LIC pre-exam question

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Both the parties t6 'a contract must agree and understand the same thing and in the same sense which is called
c. Consensus ad idem
1. a. Consideration
b. Legality of object.
d. Acceptance
According to Insurance broker association of India, what is the most appropriate relationship between insurer
2. and broker
a. Insurance broker represents the client and
c. Insurer represent both client and broker
insurer, remunerate the broker
remuneration
b. The client represents broker and insurer
d. Broker only .service the client
remunerate broker
Reasons for surrender of the policy
3. a. SA
b. advisor induced

c. no commission
d. Has Financial Problems

Which section deals with the licencing of an agent?

c. Licence section of Insurance Act 1938
4. a. Section 42 of insurance Act 1938
b. Section 42of insurance Act l936
d. Licence section of Insurance agent act 1938
During fact finding the need revealed requirement for margin money and retirement fund. Which of these
5. assumes higher priority will be determined on the basis of
a. Margin money
c. Tenure left for retirement and corpus needed
b. Retirementfund
d. Quantum of investment
In which of the recognised life stages an indivlducl does not required any protection cover
c. Pre retirement
6. a. Childhood
b. Young married
d. Retirement
A customer while investing in a recurring deposit or cumulative deposit what are the key factors which will
7. matter
a. Taxation
c. Interest rates
b. Frequency of payment
d. Tenures
Prashant buys an endowment plan with a SA Rs. I lac an to make use of tax benefit under the policy for whole S.
8. much premium would help him avail this benefita. Less than Rs. 10,000
c. Less than Rs. 20,000
b. More than Rs. 10,000
d. More than Rs. 20,000
In a fact find, a couple discovered their need to be estate planning? In what life stage will they be in?
c. Married with older children
9. a. Married
b. Married with children
d. Retirement

.Jay buys a policy on the life of Nazia. Who is Jay?

c. Proposer
10. a. Life Assured
b. Nominee
d. Appointee
Insurance benefits
11. a. Individuals
b. The country

c. The society
d. All the three

Breach of duty of utmost good faith

12. a. Nondisclosure of material facts
b. concealment of material facts

c. Fraudulent presentation
d. All above

After maturity in a ULIP customer does not get maturity amoUntk. lump sum. What is the possibility of
13. receiving it in instalments ifI is not annuity plan?
a. He has switched his fund
c. He hasredirected his past premium
b. He has opted for settlement option
d. Policy was lapsed at the time of maturity
Insurable interest on one's own life limited upto
14. a. 20 times of Gross Annual income
b. Liabilities

c. Assets
d. Unlimited

a Policy holder takes a insurance contract for 30 years and the SA reduces after 25 years what could be the
15. likely reason
a. No bonus accumulated
c. Policy has become paid up
b. Age proof was substantially wrong
d. Its a ULIP Plan
A person retiring within 3 months need return as pension. What kind of investment plan he need to choose.
c. Anticipated Endowment
16. a. Immediate Annuity
b. Deferred Annuity
d. ULIP
The amount payable under a life Insurance policy depends on
17. a. The income pf the insured person at the time of c. The amount of the sum assured
the claim
b. The income of the insured person When he took d. None of the above
the insured
Payment/investments in Kisan Vikas Patra under post office scheme is done
c. Lump sum for fixed period of time
18. a. Regularly with no fixed term
b. Lump sum with no fixed term
d. Regularly for fixed period of time
Two endowment policies A and B are issued in the same time on the quarterly mode. In both the policies 22
19. quarterly installments are paid. Both are surrendered immediately after paying 22nd installment. But in policy
A surrender value is significantly hig
a. Term of A policy is higher than B policy
c. Policy A is assigned and B is not assigned
b. Term of B policy is higher than A policy
d. Policy B is assigned and A is not assigned

