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Samplequestionon RiskAnalysis&InsurancePlanning

PARTI(LIFEINSURANCE)
Section1 Marks120=20 Choosethemostappropriateanswerfromthealternativesgiven: 1. Whatarethetwomaintypesoflifeinsurancepremiums? a) LevelandStepped b) UnevenandLevel c) EvenandStepped d) VariableandFlat

2. Whatisthetermusedfortheinsured'srighttorenewtheirlifeinsurancepolicyregardless ofchangestomedicalstatus? a) Righttorenew b) Guaranteedrenewable c) Righttocontinue d) Guaranteedcontinuance 3. For a young person with low income who has just started his career and expects bright future,thesuitableplanmaybe a) TermAssurance b) MoneyBack c) EndowmentPolicy d) Convertiblewholelifepolicy 4. Afixeddateonwhichbenefitsmaybecomepayableeitherabsolutelyorcontingentlyina lifeinsurancepolicy,iscalled a) death b) disability c) survival d) allofthese

5. Forthesameageandbenefits,thepremiumunderaLimitedPaymentpolicy a) willbelessthaninanonlimitedplanpolicy b) willbemorethaninanonlimitedplanpolicy c) maybemore,lessorsameasinanonlimitedplanpolicy d) willbethesameasinanonlimitedplanpolicy 6. Thepremiumchargedfromthepolicyholderiscalledthe a) Riskpremium b) Purepremium c) Officepremium d) Anyoneoftheabove 7. Hazardsisthefactorthat.therisk a) enhances b) doubles c) halves d) reduces

8. Insuranceispossible a) Whenanadversehappeningislikely b) Whenanadversehappeningiscertain c) Whenanadversehappeningisunlikely d) inalltheabovethreesituations 9. Whichoneofthefollowingstatementsiscorrect a) Section45oftheInsuranceAct1938makestheprincipleofgoodfaithpartlyredundant b) Theincontestableclauseappliesfromthecommencementoflifeinsurancecontract. c) Boththestatementsarecorrect d) Boththestatementsarewrong 10. Riskonchild'slifeunderChildrenDeferredAssuranceplanstartson. a) Deferreddate b) Dateofcommencement c) Dateofvesting d) Dateofmajority 11. Ahumanbeingis a) aneconomicasset b) aperishableasset c) Bothoftheabovearetrue d) Noneoftheaboveistrue. 12. Theprobabilitydistributionofcaraccidentsisasunder NumberofAccidents CumulativeRelativeFrequency. 0 0.40 1 0.65 2 0.75 3 0.90 4ormore 1.00 Findtheprobabilityofonecarhavingmetwithatleast2accidents. a) 0.25 b) 0.75 c) 0.10 d) 0.35 13. Ifl30is9,83,989;andl31is982838,thencalculatetheriskpremiumforagroupof5000 personsforaSAofRs10,00,000each. a) 58,55,492 b) 5,85,549 c) 58,48,643 d) 5,84,864 14. Calculateriskpremiumattheageof29yearsforaSAofRs.10,00,000fromthedatagiven below: Agex lx 28 986292 29 985142 30 983989

a) b) c) d)

