III B.COM [2013-2016] Semester V Elective: Principles of Insurance - 502U1 Multiple Choice Questions.

1 of 22 8/3/2015 4:02 PM Dr.G.R.Damodaran College of Science (Autonomous, affiliated to the Bharathiar University, recognized by the UGC)Reaccredited at the 'A' Grade Level by the NAAC and ISO 9001:2008 Certified CRISL rated 'A' (TN) for MBA and MIB Programmes III B.COM [2013-2016] Semester V Elective: Principles of Insurance - 502U1 Multiple Choice Questions. 1. A certain percentage of the sum assured is paid periodically according to the terms of policy is known as. A. Term policy B. Endowment policy C. Money-Back Policy D. Group insurance policy 2. Transfer of rights and remedies of the insured to the insurer after indemnity has been affected is called. A. Insurable interest B. Subrogation C. Proximate cause D. cause proxima 3. Guarantee for employer for the loss out of employee's dishonest is. A. Burglary insurance B. Fidelity insurance C. third party insurance D. medical insurance 4. Motor insurance has its beginning in the. A. USA B. USSR C. UK D. UAE 5. Insurance is based on the principle of. A. co-operation B. democracy C. equality D. welfare

2 of 22 8/3/2015 4:02 PM 6. This policy cover all risk to the ship and its cargo while the ship is at a particular port. A. voyage policy B. floating policy C. time policy D. port risk policy 7. The principle of indemnity is applicable to only. A. life insurance B. personal accident insurance C. proximate cause D. property insurance 8. Except life insurance the maximum term of other insurance is. A. 12 months B. 24 months C. 6 months D. 36 months 9. policy matures on the assured death or on his attainment of a particular age whichever occurs earlier. A. Endowment B. Money Back C. Joint life D. Single Premium 10. In marine insurance insurable interest is enough at the time of. A. claim B. loss C. maturity D. insurance 11. In fire insurance insurable interest is enough at the time of. A. effecting the policy B. loss C. both (a) & (b) D. maturity 12. is an agreement where by the insurer agrees to indemnity the insured against marine losses. A. Life insurance B. Fire insurance C. Marine insurance D. Public liability insurance

3 of 22 8/3/2015 4:02 PM 13. Notice of abandonment is necessary in the case of. A. actual loss B. constructive total loss C. partial loss D. minimum loss 14. When the subject matter insured is destroyed wholly refers to. A. partial loss B. actual total loss C. constructive total loss D. maximum loss 15. means a willful and intentional act on part of the self-destroyed. A. Death B. Suicide C. Murder D. Accident 16. The central office of the LIC of India is located at. A. New Delhi B. Kolkata C. Mumbai D. Chennai 17. A person employed to do any act for another or to represent another in dealing with a third person refers to. A. principal. B. employee. C. agent. D. development officer. 18. Martine Peril is also called as A. Moral hazards B. Morale hazards C. Peril of the sea D. None 19. Marine perils is also called as. A. Perils of the sea. B. Moral hazards. C. Marine clause. D. Marine laws. 20. policy in which the limits of the risks are determined by place of particular voyage.

4 of 22 8/3/2015 4:02 PM A. Valued. B. Time. C. Voyage. D. Unvalued. 21. policy is which covers the risk during all situations. A. Floating B. Wagering C. Valued D. Mixed 22. When a company reinsures its liability with another, then it business A. Cession. B. Cedes. C. Ceding D. None 23. provides evidence of insurance to the policies and Registration Authorities under Motor Vehicle Act. A. Cover note. B. Endorsements. C. Certificate of insurance. D. Policy form. 24. General Insurance Corporation was established during the year. A. 1956. B. 1972. C. 1955. D. 1971. 25. The head office of New India Assurance & Co Ltd., is. A. New Delhi. B. Kolkata. C. Chennai. D. Mumbai. 26. The subscribed capital of GIC contributed by the Central Government is. A. Rs. 5 Crore. B. Rs. 10 Crore. C. Rs. 15 Crore. D. Rs. 20 Crore. 27. The Head office of National Insurance Co, Ltd, is. A. Kolkata.

