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English Mock Test Chapter 2

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Question 1
Which of the below is not an element of the life insurance business?
A
Subsidy
B
Asset
C
Principle of mutuality
D
The contract
Question 2
Who devised the concept of HLV?
A
Dr. Martin Luther King
B
Warren Buffet
C
Prof. Hubener
D
George Soros
Question 3
Which of the below mentioned insurance plans has the least or no amount of savings element?
A
Endowment plan
B
Whole life plan
C
Money back plan
D
Term insurance plan
Question 4
Which among the following cannot be termed as an asset?
A
Car
B
Air
C
Human Life
D
House
Question 5
Which of the below cannot be categorised under risks?
A
Natural wear and tear
B
Dying too young
C
Dying too early
D
Living with disability
Question 6
Which of the below statement is true?
A
Life insurance policies are contracts of indemnity while general insurance policies are contracts of assurance
B
In case of general insurance the risk event protected against is certain
C
Life insurance policies are contracts of assurance while general insurance policies are contracts of indemnity
D
The certainty of risk event in case of general insurance increases with time
Question 7
Which among the following methods is a traditional method that can help determine the insurance needed by an individual?
A
Human Economic Value
B
Human Life Value
C
Life Term Proposition
D
Future Life Value
Question 8
Which of the below is the most appropriate explanation for the fact that young people are charged lesser life insurance premium as compared to old people?
A
Young people are mostly dependant
B
Mortality is related to age
C
Old people can afford to pay more
D
Mortality is inversely related to age
Question 9
Which of the below is not an advantage of cash value insurance contracts?
A
Safe and secure investment
B
Inculcates saving discipline
C
Lower yields
D
Income tax advantages
Question 10
Which of the below is an advantage of cash value insurance contracts?
A
Returns subject to corroding effect of inflation
B
Secure investment
C
Low accumulation in earlier years
D
Lower yields
Question 11
How does diversification reduce risks in financial markets?
A
Investing funds across various asset classes
B
Collecting funds from multiple sources and investing them in one place
C
Maintaining time difference between investments
D
Investing in safe assets
Question 12
________________________________ policies, with the exception of Personal Accident Insurance, are usually contracts of indemnity.
A
Life Insurance
B
bank fd
C
General insurance
D
All of the above
Question 13
______________________ means that after the occurrence of an event like fire, the insurer can assess the exact amount of loss that has occurred and pays compensation only to the amount of loss – no more, no less.
A
Assurance
B
Contract
C
Indemnity
D
All of the above
Question 14
________________________:In general insurance contracts, the risk event protected against is uncertain. No one can say with certainty whether a house would be gutted by fire or whether a car would meet an accident.
A
Assurance
B
Uncertainty
C
Contract
D
All of the above
Question 15
Premium collected in the early years of the insurance contract are held in trust by the insurance company, this amount is known as
A
Corpus
B
Reserve
C
Fund
D
Safe deposit
Question 16
_____________________________: In general insurance, in case of perils like fire or earthquake, the probability of the happening of the event does not increase with time.
A
Assurance
B
Uncertainty
C
Increase in probability
D
All of the above
Question 17
The ______________________  is a premium fixed such that it does not increase with age but remains constant throughout the contract period.
A
Net premium
B
Gross premium
C
Level Premium
D
All of the above
Question 18
The level premium is a premium fixed such that it does not increase with age but remains constant throughout the contract period. This means that premiums collected in early years would be ____________________ than the amount needed to cover death claims of those dying at these ages, while premiums collected in later years would be less than what is needed to meet claims of those dying at the higher ages. The level premium is an average of both. This means that the excess premiums of earlier ages compensate for the deficit of premiums in later ages.
A
lower
B
less
C
more
D
All of the Above
Question 19
The level premium is a premium fixed such that it does not increase with age but remains constant throughout the contract period. This means that premiums collected in early years would be more than the amount needed to cover death claims of those dying at these ages, while premiums collected in later years would be ________________________ than what is needed to meet claims of those dying at the higher ages. The level premium is an average of both. This means that the excess premiums of earlier ages compensate for the deficit of premiums in later ages.