Rs1169.02 Rs1167.34 Rs1170.39 Rs1171.76

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15. Ifexpensesare20%ofthegross(office)premiumandthepure premiumisRs5000,then whatwouldbetheofficepremium? a) 6000 b) 4167 c) 6250 d) Noneoftheabove 16. Apersonwhotakesthedecisiontoaccepttheproposalinaninsurancecompanyiscalled a) Accountant b) Actuary c) Underwriter d) Director 17. Avoidablecontractisacontractenforceableattheoptionof a) Boththepartiestothecontract b) Onlyonepartytothecontract c) Boththeabovearecorrect d) Noneoftheaboveiscorrect 18. Whichofthefollowingisnotrelevantelementforavalidcontract a) Proposalandacceptance b) Consideration c) Indemnity d) Consensusadidem 19. Acontractwherebyoneofthepartiesisboundtocomplywithhispromiseandthereisno suchbindingontheotherpartytodosoinfutureiscalledacontractofthenatureof a) Aleatory b) Unilateral c) Conditional d) Contingent 20. MsNeelamrunsherownbusinessatasmalllevelwhereshefindsthatthereexistsarisk thatoccursfrequentlybutitsseverityisverylow.Whichdeviceofriskmanagementshould sheusetohandlesucharisk? a) Avoidance b) Coinsurance c) Retention d) UnderInsurance Section2 Marks210=20 Choosethemostappropriateanswerfromthealternativesandgivereasonsthereof. 21. Apersonaged60hasawholelifeplanwithahighleveloflifeinsuranceforthereasonhe wantsto (i)Payestateduty (ii)Providesuccessionordependentincome (iii)Repayoutstandingdebt (iv)BuildCashValue a) Only(i)and(ii) b) Only(i)and(iii) c) Only(i),(ii)and(iii) d) Alloftheabove

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22. Which of the following does not constitute a valid charge on the premiums paid for an investmentlinkedlifeassurancepolicy? a) bidofferspread b) frontendcharges c) recurrentfundrelatedcharges d) surrenderpenalty 23. The following are statements concerning contracts of insurance. Identify the statement/s thatis/arecorrect. I. Wheneverthewordinginanendorsementorriderisinconflict withthetermsofthe policytowhichitisattached,theendorsementorridertakesprecedence. II. One reason for exclusions in insurance policies is that the risks are covered by other insurance. a) Ionly b) IIonly c) IandII d) NeitherInorII 24. The following are statements made concerning contracts of insurance. Identify the statement/sthatis/arecorrect. I. For life insurance contracts, misstatement of the insureds age constitutes a voidable misrepresentation. II. Aninnocentmisrepresentationbyanapplicantforinsuranceconstitutesfraud. a) Ionly b) IIonly c) IandII d) NeitherInorII 25. Themaximbuytermandinvestthebalancemaynotbeafeasiblepropositionformany investorsforthefollowingreasonsEXCEPTfor: a) itmaybedifficulttoachievesufficientdiversificationintheinvestedassets b) it may be difficult to achieve a suitable investment portfolio with the desired risk rewardrelationship c) it may be possible to consistently outperform the investment returns earned by an establishedlifeoffice d) thattheinsurerofferscapitalguaranteesoncashvalues 26. Identifywhichamongstthefollowingis/arethebasicaim/sofunderwriting: I. totreatequitablythelivesproposingforinsurancecoverage II. todesignanappropriateloadingstructureforsubstandardlives a) Ionly b) IIonly c) IandII d) NeitherInorII 27. Aregularpremiumlifeassurancepolicyistobeissuedtoalifewithadecreasingextrarisk. Thisextrariskisusuallyhandledby: a) Chargingalevelpercentageextrapremiumforthepremiumpaymentduration b) Charging a level percentage extra premium for a shorter period than the premium paymentduration c) Ageratingthelifeandchargingthepremiumappropriatetoastandardlifehavingthe ratedage d) Chargingadebtorimposingalien 28. Whichofthefollowingistrueregardingtheownershipoflifeinsurancepolicy? a) Apolicycanonlybeissuedtotheinsured

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b) Generally,assigningapolicyrequiresproofthattheinsuredisstillinsurable c) Onlyapersonwithaninsurableinterestcanbenamedasabeneficiary d) Theownercanassignthepolicytoanybody.

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29. Aninsuredhasapremiumdueonhisgeneralinsurancepolicyhavingnograceperiod.He contactstheagentforextensionofthepremiumpaymentdate.Theagentassureshimthat theinsurerusuallygrantsagraceperiodofoneweekforsuchpremiumpayment.Oneday aftertheduedateofpremium,theinsuredscarmeetswithanaccident.Theinsurercannot deny liability for the loss, on the grounds that the premium was not paid within time becauseofthePrincipleof: a) Waiver b) Estoppel c) UtmostGoodFaith d) InsurableInterest 30. CalculatePaidUpValueonthebasisofthedataasunder: SumAssured Rs.50,000 Plan&Term ParticipatingEndowmentfor12years Dateofcommencement 1stNovember,1998 DueDateoflastpremiumpaid 1stNovember,2000 Modeofpremiumpayment Halfyearly Consolidatedbonusrate @Rs100perthousandSA a) Rs12,500 b) Rs15,417 c) Rs10417 d) Noneoftheabove Section3 Marks32=6 Attemptanytwo.Eachquestioncarries3marks.Showcalculations.

