IC02 Mock Test Sample 2
These MCQs cover key concepts from IC02 – Practice of Life Insurance. They test understanding of agency requirements in LIC, investment valuation (units × NAV), and policy features like riders. Questions also assess knowledge of EDLI coverage, accounting functions, and fundamental insurance principles such as insurable interest and utmost good faith. Core topics include annuity risks (longevity), types of plans (term insurance), surplus and bonus in life funds, and premium payment modes. Numerical problems involve premium calculation and unit allocation. Concepts like diversification, age calculation (ALB), and legal terms like consensus ad idem are also included, along with claim settlement precautions.
1. In case of LIC, to continue holding the agency for the next year, what is the minimum number of lives that the agent should insure?
a) Ten lives anytime throughout the year
b) Twelve lives anytime throughout the year
c) Twenty four lives anytime throughout the year
d) Compulsorily one life every month
2. The value of an individual's investment is the______________.
a) NAV of the equity fund on any day × Units of the equity fund
b) Number of units held × NAV
c) Market value of the equity shares × NAV
d) Market value of the equity shares ÷ Units of the equity fund
3. Which clause is added on to a basic policy providing an additional benefit at the choice of the proposer?
a) AddOn
b) Rider
c) Top up premium
d) Life cover
4. Maximum Insurance Coverage under Employees Deposit Linked Insurance (EDLI) Scheme is
a) Rs 1 Lakh
b) Rs 5 Lakhs
c) Rs 75,000
d) Rs 60,000
5. Which of the following is/are important activities of an organisation's Accounts Department?
a) Keeping control on cash
b) Investments of funds
c) Processing bills
d) All of the above
6. Which of these statements is/are TRUE?
a) An event cannot be insured if it is certain to happen
b) When there is a possibility of an economic loss, insurance is relevant
c) Insurance compensates for indifferent lifestyles
d) Both 1 and 2 are TRUE
7. Which one of the following is not one of the principles governing insurance contracts?
a) Principle of Utmost Good Faith
b) Principle of Insurable Interest
c) Principle of Indemnity
d) Principle of Honesty
8. Which of the following statements is True?
(1) In cargo losses, the survey fees are paid by the claimant initially.
(2) Survey fees are reimbursed by insurers, if the claim is admitted.
a) Statement 1 is true
b) Statement 2 is true
c) Both are true
d) Both are false
9. What is the risk managed by a life annuity?
a) Premature death
b) Temporary disability
c) Excessive longevity
d) Permanent disability
10. The share of each policyholder in the life fund is a notional figure which is a result of____________.
a) Higher premiums paid in the early years
b) Premium paid for survivorship benefits
c) Interest earned on excess premiums
d) All 1, 2 and 3
11. Which insurance plan gives cover only in the event of death during a specific term?
a) Health Plan
b) Term Plan
c) Life insurance
d) Whole life assurance policy
12. What is the excess in the life fund called as?
a) Surplus
b) Value stock
c) Bonus
d) Actuarial profit
13. _________ is not a way to pay insurance premiums.
a) Direct remittance
b) Cash
c) Cheques
d) Postal Order
14. If tabular premium for plan term 5–35 is Rs 36.75, calculate premium amount for half yearly mode with sum assured of Rs 10 lakhs.
a) Rs. 18372
b) Rs. 18373
c) Rs. 18374
d) Rs. 18375
15. Insurance companies use Diversification to protect themselves against_______________.
a) Concentration of risks
b) The law of large numbers
c) Parameter changes
d) Correlated risks
16. Amar’s date of birth is 4th April 1981. The date of commencement of policy is 4th March 2010. What will be the age (ALB method)?
a) 27 years
b) 28 years
c) 29 years
d) 30 years
17. What’s the meaning of 'Consensus ad idem'?
a) Meeting of minds
b) Finalization of contract
c) Topic open to discussion
d) Advertisement in all mediums
18. An Individual wishes to invest Rs 16,000 in an Equity fund. NAV = Rs 40. Units allotted?
a) 200 units
b) 400 units
c) 800 units
d) 160 units
19. How is insurance premium calculated?
a) On the basis of Sum Assured and age of policy holder
b) On the basis of Sum Assured and insurance term
c) On the basis of Sum Assured and salary
d) On the basis of Sum Assured and nature of policy holder
20. When a policy is lost, insurance companies take utmost care while settling maturity claims because
a) The policy may be pledged elsewhere for a loan
b) The claim may not be genuine
c) Both are correct
d) Both are false