An advisor while explaining the policy and to sell he accepts to give a part of his Agents commission, what is
20. the limits
a. 0.1
c. He cannot offer any commission
b. 0.2
d. He can offer up to 50%
Advisor motivate the client to surrender the existing Endowment plan and buy new Whole life policy for
21. gaining higher commission, is the example of?
a. switching
c. Revisit the financial planning
b. Building long term relations
d. Churning
Insurance is helps to
22. a. Reduce the consequence of adverse situations
b. Guarantee that assets are always procutive

c. Ensure that assets never breakdown

d. Do all of the above

An insurer, as a trustee, has to ensure that

23. a. The life fund is safe
b. The life fund earns the maximum interest

c. Both of the above

d. Neither of the above

Benefit illustrations given to a customer quantifies an amount by which investment return is reduced. This
24. reduction reflect the impact of
a. Charges
c. Inflation
b. Interest
d. Taxation
What period of time a client has to be invested to get tax benefit under postal scheme?
c. 6 years
25. a. 10 Years
b. 8 years
d. 5 years
What is the period of award passed to the customer decided by ombudsman?
c. 5 months
26. a. 2months
b. 3 months
d. 6 months
A human being
27. a. Is an economic assest
b. Is an income earning assets

c. Is a perishable asset
d. All the above

The rates of assumed annual growth to be shared in the benefit illustration has been decided by which of the
28. authority
a. IRDA
c. The Royal Bank
b. Life insurance council
d. SEBI
Responsibility for classification and analysis of proposal form Iii with whom?
c. Underwriter
29. a. Risk analysis department
b. Classification of risk deptt.
d. Actuary who analysis the risk

Life insurance is better than other avenues of saving in respect of

c. Trancsferability
30. a. Marketibility
b. Liquidity
d. All the three above
Aman has taken a term plan for 20 years In the 3rd year he suffered financial crisia due to....whibh he' was'.
31. unable to pay premium within grace period . and died after I month. The nominee files a claim and is rejected
because
a. Policy was not in force
c. The claim is fraudulent
b. This condition was excluded in policy
d. The claim ian early claim
Law of large number helps Insurer to analyse which key area
c. to remove adverse selection
32. a. Administrative expenses
b. in fixing the correct premium
d. Non of the above
Mr. Feroz has taken a policy for critical illness worti. Rs. 1Ia health,policy. He.also has a term plan worth Rs
33. 10 lac.Mr.. Fe was hospitalised after, hewas detected wthcancer. He died afl .3 daysf treatment. How the claim
will be settled?
a. Claim of critical illness and 10 lac from term
c. Claim will not be settled as he died due to
policy will settled
cancer
b. Claimof hospital charges Rs 20,000 and I lac for d. Claim will not be settled as per instruction of
death V be settled
underwriter
What is the minimum age of the customer for entering the Insurance contract?
c. 18 years
34. a. 16 years
b. 17 years
d. 21 years
Client died in 89th day from DOC. In which category he is not eligible for claim
c. Accident
35. a. Murder
b. Deep Illness
d. Suicide
To avail the income tax benefit at investment stage,V
c. 30% of sumassured
36. a. 10% of Cumassured
b. 20% of sum assured
d. 40% of sum assured
During claim insurer deduct Rs. 10,000 in spite of having no Lien and all due premiums are paid. What are the
37. other reason for deducting the same?
a. Premium Rate increase
c. Mode of Payment
b. Loan facility
d. Loading
Relation between insurer and Broker means
38. a. Client represents the broker and the insurer
remunerate the broker
b. Insurer represent both client and broker
remuneration

c.

