Insurance Awareness Questions – Set 20

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. Insurance companies’ ability to pay the claims of policyholders is termed as _______
   A. Solvency
   B. Schedule
   C. Retrospective Rating
   D. credit life
   
   Answer & Explanation

   A. Solvency
   Explanation:
   Solvency refers to an enterprise’s capacity to meet its long-term financial commitments.
   
   
2. ________ is an insurance to cover problems associated with travelling, generally including trip cancellation due to illness, lost luggage and other incidents.
   A. Nursing Home Insurance
   B. Kidnap/Ransom Insurance
   C. Inland Marine Insurance
   D. Travel Insurance
   
   Answer & Explanation

   D. Travel Insurance
   Explanation:
   Travel insurance is insurance that is intended to cover medical expenses, trip cancellation, lost luggage, flight accident and other losses incurred while travelling.
   
   
3. A form of annuity contract that gives purchasers the freedom to choose among certain optional features in their contract is known as ______
   A. Salvage
   B. Schedule
   C. Retrospective Rating
   D. Unbundled Contracts
   
   Answer & Explanation

   D. Unbundled Contracts
   Explanation:
   By using unbundled contracts, we can choose optional features in the contract.
   
   
4. Risks for which it is difficult for someone to get insurance is called ______
   A. Partial Risk
   B. Uninsurable Risk
   C. Covariant Risk
   D. Pure Risk
   
   Answer & Explanation

   B. Uninsurable Risk
   Explanation:
   A situation that you cannot protect yourself against by buying insurance because it is impossible to calculate how likely it is to happen, or how much damage it will cause.
   
   
5. Portion of an auto insurance policy that protects a policyholder from uninsured and hit-and-run drivers is known as _______
   A. Nursing Home Insurance
   B. Kidnap/Ransom Insurance
   C. Inland Marine Insurance
   D. Uninsured Motorist Coverage
   
   Answer & Explanation

   D. Uninsured Motorist Coverage
   Explanation:
   Uninsured motorist coverage is designed to provide the injured party with compensation above what is allotted by the at-fault party’s policy.
   
   
6. A policy that combines protection against premature death with a savings account that can be invested in stocks, bonds, and money market mutual funds at the policyholder’s discretion is called _______
   A. Variable Life Insurance
   B. Kidnap/Ransom Insurance
   C. Inland Marine Insurance
   D. Uninsured Motorist Coverage
   
   Answer & Explanation

   A. Variable Life Insurance
   Explanation:
   A form of permanent life insurance, Variable life insurance provides permanent protection to the beneficiary upon the death of the policy holder.
   
   
7. _______ is a policy contract that for some reason specified in the policy becomes free of all legal effect.
   A. Salvage
   B. Schedule
   C. Retrospective Rating
   D. Void
   
   Answer & Explanation

   D. Void
   Explanation:
   A policy or other contract that has no legal validity is described as void. When an insurance company voids a life insurance policy, it is usually due to the discovery of misrepresentation of material facts by the person insured. It is as though the voided policy was never in effect since all premiums paid are usually returned to the policy owner.
   
   
8. Which of the following insurance compensates for the cost of repairing or replacing defective products past the normal warranty period provided by manufacturers?
   A. Warranty Insurance
   B. Kidnap/Ransom Insurance
   C. Inland Marine Insurance
   D. Uninsured Motorist Coverage
   
   Answer & Explanation

   A. Variable Life Insurance
   Explanation:
   A form of permanent life insurance, Variable life insurance provides permanent protection to the beneficiary upon the death of the policy holder.
   
   
9. Which of the following is the first life insurance company in India?
   A. United India Insurance
   B. Oriental Insurance
   C. LIC
   D. New India Assurance
   
   Answer & Explanation

   B. Oriental Insurance
   Explanation:
   Oriental Life Insurance Company started by Europeans in Kolkata was the first life insurance company on Indian Soil.
   
   
10. National Insurance Academy located in ________
    A. Chennai
    B. Calcutta
    C. Pune
    D. Hyderabad
    
    Answer & Explanation

    C. Pune
    Explanation:
    The National Insurance Academy (NIA) is situated in Pune, India. Founded in 1980 by the Finance Department of the Indian government with capital patronage from LIC and public sector general insurance industry.
    
    

Click Here To View Insurance Awareness Questions