IC01 Mock Test Sample 22
These IC01 Licentiate questions cover key insurance principles including deductibles (excess/retention), risk evaluation based on potential losses, and zero depreciation policies. They test core doctrines such as contribution, utmost good faith, and insurable interest, along with underwriting concepts and functions. Legal and regulatory frameworks include Motor Vehicles Act, Public Liability Act, Employee Compensation Act, Marine Insurance Act (UK origin), and Sale of Goods Act relevance. Topics also include incurred claims calculation, complaint redressal via Ombudsman, and types of risks (pure, speculative, static, dynamic). Additional areas include ULIP returns, maturity/survival benefits, carriers’ liability laws, and multi-modal transport regulations in insurance.
Q1. What is difference between sum insured and retention known as?
A. Deductible
B. Excess
C. Cover limit
D. Surplus
E. Quota
Q2. How is a risk evaluated?
A. In terms of loss of profits
B. In terms of loss of reputation
C. In terms of loss of earnings
D. In terms of loss of market
E. In terms of potential to cause losses
Q3. In automobiles having a zero depreciation clause, depreciation _______________.
A. is imposed on the vehicle’s price
B. is imposed on cost of spares
C. is imposed on the vehicle’s market value
D. is not imposed
E. imposed is 25%
Q4. Differentiate between Principle of Contribution and Principle of utmost good faith.
A. Contribution is, when more than one insurance policies are drawn up on the same subject matter, the insured cannot recover his loss from all the insurers, whereas utmost good faith is where a duty of disclosure is imposed on both the insurer and the insured to disclose all material facts relevant to the insurance contract.
B. Contribution is, where insurance places the insured in the same financial position after the loss, as they enjoyed before it, not better whereas utmost good faith is when a person said to stand to gain from the continued existence of the person or property insured and would suffer a financial loss if there is a damage to the person or property.
C. Contribution is, where a duty of disclosure is imposed on both the insurer and the insured to disclose all material facts relevant to the insurance contract whereas utmost good faith is when more than one insurance policies are drawn up on the same subject matter, the insured cannot recover his loss from all the insurers.
D. Contribution is when a person said to stand to gain from the continued existence of the person or property insured and would suffer a financial loss if there is a damage to the person or property, whereas utmost good faith is where insurance places the insured in the same financial position after the loss, as they enjoyed before it, not better.
E. None of the above option is correct
Q5. Identify from following which is not a point-of-sale person.
A. Broker trained persons for soliciting and marketing the insurance policies
B. Insurance sales persons of insurance marketing firm
C. Rural authorised persons of common service centre - special purpose vehicle
D. Authorised person of web aggregators who can solicit and market all types of insurance policies
E. All the above persons are point of sale persons
Q6. Identify the condition that is not necessary for applying Contribution.
A. There should be more than one indemnity policy
B. There should be more than one loss
C. The peril covered by the policies should be common
D. The interest served by the policies should be common
E. The subject matter covered by the policies should be the same
Q7. Under _______________, the victim has a right to seek compensation directly from the insurer.
A. Employee Compensation Act
B. Motor Vehicle Act
C. Public liability
D. Product liability
E. Tort
Q8. Underwriting is not considered just a binary activity since _______________.
A. there are further options to underwriting other than accepting and rejecting
B. binary is relevant only in the digital world
C. it has 3 functions
D. it is a crucial activity, it is not a binary activity
E. it leads to profits
Q9. Identify the statement that is NOT TRUE.
A. Insurers provide compensation for sentimental losses
B. Insurers agree to make good losses
C. Insurers provide compensation for financial losses
D. Insurers make payment only if losses arise out of an insured peril
E. Insurers make payment only if the insured has suffered a loss
Q10. Identify the correct formula for calculation of the Incurred Claims for the Current Year.
A. Claims paid during the year – Reserve for claims outstanding at the start of the year
B. Reserve for claims outstanding at the year-end - Reserve for claims outstanding at the start of the year
C. Reserve for claims outstanding at the start of the year - Reserve for claims outstanding at the year end
D. Claims paid during the year + Reserve for claims outstanding at the end of the year - Reserve for claims outstanding at the start of the year
E. Claims outstanding at the start of the year + Reserve for claims incurred but not reported
Q11. Identify the statement that is INCORRECT.
A. Less information is required for smaller risks
B. Information required varies with the nature of risk
C. A risk with an exposure for a lower value is considered a small risk
D. A Proposal form is sufficient for smaller risks
E. Less information is required for larger risks
Q12. When an Insurer predicts future losses it is _______________________.
A. likely to be unexpected
B. perfect
C. likely to be close to the expected result
D. likely to be very different from the expected result
E. unlikely to be close to the expected result
Q13. Ms. Shalini had bought a linked insurance policy and the same is to mature after two months. What amount will be available to her from the invested fund she had opted?
A. The amount available to her is not guaranteed
B. The amount will depend on how the insurance company has made the investments
C. The amount will depend on the type of fund chosen by her
D. The amount will depend on the stock market conditions after two months
E. All of the above
Q14. Which of these is an INCORRECT risk classification pair?
A. Fundamental and Particular
B. Pure and speculative
C. Dynamic and static
D. Important and unimportant
E. Financial and non-financial
Q15. Why is the Sale of Goods Act relevant to insurance?
A. Insurance is a contract and the act also lays down conditions for a valid contract
B. The law provide transfer of property, who may transfer, what may not be transferred, rights and liabilities of seller & buyers etc.
C. The law provides for protection of ship owners against claims for damage & loss of goods & passengers
D. It can be relied upon if there are disputes about ownership consequent on agreement to sell
E. The registration of documents and deeds, some of which are compulsory
Q16. As per the provisions of __________ , the Marine insurance act codifies the law relating to marine insurance.
A. GIC Marine Act
B. The Bill of Lading Act
C. Marine Hull Insurance Act
D. US marine insurance act
E. UK marine insurance act
Q17. In an insurance policy, Maturity Benefit is also known as _________.
A. Death Cover
B. Death Benefit
C. Maturity Advantage
D. Survival Benefits
E. None of the above
Q18. Which of the following statements is INCORRECT with reference to complaints to insurance Ombudsman?
A. Any delay in settlement of claim
B. Any partial or total repudiation of claims by the insurance companies
C. Non-issuance of any insurance document to customers after receipt of premium
D. Any dispute on the legal construction of the policy wordings in case such dispute relates to claims
E. Cases where redressal amount is less than Rs 10 lakhs
Q19. Which act provides for protection to ship owners against claim for damage and loss of goods and passengers?
A. The Multi Modal Transportation act
B. Carriage of Goods by Sea act
C. The Bill of lading act
D. The Carriers act
E. The Merchant shipping act
Q20. Which act provides for rights and liabilities of carriers when the goods are carried by different modes in containers by road, by land, by sea and by air under one document?
A. The multi modal transportation act
B. The carriers act
C. The merchant shipping act
D. Carriage of goods act by sea and air act
E. The carriage by air act