5 of 22 8/3/2015 4:02 PM B. Bangalore. C. Hyderabad. D. Mumbai. 28. The Head office of United India Insurance co, Ltd, is. A. Chennai. B. Bangalore. C. New Delhi. D. Mumbai. 29. Life insurance in its present form came to India from. A. The United Kingdom. B. The USA. C. Canada. D. Germany. 30. Life Insurance Corporation was nationalized in. A. 1951 B. 1952. C. 1954. D. 1956. 31. Life Insurance Corporation was formed with a capital contribution of. A. Rs. 10 Crore. B. Rs. 15 Crore. C. Rs. 5 Crore. D. Rs. 20 Crore. 32. is a social device for eliminating or reducing the loss of society from certain risk. A. Premium B. Policy C. Insurance D. Contract 33. The Oriental Life Insurance Company came to India during. A. 1919. B. 1818. C. 1899. D. 1888. 34. The Insurer who grants a guarantee from the direct insurer is called as. A. Direct Insurer. B. Ceding Insurer. C. Re-Insurer.

6 of 22 8/3/2015 4:02 PM D. Double Insurer. 35. Final accounts of Life Insurance Companies include A. Revenue account B. Profit and loss account C. Receipt and payment account D. All of these 36. A reinsurance of insurance refers to. A. line. B. retention. C. retrocession. D. cession. 37. When the same risk and subject matter is insured with more than one insurer is called as. A. Double insurance. B. Over insurance. C. Reinsurance. D. External insurance. 38. The current ratio measures the position of an insurance policy A. Solvency B. Liquidity C. Profitability D. Activity 39. Committee of reforms in insurance sectors during 1993 headed by. A. R.N. Malhotra. B. S. Narashiman. C. Manmohan Singh. D. P.Chidambaram. 40. The danger of loss from the unforeseen circumstances in future refers to. A. Risk. B. Perils. C. Hazards. D. Damage 41. involved those losses that occur even if there were no changes in the economic environment. A. Dynamic risk. B. Static risk. C. Fundamental risk. D. Particular risk.

7 of 22 8/3/2015 4:02 PM 42. Risks are not suited to treatment by insurance refers to. A. Static risk. B. Property risk. C. Dynamic risk. D. Liability risk. 43. Fundamental risk is also termed as. A. Particular risk. B. Speculative risk. C. Group risk. D. Pure risk. 44. Insurance provides security against A. Risk B. Losses C. Both (a) & (b) D. None of the m 45. The document which lays down the terms of the contract of the insurance is called the A. Policy B. Subject matter C. Premium D. Insurable interest. 46. Direct or Consequential losses refer to. A. Dynamic risk. B. Particular risk. C. Property risk. D. Pure risk. 47. Spreading of risk otherwise termed as. A. Shifting of risk. B. Acceptance of risk. C. Reduction of risk. D. Spreading of risk. 48. The principle of prevention is better than cure refers to. A. Avoiding of risk. B. Reduction of risk. C. Transferring of risk. D. Shifting of risk. 49. When the subject is partially lost by a peril insured against, it is called.

8 of 22 8/3/2015 4:02 PM A. General average loss. B. Constructive total loss. C. Actual total loss. D. Particular average loss. 50. An international code of York Antwerp Rules applied to. A. marine losses B. losses of fire. C. losses of crop. D. losses of human life. 51. Cargo ship caught by fire is an example of. A. particular average loss. B. general average loss. C. constructive total loss. D. actual total loss. 52. policy is granted only in respect of stock of inventories of the insured under fire insurance business. A. Floating. B. Declarations. C. Replacement. D. Valued. 53. Under Fire insurance, loss of profit policy is also called as. A. Average policy. B. Consequential loss policy. C. Specific policy. D. Adjustable policy. 54. Rashtriya Krishi Yojana of Crop Insurance Scheme came into India during. A. 1999. B. 1888. C. 1988. D. 1977. 55. Corpus fund is created with contributions from the Central Government and State Government on. A. 75:25 basis. B. 50:25 basis. C. 60:40 basis. D. 70:30 basis. 56. Motor Vehicle Insurance is compulsory under the Motor Vehicles Act, which was enacted in

9 of 22 8/3/2015 4:02 PM. A. 1988. B. 1998. C. 1939. D. 1978. 57. Motor Vehicle Insurance has its beginning in. A. The U.K. B. The USA. C. India. D. Canada. 58. The organisation structure of LIC refers to. A. Two tier structure. B. Three tier structure. C. Four tier structure. D. Five tier structure. 59. The constitution of the IRDA consists of not more than members. A. 10 members. B. 7 members. C. 9 members. D. 8 members. 60. The time frame for which an insurance policy provides coverage is known as A. Policy term B. Policy loan C. Policy mode D. none 61. Which of the statement is correct? (A) Burglary insurance is for commercial establishment, factories, shops and godowns and not for residences. (B) Burglary policy covers cash other then kept in safe. A. Statement A is correct. B. Statement B is correct. C. Both are correct. D. Neither is correct. 62. Which of the statements is correct? (A) Existence of the subject matter is an express condition. (B) There are no implied conditions in insurance contracts. A. Statement A is correct. B. Statement B is correct. C. Both are correct. D. Neither is correct.

