Insurance Awareness Questions – Set 4

Dear Aspirants,
Welcome to Insurance Awareness Questions in AffairsCloud.com. Here we are covering some important Insurance Awareness Questions & Answers with Explanations. Do study this questions thoroughly as it may prove to be helpful in upcoming exams and also in interviews.

1. The person who receives the proceeds or the benefits under the plan when the nominee is less than 18 years of age is called _____
   A. Adjuster
   B. Appointee
   C. Service Provider
   D. Aggregate
   
   Answer & Explanation

   B. Appointee
   Explanation:
   Where the nominee is a minor, the policyholder is advised to appoint another elder person as an ‘Appointee’.
   
   
2. __________ is an actual ownership interest in a specific asset or group of assets.
   A. Fund
   B. cover
   C. Equity
   D. Liquidity
   
   Answer & Explanation

   C. Equity
   Explanation:
   An instrument that signifies an ownership position, or equity, in a corporation, and represents a claim on its proportionate share in the corporation’s assets and profits.
   
   
3. The amount which is payable by you during the premium paying term at regular intervals for a limited period as specified in the plan schedule is called________
   A. Fund
   B. cover
   C. Limited premium
   D. Liquidity
   
   Answer & Explanation

   C. Limited premium
   Explanation:
   A limited premium payment plan is a plan where you pay the premium for a shorter span of time and enjoy the benefits of an insurance cover for a long time.
   
   
4. _______ plans provide for a “pension” or a mix of a lump sum amount and a pension to be paid to the policyholder or his spouse.
   A. Fund
   B. cover
   C. Annuity
   D. Liquidity
   
   Answer & Explanation

   C. Annuity
   Explanation:
   A contract sold by an insurance company designed to provide payments to the holder at specified intervals.
   
   
5. Which is used to determine the actual cash value of property at time of loss?
   A. appreciation
   B. Depreciation
   C. Realization
   D. Recognition
   
   Answer & Explanation

   B. Depreciation
   Explanation:
   Depreciation is a measure of age and condition, with a given lifetime. It may be referred to as a value (in dollars), or a percentage, or a number of years.
   
   
6. __________is the period between the date of subscription to an insurance-cum-pension policy and the time at which the first instalment of pension is received.
   A. appreciation
   B. Depreciation
   C. Deferment
   D. Recognition
   
   Answer & Explanation

   C. Deferment
   Explanation:
   Period between the subscription date of an insurance-cum-pension policy and the time at which the first instalment of pension is received is called as deferment period.
   
   
7. _________ is a type of reinsurance in which the re-insurer can accept or reject any risk presented by an insurance company seeking reinsurance.
   A. Treaty Insurance
   B. Health Insurance
   C. Facultative Insurance
   D. None of the Above
   
   Answer & Explanation

   C. Facultative Insurance
   Explanation:
   Facultative insurance is reinsurance for a single risk or a defined package of risks.
   
   
8. A policy which has terminated and is no longer in force due to non-payment of the premium due is called ______
   A. key man policy
   B. Lapsed Policy
   C. Indemnity
   D. Fiduciary
   
   Answer & Explanation

   B. Lapsed Policy
   Explanation:
   A policy that has been cancelled due to lack of payment of the premiums.
   
   
9. ________ is the amount you pay to the insurance company to buy a policy.
   A. Fund
   B. Premium
   C. Annuity
   D. Liquidity
   
   Answer & Explanation

   B. Premium
   Explanation:
   Premium is an amount paid periodically to the insurer by the insured for covering his risk.
   
   
10. Which principle specifies an insured should not collect more than the actual cash value of a loss?
    A. Indemnity
    B. Premium
    C. Annuity
    D. Liquidity
    
    Answer & Explanation

    A. Indemnity
    Explanation:
    The principle of indemnity is such principle of insurance stating that an insured may not be compensated by the insurance company in an amount exceeding the insured’s economic loss.
    
    

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