Insurance Awareness Questions – Set 10

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. A whole life policy in which premiums are payable as long as the insured lives is called ________
   A. Straight Life Annuity
   B. Subrogation
   C. Straight Life
   D. Subjective Risk
   
   Answer & Explanation

   C. Straight Life
   Explanation:
   A straight life insurance policy is a type of permanent insurance that provides a guaranteed death benefit and has fixed premiums. This traditional life insurance is sometimes also known as whole life insurance or cash value insurance.
   
   
2. A life annuity in which there is no refund to any beneficiary at the death of the annuitant is termed as ________
   A. Straight Life Annuity
   B. Subrogation
   C. Straight Life
   D. Subjective Risk
   
   Answer & Explanation

   A. Straight Life Annuity
   Explanation:
   An insurance product that makes periodic payments to the annuitant until his or her death, at which point the payments stop completely. These products do not allow annuitants to designate a beneficiary.
   
   
3. A standing agreement between insurers and re-insurers. Under a treaty each party automatically accepts specific percentages of the insurer’s business is termed as _______
   A. Catastrophe Reinsurance
   B. Excess of Loss Reinsurance
   C. Facultative Reinsurance
   D. Treaty Reinsurance
   
   Answer & Explanation

   D. Treaty Reinsurance
   Explanation:
   A pre-negotiated agreement between the primary and the reinsurer.
   
   
4. A form of reinsurance that indemnifies the ceding company for the accumulation of losses in excess of a stipulated sum arising from a single catastrophic event or series of events is termed as _______
   A. Catastrophe Reinsurance
   B. Excess of Loss Reinsurance
   C. Facultative Reinsurance
   D. Treaty Reinsurance
   
   Answer & Explanation

   A. Catastrophe Reinsurance
   Explanation:
   Catastrophe insurance is Insurance to protect businesses and residences against natural disasters such as earthquakes, floods and hurricanes, and against man-made disasters such as terrorist attacks.
   
   
5. A type of reinsurance in which the re-insurer indemnifies the ceding company for losses that exceed a specified limit is called _______
   A. Catastrophe Reinsurance
   B. Excess of Loss Reinsurance
   C. Facultative Reinsurance
   D. Treaty Reinsurance
   
   Answer & Explanation

   B. Excess of Loss Reinsurance
   Explanation:
   Excess of loss reinsurance is a type of reinsurance in which the reinsurer indemnifies the ceding company for losses that exceed a specified limit. Excess of loss reinsurance is a form of non-proportional reinsurance.
   
   
6. _______ is a form of non-proportional reinsurance.
   A. Catastrophe Reinsurance
   B. Excess of Loss Reinsurance
   C. Facultative Reinsurance
   D. Treaty Reinsurance
   
   Answer & Explanation

   B. Excess of Loss Reinsurance
   Explanation:
   Excess of loss reinsurance is a form of non-proportional reinsurance.In this type of Reinsurance premium is calculated independently of the premium charged to the insured.
   
   
7. ________ is reinsurance for a single risk or a defined package of risks.
   A. Catastrophe Reinsurance
   B. Excess of Loss Reinsurance
   C. Facultative Reinsurance
   D. Treaty Reinsurance
   
   Answer & Explanation

   C. Facultative Reinsurance
   Explanation:
   Facultative insurance is reinsurance for a single risk or a defined package of risks.
   
   
8. ________ is a type of life insurance policy that provides coverage for a certain period of time, or a specified “term” of years
   A. Catastrophe Reinsurance
   B. Excess of Loss Reinsurance
   C. Facultative Reinsurance
   D. Term Insurance
   
   Answer & Explanation

   D. Term Insurance
   Explanation:
   Term insurance is a life insurance product offered by an insurance company which offers financial coverage to the policy holder for a specific time period.
   
   
9. A policy that cannot be cancelled by the insurer prior to a certain age is called ________
   A. No-Fault
   B. Negligence
   C. Non-cancellable
   D. None of the Above
   
   Answer & Explanation

   C. Non-cancellable
   Explanation:
   A policy contract that specifies that the insured may continue coverage by paying the premiums for a specific time frame.
   
   
10. A single insurance policy that combines several coverages previously sold separately is termed as __________
    A. Package Policy
    B. Multiple Policy
    C. Combined Policy
    D. None of the Above
    
    Answer & Explanation

    A. Package Policy
    Explanation:
    Insurance policy that combines coverage from two or more types of insurance (such as property and liability) into one policy.
    
    

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