31. Mr.Ajayaged30yrsplanstoRetireatage60.HiscurrentAnnualSalaryisRs.3,00,000.He paysprofessionaltaxofRs.1,000andIncometaxRs25,000.Hisselfmaintenanceexpenses are estimated to be Rs60,000 p.a. He pays Life insurance premium for self Insurance Rs.7,000foraselfpolicyofRs2Lakhs,alsopremiumforhiswifespolicyRs2000.Iftherate ofinterestis6%,calculatethetotallifeinsurancerequiredasperHLVmethod. a) Rs.52lakhs b) Rs.68lakhs c) Rs.48lakhs d) Rs.66lakhs

32. CalculatecostperthousandoftheriskamountofMr.AshoksLifeInsurancepolicywhich heboughtforSAofRs20lakh.HepaysapremiumofRs15,000pa.TheSurrendervalueof thepolicyisRs6,00,000atpresent.Ifhecontinuesit,thesurrendervaluewouldincreaseto Rs25,000.Assumeinterestrateof7.5%pa. a) Rs2.63 b) Rs26.27 c) Rs20.31 d) Noneoftheabove. 33. CalculateHalfyearlyPremiumfromthefollowingdata: SA Rs1,00,000 TabularPremium Rs30.40perthousand RebateforHalfyearlymode@Re1.00perthousand LargeSumAssuredrebateRs1.50iftheSAisequaltoormorethanRs50,000 DoubleAccidentBenefitRiderpremium@Re1.00perthousand Healthextra@Rs1.50perthousand a) Rs3040 b) Rs1520 c) Rs1500 d) Noneoftheabove.

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34. If the insured dies on 2762007 who had taken a participating endowment policy for Rs30,000 on 13121991. The halfyearly premiums @Rs900 were paid due up to 136 2006.Thepolicytermis30years.Thebonusalreadyallocatedtothepolicyis@Rs.800per thousandforalltheyearsuptoMarch2006.Theinterimbonus @Rs75perthousandwas declaredonthevaluationason3132006.Calculatetheamountofdeathclaimpayableto thenominee. a) Rs54000 b) Rs56250 c) Rs54450 d) Noneoftheabove Section4(Subjective) 35. Writebriefnoteonany3ofthefollowing: a) Utmostgoodfaith b) Pureendowmentplan c) Deferreddate d) Contract (3markseach)

Attemptanytwoquestions.Allquestionscarry5markseach. 36. Differentiatebetweenperilandhazardswiththehelpofexamples? 37. Whatisthedifferencebetweentermandendowmentplan? 38. PrincipleofIndemnitydoesntapplytolifeinsurancepolicies.Explain.

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PARTII(GENERALINSURANCE) Section5 Marks115=15 Choosethemostappropriateanswerfromthealternativesgiven: 39. Whichofthefollowingisnotpurerisk? a) Prematuredeath b) Fireinagown c) Investmentinequity d) Machinerybreakdown

40. A loss arising from indifferent attitude towards safety because of existence of insuranceis___________
Moralehazard Occupationalhazard Physicalhazard Unintentionalhazard 41. Licenceforworkingasinsuranceagentaregivento__________ a) Individual b) Companies c) C0operatviesocieties d) Alltheabove. a) b) c) d)

