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Insurance Awareness Questions – Set 28

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Welcome to Insurance Awareness Questions in AffairsCloud.com. Here we are covering some important Insurance Awareness Questions & Answers with Explanations. It will help you to know the important terms, condition, definitions and abbreviation related with

  1. A method of valuing insured property, or the value computed by that method is known as
    1.Actual cost validity
    2.Actual cash value
    3.Replacement cash value
    4.Normal cost value
    5.None of these
    Answer – 2.Actual cash value
    Explanation :
    Actual Cash Value (ACV) is a method of valuing insured property, or the value computed by that method. Actual Cash Value (ACV) is not equal to replacement cost value (RCV). ACV is computed by subtracting depreciation from replacement cost.

  2. _____________ is the maximum amount an insurance company will pay if an insured asset is deemed a total loss.
    1.Insurance value
    2.Actual value
    3.Replacement value
    4.Guaranteed Replacement Cost
    5.None of these
    Answer – 1.Insurance value
    Explanation :
    Define insurance value  is the maximum amount an insurance company will pay if an insured asset is deemed a total loss.

  3. SEF is abbreviated as _____________________
    1.Standard Endorsement Form
    2.Secure Endorsement Form
    3.Standard Envelope Form
    4.Standard Endorsement Fair
    5.None of these
    Answer – 1.Standard Endorsement Form  
    Explanation :
    SEF – Standard Endorsement Form   Can be added to an Automobile Insurance policy and serve the purpose of either adding or removing coverage from the policy.

  4. Which of the following is a combination of insurance as well as investment ?
    1.Money back policy
    2.Endowment plan
    3.Unit Link Insurance Plan
    4.Mutual Funds
    5.None of these
    Answer – 3.Unit Link Insurance Plan
    Explanation :
    Unit Link Insurance Plan is basically a combination of insurance as well as investment, while mutual funds are a pure investment avenue

  5. Investment in ULIPs is related to which section of the Income Tax Act ?
    1.58C
    2.65B
    3.78A
    4.80C
    5.None of these
    Answer – 4.80C
    Explanation :
    Investment in ULIPs is eligible for tax benefit up to a maximum of Rs 1.5 lacs under Section 80C of the Income Tax Act.

  6. Which of the following is an example of Broad Form Insurance ?
    1.Mortgage insurance
    2.Automobile insurance
    3.Liability insurance
    4.Property insurance
    5.None of these
    Answer – 2.Automobile insurance
    Explanation :
    An automobile insurance is an example of Broad Form Insurance .A customer may require glass insurance as the driver is frequently on the highway and obtains a lot of chips in the front window.

  7. Which policy referring to policies that provide coverage only for loss caused by the perils ?
    1.Specifies perils
    2.Named Perils
    3.All Risk
    4.All perils
    5.None of these
    Answer – 2.Named Perils
    Explanation :
    Named Perils is a property insurance term referring to policies that provide coverage only for loss caused by the perils specifically listed as covered.

  8. Which type of insurance usually requires higher premium ?
    1.Broad Form insurance
    2.Whole life insurance
    3.Health insurance
    4.Term insurance
    5.None of these
    Answer – 1.Broad Form insurance
    Explanation :
    ‘Broad Form Insurance’ is an Insurance coverage that extends beyond the basics to include rare events that may be of serious risk to the insured. This type of insurance usually requires that a higher premium, and often a deductible, be paid

  9. What is PAC ?
    1.Post-Authorized Cheque
    2.Pre-Authorized Chequing
    3.Process-Authorized Chequing
    4.Pre-Authorized Checking
    5.None of these
    Answer – 2.Pre-Authorized Chequing 
    Explanation :
    Pre-Authorized Chequing  is an authorization by the insured to allow the Insurance Company to automatically withdrawal their insurance payments from their chequing account.

  10. Which of the following form is designed to be used by many different insurers and has exactly the same provisions ?
    1.Guaranteed Replacement Form
    2.Standard insurance Form
    3.Standard Endorsement Form
    4.Standard Policy Form
    5.None of these
    Answer – 4.Standard Policy Form
    Explanation :
    Standard Policy Form is an insurance policy form that is designed to be used by many different insurers and has exactly the same provisions, regardless of the insurer issuing the policy.