Broker represent the client and insurer

remunerate the broker
d. Brokerserve the client

In case the customer has stopped making payment for U premium of the policy what are two most important
39. thing requiri in order to reinstate the policy
a. Reinstatement fee and proof of good health
c. Only health certificate
b. Premium cheque and health declaration
d. Premium cheque with arrear
In term Insurance how peril & Hazard are distinguished?
40. a. Perils are risk that policyholders will die before c. Penis are factors which affects the risk being
in specified date and hazards are factors which
insured and hazards are the size of the risk being
could influence that risk
insured
b. Perils are medical factors which influence the d. Peril are factors which could influence an
risk of dying and hazard are lifestyle activities
insured event occuring and hazard are the actual
which influence the risk of dying
events which will triger a payout
Ramesh wants to buy 15 years pension plan for retirement while calculating gaps required at the end the
41. gratuity amount was completely ignored because he is
a. self employed
c. Savings are significantly higher
b. Widower
d. Govt employee
What ever riding criteria an insurance, agent consider whil proposing a solution
c. Flexibility
42. a. Risk
b. Suitability
d. Cost
Life insurance is better than other avenues of saving in respect of
c. userfulness in emergency
43. a. Appricaition
b. Tax benefits
d. All the above
If insured gets two advance payment in 5 yrs and in mat gets rest of sum assured what type of policy it is
c. Term plan
44. a. Money back policy
b. Corivertible plai
d. Endowmentpol
Mr. Santash is head master and is 52 yrs old. He wants insuran cover for Rs. I crore. He proposes his brother's
45. son as nomin not his wife underwriter will verify
a. A physical hazard, as he is old
c. Moral hazard as coverage is high and brother's
son nomwiee
b. Moral hazard as he is 52 yrs and wife is not
d. Moral hazard as he is head master and 52 yrs
nominee
oldj
While calculating HLV with future income, number of years work, increments in salary what is also to be taken
46. in to accouni
a. Inflation
c. Discount rate
b. Interest
d. Compounding
E-Sales lefers to sales of insurance product through
c. Individual agent
47. a. Insurance broker
b. Bancassurance
d. Internet

What will be maturity benefit under health insurance plan

c. Paid premium with interest
48. a. Fund value
b. Paid premium
d. No maturity benefit
The best way to prove that customer of a ULIP policy is given awareness about the commission paid to the
49. agent is
a. Ask the insurer to give a policy endorsement
c. From signed copy of benefit illustration
letter
b. From the fact details
d. From ticked columns of proposal form
An agent is intermediary between
50. a. Client and insurance company
b. Insurance Company & IRDA

c. Client and IRDA

d. Insurance and Reinsurance Company

------------------------------------------------------------------------------------------------------What facility do insurers use to cover risks beyond their exposure limits
c. Both a & b
1. a. Bancassurance
b. Reinsurance
d. Neither a nor b
Which market areas do Micro Insurance product concentrate
c. people employed with the government
2. a. People with large families
b. people with low income
d. people with high income
What is IRDA stands for & year of Incorporation
c.
3. a. Insurance Regulatory and Development
Authority (IRDA) . The IRDA was incorporated
as an autonomousbody in April 1999
b. Insurance Regulatory and Development
d.
Authority (IRDA) was constituted in 1956

IRDA is an independent body constituted to

address the grievances of the insurance policy
holder
None of the above

The amount of insurance depends on

4. a. The penil
b. The risk

c. Neither the penil nor the risk

d. Both the penil and the risk

A human being's value is measured by

5. a. The income that he generates
b. The value of the goods that he produces

c. His academic qualification

d. All of the above

The bussiness of insurance affects

6. a. Availability of capital for bussiness
b. The life span of individuals

c. The safety of equipments in factories

d. All these three

An agent is intermediary between

7. a. Client and insurance company
b. Insurance Company & IRDA

c. Client and IRDA

d. Insurance and Reinsurance Company

Which statement is correct?

