period (Period between date of commencement of policy and
first installment) on the life of female child and when she gets married, policy extends
the risk cover to the life of her husband also, provided premiums have been paid fully
for the premium paying term.
10. Claim is processed on the basis of Claim form, survey report etc., other documents and any
evidence secured by the insurer.
11. Bancassurance as a term first appeared in France in the 1980s. At first, many countries
believed that the practice of bancassurance would give banks too much control over the
financial products in the market.
12. The proportion of the risk which the direct insurer holds on his own account refers to
Retention.
13. Credit insurance: Transferring risk away from the business and over to an insurer, credit
insurance protects the policyholder in the event of a customer becoming insolvent or failing
to pay its trade credit debts. Not only this, but insurers can actually help to reduce the risk
of financial loss through credit management support.
14. Marine Cargo insurance is a type of insurance policy that covers the loss or damages
caused to marine cargo during the transit. The protection is offered to the cargo owner
along with the cover to the cargo for any loss or damage caused due to delay in the voyage,
ship accident or unloading.
15. For settlement of claims, Insurer requires proper knowledge of Law, principles, practice of
insurance, terms and conditions of policies, extensions and modifications.
16. Age increases risk on the life increases.
17. An insurance claim is a formal request to your insurance provider for reimbursement
against losses covered under your insurance policy. ... The purpose is to notify the insurer
that the event for which you have opted for an insurance has occurred and the insurer
should pay the claim amount.
18. Nominee is a person who is nominated or appointed by the policyholder to look after
his/her financial accounts, assets, etc., after his death. ... A beneficiary is an individualwho
has a financial interest in the life of the policyholder
19. Actuary is a professional who specialises in the field of analysing financial risks by
implementing statistical, financial and mathematical theories. In insurance, actuaries aid in
assessing risks which help companies in the estimation of premiums for their policies.
20. An insurance rider is an adjustment or an add-on to a basic insurance policy. Riders are
designed to provide additional benefit over the stated coverage in the basic policy. A rider
is useful for tailoring an insurance policy to the precise needs of the insured entity.
21. Death claims are settled in the favour of trustees, not in the favour of nominees
22. As per Section 45 of Insurance Act, 1938, an insurance company can reject a claim after 2
years from issuance of policy if the material facts in the proposal are fraudulently made.
23. The set time limit for completing a claim investigation is 6 months.
24. If there is any delay in settlement of claim within 30 days, other than an early claim, the
insurer has to pay Bank interest + 2% rate of interest.
25. A composite insurance agent means an individual who is appointed as an insurance agent
by two or more insurers, subject to the condition that he/she shall not act as insurance agent
for more than one life insurer, one general insurer, one health insurer and one of each of the
mono-line insurers.

B. FILL IN THE BLANKS ANSWERS

1. Underwriting
2. Underwriter
3. Syndicate
4. Claim
5. Claim reserve
6. Claim
7. Three
8. Underwriting
9. Death claim
10. Presumption of death
11. 30 days
12. Premium
13. Annuity
14. 1980
15. Bill of lading
16. Riders
 17. Insurance waiver
18. Trustees ; nominees
19. Surveyors & loss assessors
20. Partial average loss

C. CONCEPT BASED QUESTION ANSWERS

1. Life insurance claim settlement is a process where the claimant/beneficiary can make a
request to the policyholder's insurance company to avail the death benefits under the life
insurance of the insured in case of the policyholder's death.
2. Underwriting is the process insurers use to determine the risks of insuring your small
business. It involves the insurance company determining whether your firm poses an
acceptable risk and, if it does, calculating a fair price for your coverage.
3. Financial planning is a step-by-step approach to meet one's life goals. A financial plan acts
as a guide as you go through life's journey. Essentially, it helps you be in control of your
income, expenses and investments such that you can manage your money and achieve your
goals.
4. Claims in Life Insurance are of 3 types:
 Maturity Claim
 Death Claim
 Survival benefit