10 of 22 8/3/2015 4:02 PM 63. Which of the following is true? (A)Policy form is a legal document. (B)The warranties inserted in a policy safeguard the interest of the insured. A. A is true. B. B is true. C. Both are true. D. Neither is true. 64. Which of the statement is true? A. Endorsements are issued to record alterations. B. In certain classes of business attachment of endorsements to the policy is compulsory. A. A is true. B. B is true. C. Both are true. D. Neither is true. 65. Which of the statements is true? (A) Any wrong answer in a proposal form will give the right to insurers to avoid the contract. (B) Schedule contains information applicable to a particular contract. A. A is true. B. B is true. C. Both are true. D. Neither is true. 66. Notification of Alteration in Risk is a condition of. A. precedent to liability. B. subsequent to liability. C. precedent to the contract. D. subsequent to the contract. 67. In case a business firm sets up a private fund to payout the losses if happens, then that is called as. A. Self-insurance. B. Individual insurance. C. None of them. D. Both of them. 68. According to Insurance Act, 1938, the joint stock companies can distribute percent of the profit among shareholders. A. 5 B. 10 C. 8 D. 12 69. In mutuals, the policy holders have to pay premium based upon their share of the losses and expenses at the end of the period, not necessarily at the beginning. A. Assessment mutuals. B. Factory mutuals.

11 of 22 8/3/2015 4:02 PM C. Farm mutuals. D. Perpetual mutuals. 70. Group insurance is ideally suited for covering. A. affluent person in the society. B. weaker sections of the society. C. employer-employee groups. D. both (2) and (3). 71. For the introduction of a group scheme, we need a. A. homogeneous group. B. insured group. C. a small group of persons. D. a large group. 72. Insurance writing is often referred to as. A. Rate making. B. Underwriting. C. Undertaking. D. Documenting. 73. From the following, which is not a type of risk? A. Speculative risks B. Dynamic risks C. Fundamental risks D. Quantitative risks 74. The doctrine of contribution is a corollary of. A. the principle of insurable interest. B. the principle of indemnity. C. the principle of subrogation. D. the principle of utmost good faith. 75. A person who gains or benefits as per a contract is known as A. Beneficiary B. Annuitant C. Assurer D. None 76. Can a marine policy be assigned? A. Can be assigned before the loss. B. Can be assigned after the loss C. Cannot be assigned D. Both (1) and (2)

12 of 22 8/3/2015 4:02 PM 77. In Marine Insurance, loss due to a rats and vermins is. A. a covered loss. B. a general exclusion. C. a statutory exclusion. D. unexpected loss. 78. Means restoring the victim of a loss by payment,repair or replacement. A. Premium B. Declaration C. Indemnity D. Assurance 79. Claim forms are not compulsorily used in. A. fidelity guarantees. B. marine cargo. C. machinery breakdown. D. others. 80. Which of the statement is correct? (A) Breach of a warranty results in the contract becoming null and void. (B) If breach of warranty has not contributed or resulted to the loss then the claim is fully payable. A. A is true. B. B is true. C. Both are True. D. Neither is true. 81. Which of the statement is correct? (A) Cover note gives complete terms and conditions of the contract. (B) Certificate of insurance is only a proof of insurance. A. A is true. B. B is true. C. Both are true. D. Neither is true. 82. Under the Bankers Blanket policies, excess clause appears for the loss arising from. A. Dishonesty of employees. B. Fire. C. Riot. D. Burglary. 83. The burden of proof of the loss within the scope of policy is upon the. A. Insurer. B. Insured. C. Surveyor. D. Defence Lawyer.

13 of 22 8/3/2015 4:02 PM 84. If the loss is caused by an unexpected peril then the burden of proof is one. A. insurer. B. insured. C. surveyor. D. lawyer. 85. Duty to minimise loss is incorporated in the policies through. A. warranties. B. conditions. C. clauses. D. declaratives. 86. As the age increases risk on the life. A. increases. B. decreases. C. does not change. D. moderate. 87. If the interest rates in the market are higher, then cost of insurance. A. decreases. B. increases. C. moderate. D. no change. 88. The expenses which do not vary with the amount of business written are called. A. Overhead expenses. B. Direct expenses. C. Indirect expenses. D. Trading expenses. 89. Brokers Association of India was granted recognition by IRDA on. A. Dec 11, 2001. B. Dec 11, 2002. C. Dec 11, 1999. D. Dec 11, 2003. 90. Foreign equity participation is allowed in insurance sector upto a limit of percent. A. 26. B. 49 C. 73. D. 80.