8. a. lung cancer is peril and smoking is a hazard
b. smoking is peril and lung cancer is hazard

c. Both the statement is correct

d. Both the statement is incorrect

Ramkumar is habitual car racer. What kind of hazard is this?

c. Moral hazard
9. a. Physical hazard
b. Fraudulent representations
d. Peril
Which of following refers to specific event which might cause a loss
c. Physical hazard
10. a. Peril
b. Hazard
d. Uncertainty
Which risk is associated with those events which are not in control of an individual .and no possibility of
11. making profit
a. Pure risk
c. Financial risk
b. Particular-risk
d. Insurable risk
Insurance Contract without any Insurable Interest will result?
c. Void Contract
12. a. Wagering Contract
b. Legal Contract
d. All of the above
To be a valid contract ,the declaration is necessary in which document
c. FPR
13. a. Policy Document
b. proposal form
d. RPR
Changes in policy can be made by
14. a. Issuing a new policy
b. Endorsement

c. Corrections on the policy

d. Not allowed

In which kind of policy the insurable interest should exist at the time of claim only
c. Liability insurance
15. a. Motor insurance
b. Marine insurance
d. Travel insurance
What are the factors involved in calculating surrender value
c. Sum assured
16. a. Number of year's premium paid
b. Number of premium payable
d. All of above
Policies as he was regularly paying the premium. What is your suggestion?
17. a. Due to regular premium he can take loan from c. No loan from money back but can take loan
both the policies
from whole life
b. He can surrender whole life and take loan.from d. He can't take loan from whole life policy but
money back policy
can avail loan from money back policy

Ramlal is an insurance policyholder. He has recently shifted his home from New Delhi to Noida. He wants the
18. address to be changed. This change in policy document will be effective through?
a. Terms & condition
c. Endorsement
b. Preamble
d. Schedule
ii Moral hazard reflects the
19. a. Intentions and attitude of proposer
b. Habits and Hobbies of proposer,

c. Occupation and residence of proposer

d. Medical and personal history of proposer

Mr. Gupta is recently detected with lung cancer. He would like take an insurance. Wht is your suggestion?
20. a. Time of death is uncertain, so insurance can be c. He can take insurance after submitting health
given
certificate
b. only lung is affected so health insurance can be d. Cannot be given insurance for health reason
given
Ajay is 35 years old and works for a multinational corporation (MNC). He has a ten-year-old son, Vijay, whom
21. he dreams will one day become a doctor. Ajays spouse is a housewife, and his parents are retired and
dependent on him. Ajay has a home loan of 40
a. term plan
c. endowment plan
b. health plan
d. traditional plan
Open market option under annuity policy would extend which of the following benefit
c. increase in return
22. a. Ensure better annuity rate
b. Increase in range
d. Switch of funds
Alumpsum withdrawal allowed as commutation in pension plan is
c. 1/2 of accumulated fund
23. a. 1/3 of accumulated fund
b. 114 of accumulated fund
d. Full withdrawal is allowed
If a person chooses Cumulative deposit than Recurring deposit ,difference will be in
c. Interest tax
24. a. frequency of interest calculation
b. Tax
d. Tenure
Rahul switch from direct holding of shares to equity based mutual funds. The impact on risk would be
c. Less return
25. a. Less transparent
b. More diversified
d. Steep rise
What is similarity between recurring deposits and cumulati deposit in a bank
c. Tenure
26. a. Guarantee
b. Taxation
d. Lock in periods
In cumulative bank deposit the interest unit is normally compound on what basis
c. Half yearly
27. a. Monthly
b. Quarterly
d. Annually

What frequencies can one take in annuity

28. a. monthly,quarterly,half yearly, yearly
b. fortnightly,quarterly,monthly,yearly

c. fortnightly, monthly ,half yearly, yearly

d. None of the above

What are the Special features of Health plan?

