CHAPTER 3

1) Features of a valid contract are

Offer and acceptance
Consideration

Capacity to contract

2) Features of a valid contract are

Consensus ad idem
Capability of performance

Legality of object of purpose

All Above

3) An individual is said to be competent to enter into a contract they are

Of the age of majority
Of sound mind
Not disqualified, by now

All Above

All Above

4) The policy is the evidence of the Insurance _____________

Contract

Both

None of the above

5) ___________ is necessary to create a valid insurance contract

Insurable interest
Relationship
Involvement

All Above

6) Insurable interests is said to exist when an individual stands to ____________ from the continued
existence or well-being of another individual
Damage
Gain
Both
None of the above
7) By common loaw, insurance interest is deemed to exist in the following circumstances
Own Life
Spouse
Children
All Above
8) By common law, insurance interest is deemed to exist in the following circumstances
Assets
Creditor
Both
None of the above
9) A Creditor has insurable interest the life of the _______________
Debtor
Employer
Employee

Spouse

10) A surety has insurable interest in the life of

The principal debtor
The co-surety

None of the above

Both

11) An employee has insurable interest in the life of their employer to the extent of their
Debtor
Monthly Salary
Both
None of the above
12) In marine insurance, insurable interest need to exist at the time of
Inception
Claim
Both

None of the above

13) In general insurance, insurable interest need to exist at the time of

Inception
Claim
Both

None of the above

14) In life insurance, insurable interest need to exist at the time of

Inception
Claim
Both

None of the above

15) Breaches of the duty of utmost good faith can be categorized as

Non-disclosure
Concealment
Both

None of the above

16) Breaches of the duty of utmost good faith can be categorized as

Fraudulent misrepresentation
Innocent Misrepresentation
Both
None of the above
17) Ajay does not consumes alcohol for a month to not detect during medical test is
Concealment of a material fact
Fraudulent misrepresentation
Innocent misrepresentation
None of the above
18) If Sameer declares his age 3 years less than actual to get insurance at better term is
Concealment of a material fact
Fraudulent misrepresentation
Innocent misrepresentation
None of the above
19) The material facts are important because they help the insurance companys underwriter to decide
Whether to accept the risk proposal or to reject it
If the proposal is to be accepted, then at what price (premium) it should be accepted
Both
None of the above
20) In the first __________ years of the policy, if the insurance company comes to know that some
material fact has not been disclosed by the proposer, it can declare the policy to be null and void.
2
3
4
5
21) If Sanjay took whole life policy after 10 years he diagnosed with diabetes which he does not
disclosure to LIC. Is this
Concealment of a material fact
Fraudulent misrepresentation
Innocent misrepresentation
None of the above
22) Life insurance contracts are also known as
Value contracts
Legal contracts

Logical contracts

None of the above

23) ______________ comes into existence when one party makes an offer which the other party accepts
unconditionally
A Policy
An Agreement
A Contract
A Proposal
24) In an insurance contract, consideration is _______ paid by the propose to the insurance company
Sum Assured
Premium
Bonus
Loyalty addition
25) _________ means placing the insured in the same financial position after the loss, as they were
before the occurrence of the loss.
Indemnity
Material Facts
Utmost good faith
None of the above
26) Circumstances in which insurable interest is deemed to exist are those where an individual has
unlimited interest in their own life
Interest in their spouses life vice versa
Interest in their childrens life vice versa
All Above
27) The person seeking insurance is called ___________________
The proposer
The employer
The insurer

All above

28) Key Documents required for insurance are

Proposal form
Age proof

None of the above

Both

29) The insurance company collects the following information through the proposal form|
Life Insured Name
Life Insured Age
Life Insured Address
All Above
30) The signing of declaration on proposal form means
The insurance company can cancel the contract and keep the premiums if it finds out that any of
the information provided is not true
By stating that they have understood the questions, they cannot claim that they were given
wrong information or mislead in any way, if a dispute happens in the future.
Both
None of the above
31) Following are standard age proofs
School Certificate
College Certificate

Passport

All Above

32) Following are standard age proofs

PAN Card
Service Register

Baptism Certificate

33) Following are standard age proofs

Defence Personnel Identity
Birth Extract from Family Bible

Marriage Certificate by Roman/Church

All Above

34) Following are Non standard age proofs

Horoscope
Ration Card

Self Declaration

All Above

All Above

35) Following are Non standard age proofs

Elders Declaration
Certificate from the Village Panchayat
Both
None of the above
36) To prove identity in accountance with KYC process, the customer needs to submit
Age proof
Identity proof
Address proof
All above
37) The insurance company issues ________________ after accepting proposal
First Premium Receipt
Renewal Premium Receipt
Deposit Receipt
None of the above
38) The Insurance company issues ________ after receiving further premium
First Premium Receipt
Renewal Premium Receipt
Deposit Receipt
None of the above
39) IRDA regulations require that the decision on the proposal ha sto be passed within
20 days
25 days
15 days
30 days
40) Free-look-in period of cooling off period is of
20 days
25 days

