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Principles of Insurance (Chapter - Unit 2) Solved MCQs (Set-1)

This document contains 25 multiple choice questions about principles of insurance. The questions cover topics such as the similarities between insurance and gambling, the purpose of insurance being to share losses among many, and the role of insurance in economic development. Insurance reduces the uncertainty associated with the occurrence of events by spreading risk. The Insurance Regulatory and Development Authority (IRDA) regulates the insurance sector in India and aims to protect policyholders.

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649 views

Principles of Insurance (Chapter - Unit 2) Solved MCQs (Set-1)

This document contains 25 multiple choice questions about principles of insurance. The questions cover topics such as the similarities between insurance and gambling, the purpose of insurance being to share losses among many, and the role of insurance in economic development. Insurance reduces the uncertainty associated with the occurrence of events by spreading risk. The Insurance Regulatory and Development Authority (IRDA) regulates the insurance sector in India and aims to protect policyholders.

Uploaded by

ANURAG
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Principles of Insurance MCQs [set-1]

Chapter: Unit 2

1. Which of the following is the similarity between insurance and gambling:


A. The amount of loss to be paid is known before hand.
B. Promise to pay on the happening of the event
C. Both the parties win on happening of an event.
D. Both are enforceable at law.
Answer: A

2. The business of insurance is related to protection of:


A. savings
o m
B. status
. c
C. profits
te
D. economic value of assets
a
Answer: D

q M
3. The concept of insurance is c
M
A. to share losses by many
B. to make money out of death
C. to earn interest
D. to earn a status
Answer: A

4. Insurance covers the risk of the most certain event -


A. Death of a person
B. protection of the childhood
C. protection of old age
D. all of the above
Answer: B

5. Insurance cover
A. Protects assets
B. prevents loss
C. reduces the impact of loss
D. insures immortality
Answer: C

6. The company doing insurance business is called:


A. mutual funds
B. non-banking firm
C. banking company
D. an insurance company
Answer: D

7. All of the following are disadvantages of using insurance EXCEPT


A. There is an opportunity cost because premiums must be paid in advance.
B. Considerable time and effort must be spent selecting and negotiating coverages.
C. It results in considerable fluctuations in earnings after a loss occurs.
D. Attitudes toward loss control may become lax.
Answer: C

8. All of the following can be classified as casualty insurance EXCEPT


A. Marine insurance.
B. General liability insurance.
C. Workers compensation insurance.
D. Burglary and theft insurance.
Answer: A

9. Insurance eliminates or decreases the uncertainty associated with occurrence of


an event
A. Correct
B. Wrong
C. Partially correct C.
D. Totally misleading
Answer: C

10. The insurance plays a role in the economic development of the country in
following ways:
A. Release capital for new investments.
B. The job potential increases

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C. Money collected is invested in infrastructure
D. All of the above
Answer: D

11. Insurance brokers are governed by


A. Sale of Goods Act
B. Agency Law
C. IRDA Act. 1999
D. Mercantile Law
Answer: C

12. A reinsurance of insurance refers to ________.


A. line.
B. retention.
C. retrocession.
D. cession.
Answer: C

13. IRDA Act. 1999 defines insurance intermediary as one including also
A. Insurance broker
B. UTI Agent
C. Sarpanch
D. Medical Examiner
Answer: A

14. Insurance reduces the extent of financial loss connected with uncertain events
A. True
B. False
C. To the extent of insurance cover
D. Does not reduce the loss at all
Answer: C

15. The business of insurance is related to protection of


A. Savings
B. Status
C. Profits
D. Economic value of assets
Answer: D

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16. Which of the following is the similarity between insurance and gambling?
A. The amount of loss to be paid is known beforehand
B. Promise to pay on the happening of an event
C. Both the parties win on happening of an event
D. Both are enforceable at law
Answer: A

17. What is underwriting in Insurance ?


A. Process of investing the premiums which insurance provider collect from insured parties.
B. A claim arises on the occurrence of a specified event
C. Process by which insurers select the risks to insure and decide how much in premiums to
charge for
D. The ratio of losses and expenses to premium
Answer: C

18. Insurance Sector in India is regulated by IRDA. What is full name of IRDA?
A. Insurance Regulating and Development Agency
B. Insurance Rules and Development Authority
C. Insurance Rules and Deployment Authority
D. Insurance Regulatory and Development Authority
Answer: D

19. When was IRDA Act passed?


A. 1972
B. 1999
C. 1989
D. 2000
Answer: A

20. Which of the following is the main objective of IRDA:


A. To take care of the policy holder interest
B. To open the insurance sector for private sectors
C. To supervise the activities of intermediaries
D. All of above
Answer: A

21. The general insurance business in India was nationalized in the year.

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A. 1976
B. 1956
C. 1983
D. 1972
Answer: D

22. The main role of an underwriter in a non-life insurance company is normally to


A. assess the acceptability of particular risks
B. certify a loss when claims are submitted.
C. design the structure of the products to be offered.
D. negotiate with the industry regulator.
Answer: A

23. Akshat is a relatively cautious person. In insurance terms, this will normally
increase the likelihood that he will
A. be considered an above average insurance risk.
B. be considered a below average insurance risk.
C. require insurance cover.
D. require reinsurance cover.
Answer: C

24. Which of the statements is correct? A. Insurance is a transfer of risk


mechanism. B. Insurance gives physical protection to assets.
A. Statement A.
B. Statement B.
C. Both the statements.
D. Neither of the statements
Answer: A

25. Transfer of rights and remedies of the insured to the insurer after indemnity
has been effected is called __________.
A. Insurable interest.
B. Subrogation
C. Proximate clause.
D. Money back policy.
Answer: B

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