A
lower
B
less
C
more
D
All of the above
Question 20
The level premium is a premium  ___________________such that it does not increase with age but remains constant throughout the contract period. This means that premiums collected in early years would be more than the amount needed to cover death claims of those dying at these ages, while premiums collected in later years would be less than what is needed to meet claims of those dying at the higher ages. The level premium is an average of both. This means that the excess premiums of earlier ages compensate for the deficit of premiums in later ages.
A
lower
B
less
C
fixed
D
All of the above
Question 21
Which of the below is an element of the life insurance business?
A
The contract
B
Asset
C
Principle of mutuality
D
All of the Above
Question 22
life insurance provides ______________________________  against those risk events that can destroy or diminish the value of human life as an asset.
A
protection
B
consideration
C
All of the Above
D
None of the above
Question 23
life insurance provides protection against those ________________________  that can destroy or diminish the value of human life as an asset.
A
risk events
B
consideration
C
All of the Above
D
None of the above
Question 24
life insurance provides protection against those risk events that can destroy or diminish the ____________________ of human life as an asset.
A
value
B
consideration
C
All of the Above
D
None of the above
Question 25
_________________________means that after the occurrence of an event like fire, the insurer can assess the exact amount of loss that has occurred and pays compensation only to the amount of loss – no more, no less.
A
Indemnity
B
Assurance
C
Asset
D
value
Question 26
___________________is not possible in life insurance. The amount of benefit to be paid in the event of death has to be fixed at the beginning itself, at the time of writing the contract. Life insurance policies are thus often known as life assurance contracts. An assured sum is paid to the nominees or beneficiaries of the insured when he dies.
A
Indemnity
B
Assurance
C
Asset
D
value
Question 27
Indemnity is not possible in life insurance. The amount of ____________________ to be paid in the event of death has to be fixed at the beginning itself, at the time of writing the contract. Life insurance policies are thus often known as life assurance contracts. An assured sum is paid to the nominees or beneficiaries of the insured when he dies.
A
benefit
B
Assurance
C
Asset
D
value
Question 28
Indemnity is not possible in life insurance. The amount of benefit to be paid in the event of death has to be ___________________ at the beginning itself, at the time of writing the contract. Life insurance policies are thus often known as life assurance contracts. An assured sum is paid to the nominees or beneficiaries of the insured when he dies.
A
fixed
B
Variable
C
not fixed
D
All of the above
Question 29
Indemnity is not possible in life insurance. The amount of benefit to be paid in the event of death has to be fixed at the beginning itself, at the time of writing the contract. Life insurance policies are thus often known as life ____________________________ contracts. An assured sum is paid to the nominees or beneficiaries of the insured when he dies.
A
benefit
B
Assurance
C
Asset
D
value
Question 30
Indemnity is not possible in life insurance. The amount of benefit to be paid in the event of ___________________________  has to be fixed at the beginning itself, at the time of writing the contract. Life insurance policies are thus often known as life assurance contracts. An assured sum is paid to the nominees or beneficiaries of the insured when he dies.
A
death
B
Accident
C
Hospitalization
D
All of the above
Question 31
In the case of life insurance, there is no question whether the event deathwould occur or not. Death is ______________________ once a person is born. What is uncertain is the time of death. Lifeinsurance thus provides protection against the risk of premature death.
A
Certain
B
uncertain
C
All of the above
D
None of the above
Question 32
In the case of life insurance, there is no question whether the event deathwould occur or not. Death is certain once a person is born. What is _____________________ is the time of death. Lifeinsurance thus provides protection against the risk of premature death.
A
certain
B
uncertain
C
All of the above
D
None of the above
Question 33
In the case of life insurance, there is no question whether the event death would occur or not. ___________________ is certain once a person is born. What is uncertain is the time of death. Life insurance thus provides protection against the risk of premature death.