15 days

30 days

41) _____________ is the evidence of contract between the insured the insurance company
First Premium Receipt
Renewal Premium
Policy Document
Proposal Form
42) The _________ of the policy document contains the name address fo the company its logo
Preamble
Endorsement
Schedule
Heading

43) The __________ of the policy states that the proposal declaration signed by the proposal from the
basis of the contract
Preamble
Attestation
Operative Clause
Proviso
44) The operative clause lays down obligations of
The payment of premium by the insured
The payment of sum assured by insurance company on the happening of even
Both
None of the above
45) The provision of the policy states
Surrender value
Nomination

Both

None of the above

46) The provision of the policy states

Assignment
Loan

Both

None of the above

47) The schedule of the policy gives

Date of commencement
Maturity date

Sum insured

All Above

48) The schedule of the policy gives

Nominee
Rider details

Exclusions

All Above

49) The _________ confirms that the insurers have authenticated the policy document by signature
Attestation
Endorsement
Schedule
None of the above
50) The terms conditions of policy will refers
Days of grace for premium payment
Loan availability

Consequences of failing to pay the premium

All the above

51) ____________ is a statement that a certain risk is not covered by the policy
Preamble
Exclusion
Operative Clause

Proviso

52) In order to make certain changes in the term conditions of the policy, _________ can be made
Attestation
Operative clause
Endorsement
Exclusion
53) If policyholder do not wish to pay further premium, he is an option
To stop making payment get policy lapse
Policy turns into paid up
Surrender the policy
All Above
54) If policyholder dies after policy lapsed, he is entitle to receive
Sum Assured
Surrender Value
Paid up Value
55) For Quarterly mode of payment, days of grace is
20 days
25 days

15 days

Guaranteed Surrender Value

30 days

56) The surrender value will be __________ for a longer term policy comparing with shorter term
policy, if both surrendered after same number of years.
Lower
Equal
More
Cant Say
57) The duration of the policy the difference between date surrender and ____________
Maturity date
Birth date
Date of commencement
First unpaid premium

58) If the policy is in lapse condition, policyholder need to _______ it to be brought back into full force
Revival
Foreclosure
Maturity
Surrender
59) Nomination is allowed under Section ________ of the insurance act 1938
35
37
39

38

60) A person who received policy money after death of policyholder is ___________
Trustee
Insurer
Assignee
Nominee
61) If nominee is minor, ____________ accept money on behalf of nominee
Trustee
Appointee
Beneficiary

Nominee

62) Payable to Mr. Anand Shah, failing to Mr. Suresh Shah, falling to Madhav Shah is type of ______
nomination
Legal
Consideration
Absolute
Successive
63) If nominee dies after the death of policyholder but before the payment of death claim will be
payable to _________
Son of nominee
Spouse of nominee
daughter of the nominee
Legal heir of policyholder
64) If Mr. Sarang nominates his 3 yrs. son as nominee but did not submit appointee signature die after
3 years . He appoints his father as legal heir his wife becomes legal guardian of the child. Who will
receive policy money
Son
Wife
Father
None of the above
65) The person who transfers their title in the insurance policy is known as ______________
Nominee
Appointee
Assignee
Assignor
66) The person to which the policy is transferred is know as _________
Nominee
Appointee
Assignee

Assignor

68) Assignment is effected under Section _________ of insurance Act

.
35
36
37

38

69) Types of assignment

Conditional

None of the above

Absolute

Both

70) A conditional assignment can provide for reversion when

The assignment predeceases the assignor
The assignor survives until the date of maturity
Both
None of the above
71) Loan against policy is certain percentage of __________
Sum Assured
Paid up Value
Surrender Value

Bonus

72) Insurance policy can be surrendered by

Policyholder
Insurer

Both

None of the above

73) When a policy is surrendered by insurer, its called

Maturity
Foreclosure

Paid-up

Cooling off

74) If policyholder dies after policy forclosure action but before surrender payment, then amount is
payable to
Spouse
Assignee
Nominee
None of the above
75) If policyholder dies within days of grace without paying premium then nminee will receive
Refund of premium
Paid up Value
Surrender Value
Full claim amount
76) _____________ are the dates on which the policyholder need to pay the premium
Maturity date
Commencement Date
Due Date
Accounting Date
77) ______________ refers to the transfer of the title, rights interest of the insurance policy
Nomination
Asignment
Surrender
None of the above