14 of 22 8/3/2015 4:02 PM 91. provides guidelines to decide whether the loss is caused by an insured peril or an expected peril. A. Indemnity. B. Proximate clause. C. Standard claims. D. Trip sheet. 92. means those risks which involve a situation where there is a possibility of gain. A. Personal risk. B. Speculative risk. C. Other risk. D. Liability risk. 93. The Malhotra Committee submitted its report in A. 1993 B. 1994 C. 1995 D. 1996 94. is a contract between the insurer and the insured under which the insurer undertakes to compensate the insured for the loss arising from the risk. A. Insurance. B. Agreement. C. Indemnity. D. Proximate clause. 95. The authorized capital of GIC is. A. 35 Crore. B. 75 Crore. C. 50 Crore. D. 80 Crore. 96. is the appointing of a nominee under the policy. A. Nomination. B. Election. C. Justification. D. Assignment. 97. The has the right to receive the amount assured in the event of death of the insured. A. employer. B. nominee. C. friend. D. third party.

15 of 22 8/3/2015 4:02 PM 98. Nomination can be done at the inception of the policy by providing details of nominee in the. A. white paper. B. proposal form. C. premium receipt. D. promissory note. 99. Nomination can be done only by a who is a major holding Policy Bond in his own name. A. policy holder. B. insurance company. C. legal advisor. D. employer. 100. Under Nomination, the Nominee gets only the right to receive the policy money in the of the policyholder. A. event of sickness. B. event of death. C. event of credit. D. event of happiness. 101. is a means whereby the beneficial interest, right and title under a policy gets transferred from the assignor to the assignee. A. Nomination. B. Assignment. C. Selection. D. Election. 102. is the policyholder who transfers the title of the policy. A. Assignee. B. Nominee. C. Assignor. D. Consignee. 103. is the person who derives the title from the assignor. A. Assignee. B. Nominee. C. Assignor. D. Consignee. 104. can be done by mere endorsement on the policy or by a separate duly stamped deed. A. Nomination B. Election C. Justification D. Assignment

16 of 22 8/3/2015 4:02 PM 105. A life insurance policy from LIC may be assigned only after a period of. A. 10 years. B. 5 years. C. 3 years. D. 1 year. 106. How many zonal offices are functioning under LIC? A. 5 zonal offices. B. 8 zonal offices. C. 10 zonal offices. D. 15 zonal offices. 107. The first requirement of the corporation in the cases of death claim is A. Imitation of death B. Intimation of death C. Certificate of death D. None of these 108. From the following which is the importance of life Insurance? A. Encourage investments B. Credit work ness C. Tax benefit D. All of these 109. Time policy is taken in the case of insurance A. Hull B. Cargo C. marine D. All of these 110. Which of the following statement is correct? (A)The eight zonal offices of LIC is located in Bhopal, Chennai, Hyderabad, Kanpur, Kolkata, Mumbai, New Delhi and Patna. (B) The LIC has 105 Divisional offices A. Statement A is true. B. Statement B is true. C. Both are true. D. Neither it is true. 111. The document which contains the terms and conditions of the life insurance contract is termed as the. A. Life insurance policy. B. Cover note. C. Agreement. D. Other document.

17 of 22 8/3/2015 4:02 PM 112. The person to whom the policy proceeds will be paid in the event of the death of the insured is known as. A. Assignee. B. Nominee. C. Consignee. D. Beneficiary. 113. A is the person who sends the proposal form for taking an insurance policy and pays the premium. A. proposer. B. nominee. C. legal advisor. D. employer. 114. The amount paid by the insured to the insurer is known as. A. Commission. B. Brokerage. C. Premium D. Overhead charges. 115. The cash value of the policy, paid by the company upon the surrender of a policy before it becomes payable by maturity is known as. A. Premium. B. Cash surrender value. C. Consideration. D. Commission. 116. One who shares the risk under an insurance policy or policies is known as. A. Assurer. B. Insurer. C. Co-insurer. D. Agent. 117. Group insurance policy is also termed as. A. Master policy. B. Cover policy. C. Burglary policy. D. Fidelity policy. 118. The date at which a policy becomes payable is called. A. Maturity date. B. Last date of premium. C. Payment date.