29. a. Covers disease expenses
b. Helps in Tax Benefits

c. covers hospitalization cost

d. All of the above

How riders will help the customer in life insurance

c. Operative clause
30. a. Allow policy holders to customise their
insuranceCoVerW addl. benefit
b. Rider is like aclause
d. Rider is like preamble
The sole focus during a clients fact-find session was healthcare requirements and estate planning. Which main
31. life stage is he most likely to fall into?
a. Young married couple
c. Pre-retirement.
b. Young married with children.
d. Retirement
With profit policies can be given to
32. a. surety
b. keyman

c. partner
d. Individual

Acouple has 7 year old son. What solution would they be looking for
c. Child education
33. a. Retirement
b. Health care
d. Life cover
Mrs. Sheela received some amount out of her husband's d In such a situation what will be her prime focus
c. Investment management
34. a. Saving
b. Insurance
d. Planning for pensi
Under S 80C the maximum tax deduction that can be gainpremium paid Rs._in a financial year
c. Rs. 1,20,000
35. a. Rs. 75,000
b. Rs. 1, 10,000
d. Rs. 1,00,000
Perceived needs are
36. a. Short term needs
b. Imagined to be important by advisor

c. Imagined to be important by client

d. Long term needs

Fact find process helps to

37. a. Ensure a salesIs achieved
b. Identify client need

c. Create an audit trail for future complaints

d. Provide regulatory body about agents database

Which type of questioning is very useful to gather information from clients?

c. Interrogative question
38. a. Close ended question
b. Open ended question
d. Clarification question

Higher persistency to the insurer ensures what ?

39. a. More productivity
b. Higher attrition

c. Higher Profits
d. Higher S.A

An agent reveals his commission received from insurance sale$ to X and Y. Both plans are of same duration.
40. Why is commission ofXa higherthan that ofY
a. 'X' has bought other limited premium product c. X is married
b. 'Y' has bought a single premium product
d. 'Y' is single
Amit & Rashmi are newly married. Both are working couple,Thl want to invet their savings 1,00,000 annually
41. to build corpu$ I make down payment for their house in 5 years from noW,A adviser sold them a Uhp to meet
their requirement this may resUlt I
a. Ruining the long term reputation of company c. Bad reputation of individual adviser
b. Opportunity of new business for adviser
d. Financial burden on the couple
Without submitting any form of claim, a life insurance policy holder received payments of maturity then what
42. type of policy he is holding
a. ULIP
c. Money Back
b. Term
d. Health
What is the maximum time in which the insurer should settle a claim when all documents are submitted
c. 30 days
43. a. 3 days
b. 15 days
d. 10 days
The delay in settling claim by any insurance company as P: IRDA norms has to pay _% if the bank rate was
44. 5.2% durin9 the claim pd.
a. 0.07
c. 0.072
b. 0.09
d. 0.08
An indemnity bond was signed in a policy whn the claim was paid. This indicates that the policy was
c. It was lapsed
45. a. lt wasl ost
b. It was paid up
d. It was surrendered
Mr. Bhaskar,had:taken atermi plan 2008 for Rs. 7 lac.. He has anADBrider'worthRS.;4 lac.
46. UnfortunatelyBhaskar died u car accident How much will,he tle.death claim?
a. Total 7 lac will be paid as death claim
c. Total 11 lac will be paid
b. Total 4 lac will be paiasdeathcIaim due tocar
d. Total 7 lac will be paid without any deduction
accident.
In a MWP policy the beneficiaries under the plan, other than wife can be
c. Parents
47. a. Ex wife
b. Sibling
d. Children

Board of Insurance is related to

48. a. SEBI
b. IRDA

c. Insurance Association
d. None of the above

A policy has been rejected by the company under direct intimation to the customer and copy to the Agent, what
49. is the next action of the Agent
a. he has to inform the customer that the co has
c. He has to explain the reasons for rejection to the
broken relationship with the customer
customer
b. he plans to change the plan
d. He takes up with the higher authorities
Sh. Gayaram advisor who advised the customer to close the old policy and take new one. But new policy does
50. not have any extra benefits but it will give more commission to Sh. Gayaram. This is called
a. Switching
c. Redirecting
b. Churning
d. Shifting