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Insurance Awareness Questions – Set 10

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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
    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
    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
    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
    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
    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
    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
    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
    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
    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
    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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