42. Mr.HanishinsuredhisshopworthRs.40,00,000forRs.20,00,000.Inadevastating fire the shop was completely gutted. Calculate the amount of claim payable to Mr. Harish
Rs.10,00,000 Rs.20,00,000 Rs.40,00,000 Noneoftheabove 43. Acompositebrokeristhatbrokerwhocarriesonbusinessas_________ a) Broker&agent b) General&lifeinsurancebroker c) Insurance&reinsurancebroker d) Anyoftheabove 44. Apackagemotorinsurancepolicywillcover a) Onlydamagetothevehicle b) Onlyliabilitytothethirdparties c) Injurytodriver/owner d) Alloftheabove 45. Insuranceisprimarilyacaseof a) Riskretention b) Riskreduction c) Risktransfer d) Riskprevention a) b) c) d)

46. Whichofthefollowingisnotconsideredasamaterialfact
a) b) c) d) Previousinsurerhasrejectedtheproposal Insuredhimselfhascancelledthepolicy Previousinsuredhascancelledthepolicy Noneoftheabove

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47. Undermotorvehicleactnofaultliabilityincaseofpermanentdisabilityis
a) b) c) d) Rs.1lakh Rs.50,000 Rs.25,000 Rs.12,500

48. A policywithsuminsured Rs.10lakh iswithfranchiseRs. 10,000.Theloss is Rs. 15,000.Whatistheamountofclaimpayable?


a) b) c) d)

Rs.10,000 Rs.5,000 Rs.15,000 NIL 49. Overseasmediclaimpolicycanbeissuedforamaximumperiodof a) 365days b) 180days c) 30days d) 7days 50. Inagroupcorporatefrequenttravellernosinglevisitshallbemorethen___________

days.

a) b) c) d)

180days 60days 30days 7days

51. In fidelity guarantee insurance (floator policy) the insured wants to cover 10 employeesforasuminsuredofRs.10Lakh.PremiumrateisRs.1%&forpercapita Rs.10.Calculatethepremium.
5050 10000 10100 11000 52. Whichofthestatementiscorrect A. Undercommonlawinsurerhasarightofsubrogationonlyaftersatisfyingtheclaim B. Underpolicyinsurerhasrightofsubrogationevenbeforepayingtheclaim a) StatementAiscorrect b) StatementBiscorrect c) Botharecorrect d) Neitheriscorrect 53. Thewarriskcanbecoveredunderpersonalaccidentinsurance,by chargingextra a) b) c) d)

premium@____%duringabnormalperiod
a) b) c) d) 10% 15% 50% 150%

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Section6 Marks25=10 Choosethemostappropriateanswerfromthealternativesandgivereasonsthereof.

54. Under mediclaim policy, as in patient stay of 24 hours is not applicable for treatmentof
Lithotripsy Asthama Diabetes Hernia 55. Domiciliaryhospitalisationexpensesarenotpayablefor a) Renalfailure b) Tonsillitis c) CardiacArrest d) Correctionoffractureinspinalcord a) b) c) d)

56. Whichofthefollowingstatementistrue

A. Weeklybenefitsunderpersonalaccidentarepayableonlywhencompensationamount isarrivedat&agreedupon B. Weeklybenefits&medicalexpensesaresubjecttocontributionclause. a) StatementAiscorrect b) StatementBiscorrect c) Botharecorrect d) Neitheriscorrect a) b) c) d) 10% 30% 40% 50%

57. Underfloatorcumdeclarationpolicytheminimumpremiumtoberetainedis

58. Thedeclarationpolicyforburglaryinsuranceissuedforaprovisionalsuminsured ofRs.1crorewithrateofpremiumRs.1.ActualdeclarationmadeisRs.40lakh. Calculateprovisionalsuminsured&refundableamount


a) b) c) d) Rs.1000Rs.500 Rs.10,000Rs.5000 Rs.10,000Rs.6,000 Rs.11,000Rs.4,000

Section7(Subjective) Marks52=10 Attemptanytwoquestions.5markseach 59. Write what is covered under burglary insurance policy for commercial establishment(minimumfourloses)withconditionsapplicable?

60. Explaincoverageunderfidelityguaranteeinsurancepolicy&typeofpolicies? 61. Explain in details full coverage under maternity benefits in a mediclaim policy & whatareexclusion.

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