5. A death claim is an official request made by the nominees of the life insurance policy. The
nominee asks for the payment of the Life cover amount in case of the insured's demise. The
beneficiaries use the death claim amount to ease the financial burden.
6. An insurance claim is a formal request to your insurance provider for reimbursement
against losses covered under your insurance policy. ... The purpose is to notify the insurer
that the event for which you have opted for an insurance has occurred and the insurer should
pay the claim amount.
7. Claim management is a collective term for the myriad of advice and services provided by
firms in respect of claims for compensation, reparation, restitution or any other remedy for
financial loss or breach of contractual obligation.
8. Insurance fraud is an attempt to exploit an insurance contract. ... Although insurance fraud
by the policy issuer does occur, the majority of cases have to do with the policyholder
attempting to receive more money by exaggerating a claim.
9. Insurance Reserve is the amount of money that an insurance company has to set aside to
pay future obligations to the policyholders. The regulatory body of the government often
checks on the reserve to ensure that policyholders will actually be covered according to the
risks that they have insured.
10. Insurance accounting: The accounting process followed by insurance companies for
maintain their accounts of clients and claims is referred as insurance accounting. General
insurance companies maintain accounting books as per the guidelines given by Insurance
Regulatory and Development Authority. (IRDA).
11. A presumption of death: "If a person has not been heard of for 7 years, there is a
presumption of law that he is dead; but at what time within that period he died is not a matter
of presumption but of evidence and the onus of proving that the death took place at any
particular time within the 7 years lies upon the person who claims a right to the establishment
of which that fact is essential."
12. Riders Benefits: are the extra benefits that a policyholder can buy to add on to a life
insurance policy. The most common include guaranteed insurability, accidental death, waiver
of premium, family income benefit, accelerated death benefit, child term, long-term care, and
return of premium riders.
13. A bill of lading is a document issued by a carrier to acknowledge receipt of cargo for
shipment. Although the term historically related only to carriage by sea, a bill of lading may
today be used for any type of carriage of goods.
14. Particular average loss
According to the Marine Insurance Act, 1906, the particular average loss is a partial
loss (i.e., any loss other than a total loss). It is due to an insured peril and is not a
general average loss.
15. Policy claim: An insurance claim is a formal request by a policyholder to an insurance
company for coverage or compensation for a covered loss or policy event. The insurance
company validates the claim and, once approved, issues payment to the insured or an
approved interested party on behalf of the insured.
16. Survival benefit is the amount a policyholder receives at the end of a policy term. In case,
you survive till the end of your policy and the policy is active, it will take care of your
financial needs by offering survival benefits.
17. Maturity Claim is associated with the Maturity Benefit of the Policy i.e. the claim which
arises when the policy matures. It simply means that when the policy completes its tenure, a
certain amount of money called Maturity Claim amount is settled towards the life assured.
18. Early claims' are defined as life claims that come within 2-3 years of policy issuance. If the
insured person dies within three years of the term plan period, it is called an early death.
While claims in themselves impact the insurer's overall profitability, carriers are usually
prepared for them
19. Non early claims: If the death has taken after 2 years, it is called a non-early death claim.
20. An insurance waiver is a document that includes the employee's “declaration that you have
been offered a plan, however, have chosen to refuse” the coverage offered and why. ... Learn
why employees would waive coverage, what's included in a health insurance waiver form,
and the consequences of opting out.
21. Claim concession: Companies provide certain concessions with regard to the claim payment,
if the policy has run for 3 yrs or more:
1. If the premiums under a policy have been paid for a minimum period of three full
years, and the life assured has died within 6 months from the date of the first unpaid
premium insurer pays the full sum assured instead of the paid up value and only the
unpaid premiums for the policy year are deducted from the claim amount.
2. This concession is extended to a period of twelve months and the full sum assured
is paid if the life assured dies within one year from the due date of the first unpaid
premium, provided the premiums have been paid for a minimum period of 5 years
subject to deduction of the unpaid premiums for the policy year.
22. A capital market is a financial market in which long-term debt or equity-backed securities
are bought and sold, in contrast to a money market where short-term debt is bought and sold
23. The term accidental death benefit refers to a payment due to the beneficiary of an
accidental death insurance policy, which is often a clause or rider connected to a life
insurance policy. The accidental death benefit is usually paid in addition to the standard
benefit payable if the insured died of natural causes.
24. Permanent rider benefits: Living and death benefit riders are optional add-ons to an annuity
contract that you may buy for an extra fee. A living benefit rider guarantees a payout while
the annuitant is still alive. A death benefit rider protects beneficiaries against a decline in the
annuity's value.
25. Surveyors and Loss Assessors are service providers to a general insurance company,
usually at the time of a fire or motor insurance claim. They carry out claim surveys and
estimate the quantum of loss.