IC01 Mock Test Sample 20
These IC01 Licentiate questions cover core insurance concepts including regulatory framework, underwriting, pricing, and taxation. They highlight amendments to the Insurance Act, 1938 that enabled IRDA and private insurers, and define the role of underwriters in risk evaluation, selection, and pricing. Key principles include premium as consideration, insurable interest, utmost good faith, and classification of hazards and perils. Topics also include net incurred claims calculation, proportional treaties, underinsurance applicability, and types of insurance like aviation and miscellaneous. Additional areas include agents’ training requirements, customer service roles, and concepts such as mortality, stability, exposure units, and principles governing marine and life insurance contracts.
Q1. _________ Act was amended in 1999 to provide for registration of private insurers to transact insurance business in India and setting up of IRDA.
A. The Insurance Act, 1938
B. The LIC Act 1956
C. The RBI Act 1934
D. Insurance Nationalization Act 1990
E. None of the above
Q2. An Underwriter's job includes _______ .
A. to check whether insurance can be given or not
B. deciding the terms of the policy
C. deciding the amount of premium to be charged
D. All of the above
E. None of the above
Q3. The premium is the _________ which is to be paid to the insurance company for bearing the risk.
A. expense
B. fee
C. compensation
D. value
E. consideration
Q4. The insurer being a legally constituted corporation is competent to contract for insurance ________ .
A. Only if it has invested huge money in the business initially
B. If it has collaborated with a foreign insurance company as a partner
C. Only if it has a capacity to be profitable
D. If the management is from business and insurance background
E. If it is licensed to transact in insurance business
Q5. The Net Incurred claims is _________ assuming incurred claims on direct business is Rs.9,500 cr., incurred claims on Reinsurance accepted is Rs.400 cr., incurred claims on Reinsurance ceded is Rs.3,600 cr.
A. Rs.6,300 cr.
B. Rs.7,200 cr.
C. Rs.10,300 cr.
D. Rs.4,900 cr.
E. Rs.6,400 cr.
Q6. Underinsurance is applicable to which type of the following policies?
A. Just for liability policies
B. For all insurance policies
C. Just for health policies
D. Not for benefit policies
E. Just for benefit policies
Q7. Hazard study is required to _________________.
A. avoid risk classification
B. analyse cause of loss
C. classify risks
D. understand hazards
E. understand perils
Q8. Interest should exist _________, in marine insurance.
A. at the time of the proposal
B. at the time of the loss
C. at the time of both the proposal and also the loss
D. only when the journey ends
E. never
Q9. In India, the insurer has to be a Corporation or a Company incorporated under the _______ .
A. The SEBI Act
B. The Companies Act
C. The RBI Act
D. The IRDAI
E. The Insurance Act
Q10. Who are mainly responsible to keep customers happy ?
A. Brokers
B. Underwriters
C. Agents
D. Only option 2 and 3
E. All of the above
Q11. Stability means?
A. Volatility
B. Steady
C. Adversity
D. Fluctuation
E. Punctuality
Q12. Identify the CORRECT statement.
A. Pricing of insurance products is an easy task
B. Costs are known even before risk is assumed in insurance
C. Costs could never be known in insurance
D. The price should be determined even before the costs are known in insurance
E. The insurer could ask the customers for more payment, when the claims are higher
Q13. Which of the following is not a Benefit Policy?
A. Personal Accident
B. Life Insurance
C. Critical Care Benefit Insurance
D. Marine Insurance
E. All of the above
Q14. Death Rates means _________.
A. Uncertainty
B. Indemnity
C. Morbidity
D. Mortality
E. All of the above
Q15. When the Underwriter drafts the terms for the Policy for a risk underwritten, which function does he perform?
A. Evaluation
B. Selection
C. Acceptance
D. Loss Control
E. All of the above
Q16. Which of the following is not an exposure unit?
A. Person covered in Life Insurance
B. Vehicle
C. Consignment
D. Group Policy
E. All of the above
Q17. Aviation insurance falls under which category of insurance ?
A. Miscellaneous Insurance
B. Engineering Insurance
C. Marine Insurance
D. Motor Insurance
E. Fire Insurance
Q18. Identify the unique feature of Proportional Treaties.
A. Just the premium is shared proportionately
B. There is equal sharing of risk
C. There is proportionate sharing of premium
D. There is equal sharing of loss
E. There is proportionate sharing of risk, premium and loss
Q19. Mr Rakesh, an Indian national working in Nigeria sought an insurance policy on his life from an insurer. He hid the fact that he worked in Nigeria which was an excluded location for the insurer. He died after 7 years from the issue of the policy in Nigeria due to prolonged sickness. A claim was raised under the policy. His passport showed the records of his stay and work permit in Nigeria.
A. The claim could not be repudiated since the policy had complete 7 years and the claim was paid
B. The claim was repudiated because he died in Nigeria
C. The claim was repudiated because he was no longer an Indian national.
D. The claim was repudiated because the insurer was able to prove in court that Mr. Rakesh was a NRI and working in Nigeria before the policy was issued and he had hid the facts while applying for life insurance.
E. None of the above
Q20. In which of the below cases has the insurer breached the principle of utmost good faith ?
A. Promises are made about returns or bonuses in future
B. Premium is collected without looking at the applicability of rebates allowed by the insurer
C. The proposer is advised not to mention the fact that he was on leave for two weeks
D. The proposer is not informed that the use of sprinkler system may affect premium
E. All of above