18 of 22 8/3/2015 4:02 PM D. Policy date. 119. Loan granted by the insurer on the basis of insurance policy is known as. A. Loan on mortgage. B. Policy loan. C. Jewel loan. D. Property loan. 120. The period of time for which the policy will normally remain in existence is known as. A. Policy term. B. Policy note. C. Proposed time. D. Grace time. 121. The degree or percentage of chance that a given contingency will occur is called. A. Chance. B. Rate. C. Risk. D. Riot. 122. A person or body other than the parties to an agreement, relationship or dispute is known as. A. Third party. B. Concerned party. C. Owner. D. Payer. 123. means insuring a risk with two or more insurers and the total sum insured also exceeds the actual value of the subject matter. A. Reinsurance B. General Insurance C. Single insurance D. Double insurance 124. A missing person will be presumed to be dead only after. A. three years. B. five years. C. seven years. D. nine years. 125. The proposal form and personal statement contain information relevant to determine. A. level of risk. B. moral hazard. C. insurable interest.

19 of 22 8/3/2015 4:02 PM D. all the above. 126. A type of insurance contract through which protection is given against loss of crop from risk is known as. A. Fire insurance. B. Crop insurance. C. Marine insurance. D. Automobile insurance. 127. A memorandum added to a policy embodying some alterations to the terms of policy is known as. A. Discharge of contract. B. Breach of contract. C. Nomination. D. Endorsement. 128. A kind of insurance which provides for indemnity for loss against health such as loss of time and medical expenses due to sickness is called. A. Fidelity insurance. B. Crop insurance. C. Health insurance. D. Fire insurance. 129. The person who agrees to insure cargo, hull or freight are called. A. Undertakers. B. Caretakers. C. Underwriters. D. Book keepers. 130. Doctrine of subrogation is used in. A. life insurance. B. fire insurance. C. marine insurance. D. joint life insurance. 131. Insurance technique is based on the principle of. A. pooling system. B. compensating others. C. helping others. D. indemnity. 132. Average clause in a fire policy is interest in order to check mainly. A. over insurance. B. under insurance.

20 of 22 8/3/2015 4:02 PM C. loss of insurance company. D. other insurance. 133. The principle of does not apply to life insurance. A. subrogation. B. indemnity. C. utmost good faith. D. contribution. 134. A policy is taken up to cover the risk of goods lying at different places. A. comprehensive. B. consequential. C. replacement. D. floating 135. Insurance is a risk management technique involving. A. risk retention. B. risk avoidance. C. loss control. D. risk transfer. 136. Risk management follows a systematic process which involves steps. A. two. B. three. C. four. D. five. 137. Organizations are mainly concerned with managing. A. pure risks. B. speculative risks. C. personal risks. D. other risks. 138. The first step in risk management process is. A. risk avoidance. B. risk identification. C. insurance. D. risk evaluation. 139. Which of the following steps in the risk management process helps in determining sum insured under policies? A. risk identification. B. risk retention. C. risk transfer.

21 of 22 8/3/2015 4:02 PM D. risk evaluation. 140. The business of insurance is related to protection of. A. savings. B. status. C. profits. D. economic value of assets. 141. Which one of the following comes under miscellaneous insurance? A. Marine insurance. B. Motor insurance. C. Fire insurance. D. Group insurance. 142. Policy stamp needs to be affixed on the. A. endorsement. B. cover note. C. policy. D. stamp paper. 143. Which of the following is a children policy of LIC? A. Jeevan Sneha. B. Jeevan Vishwas. C. Jeevan Dhara. D. Jeevan Sukanya. 144. Annuity plan offer. A. liquidity. B. capital appreciation. C. profitability. D. regular assured return. 145. Insurance writing is often referred to as. A. rate making. B. underwriting. C. undertaking. D. documenting. 146. The concept of bancassurance originated in. A. France. B. U.S.A. C. England. D. Italy.

22 of 22 8/3/2015 4:02 PM 147. Which of the following risks are insurable? A. Speculative. B. Economic. C. Sure to happen. D. Other risks. 148. From the following which is not a horticulture crop? A. Grape B. Litrus C. Banana D. Coffee 149. The policyholder is concerned with the. A. office premium. B. pure premium. C. net premium. D. risk premium. 150. Which insurance covers risk of earthquake? A. Marine B. Life C. Fire D. miscellaneous Staff Name Nancy Sebastina.J.