A
Death
B
time of death
C
All of the above
D
None of the above
Question 34
In the case of life insurance, there is no question whether the event death would occur or not. Death is certain once a person is born. What is uncertain is the ___________________. Life insurance thus provides protection against the risk of premature death.
A
Death
B
Time of Death
C
All of the Above
D
None of the above
Question 35
__________________________________________: In general insurance, in case of perils like fire or earthquake, the probability ofthe happening of the event doesnot increase with time.
A
Increase in probability
B
decrease in probability
C
All of the Above
D
None of the above
Question 36
Increase in probability: In_________________________________ , in case of perils like fire or earthquake, the probability o fthe happening of the event does not increase with time.
A
general insurance
B
Life Insurance
C
All of the above
D
None of the above
Question 37
In case of ___________________ the probability of death increases with age.
A
general insurance
B
Life Insurance
C
All of the above
D
None of the above
Question 38
Which of the below is a component of level premium ?
A
term or protection component
B
cash value element
C
All of the above
D
None of the above
Question 39
The level premium has two components. i. The first is known as the______________________, consisting of that portion of premium actually needed to pay the cost of the risk. ii. The second is known as the cash value element. It is made up of accumulated excess payments of the policyholder. It constitutes the savings component.
A
term or protection component
B
cash value element
C
All of the above
D
None of the above
Question 40
The level premium has two components. i. The first is known as the term or protection component, consisting of that portion of premium actually needed to pay the cost of the risk. ii. The second is known as the _________________________. It is made up ofaccumulated excess payments of the policyholder. It constitutes the savings component.
A
term or protection component
B
cash value element
C
All of the above
D
None of the above
Question 41
Under ______________________  the funds are spread out among various assets (placing the eggs in different baskets).
A
diversification
B
Mutuality
C
All of the above
D
None of the above
Question 42
Under _________________________ or pooling, the funds of various individuals are combined (placing all eggs in one basket).
A
diversification
B
Mutuality
C
All of the above
D
None of the above
Question 43
Under ___________________ we have funds flowing from one source to many destinations
A
diversification
B
Mutuality
C
All of the above
D
None of the above
Question 44
Under ___________________ we have funds flow from many sources to one
A
diversification
B
Mutuality
C
All of the above
D
None of the above
Question 45
Which of the below is a role of mutuality or pooling of risk in life insurance business?
A
providing protection against the economic loss arising as a result of one’s untimely death
B
pooling and evening out of financial risk
C
All of the above
D
None of the above
Question 46
Which of the below is an advantage of cash value insurance contracts?
A
Safe and secure investment
B
Inculcates saving discipline
C
provides liquidity
D
All of the above
Question 47
Which of the below is an advantage of cash value insurance contracts?
A
Safe and secure investment
B
Inculcates saving discipline
C
income tax advantages.
D
All of the above
Question 48
Which of the below is not an advantage of cash value insurance contracts?
A
Safe and secure investment
B
Inculcates saving discipline
C
income tax advantages.
D
As an instrument with relatively stable returns it is subjected to the corroding effect of inflation on all fixed income investments.
Question 49
Which of the below is not an advantage of cash value insurance contracts?
A
Safe and secure investment
B
Inculcates saving discipline
C
income tax advantages
D
"The high marketing and other initial costs of life insurance policies, reduces the amount of money accumulated in earlier years.
Question 50
Which of the below is not an disadvantage of cash value insurance contracts?
A
Safe and secure investment
B
"The yield, while guaranteed, may be less than that on other financial market instruments. Lower yield is the result of a trade-off, which also reduces the risk."
C
As an instrument with relatively stable returns it is subjected to the corroding effect of inflation on all fixed income investments.
D
"The high marketing and other initial costs of life insurance policies, reduces the amount of money accumulated in earlier years."
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