Education

DOCUMENTATION - POLICY CONDITION

DOCUMENTATION - POLICY CONDITION

Question 1

Which of the below statement is false with regards to nomination?

I. Policy nomination is not cancelled if the policy is assigned to the insurer in

return for a loan

II. Nomination can be done at the time of policy purchase or subsequently

III. Nomination can be changed by making an endorsement in the policy

IV. A nominee has full rights on the whole of the claim

Question 2

In order for the policy to acquire a guaranteed surrender value, for how long

must the premiums be paid as per law?

I. Premiums must be paid for at least 2 consecutive years

II. Premiums must be paid for at least 3 consecutive years

III. Premiums must be paid for at least 4 consecutive years

IV. Premiums must be paid for at least 5 consecutive years

Question 3

When is a policy deemed to be lapsed?

I. If the premiums are not paid on due date

II. If the premiums are not paid before the due date

III. If the premium has not been paid even during days of grace

IV. If the policy is surrendered

Question 4

Which of the below statement is correct with regards to grace period of an

insurance policy?

I. The standard length of the grace period is one month.

II. The standard length of the grace period is 30 days.

III. The standard length of the grace period is one month or 30 days.

IV. The standard length of the grace period is one month or 31 days.

Question 5

What will happen if the policyholder does not pay the premium by the due date

and dies during the grace period?

I. The insurer will consider the policy void due to non-payment of premium by

the due date and hence reject the claim

II. The insurer will pay the claim and waive off the last unpaid premium

III. The insurer will pay the claim after deducting the unpaid premium

IV. The insurer will pay the claim after deducting the unpaid premium along

with interest which will be taken as 2% above the bank savings interest rate

Question 6

During the revival of a lapsed policy, which of the below aspect is considered

most significant by the insurance company? Choose the most appropriate option.

I. Evidence of insurability at revival

II. Revival of the policy leading to increase in risk for the insurance company

III. Payment of unpaid premiums with interest

IV. Insured submitting the revival application within a specified time frame

Question 7

For an insurance policy nomination is allowed under _________ of the Insurance

Act, 1938.

I. Section 10

II. Section 38

III. Section 39

IV. Section 45

Question 8

Which of the below statement is incorrect with regards to a policy against which

a loan has been taken from the insurance company?

I. The policy will have to be assigned in favour of the insurance company

II. The nomination of such policy will get cancelled due to assignment of the

policy in favour of the insurance company

III. The nominee’s right will affected to the extent of the insurer’s interest in

the policy

IV. The policy loan is usually limited to a percentage of the policy’s surrender

value

Question 9

Which of the below statement is incorrect with regards to assignment of an

insurance policy?

I. In case of Absolute Assignment, in the event of death of the assignee, the

title of the policy would pass to the estate of the deceased assignee.

II. The assignment of a life insurance policy implies the act of transferring the

rights right, title and interest in the policy (as property) from one person to

another.

III. It is necessary that the policyholder must give notice of assignment to the

insurer.

IV. In case of Absolute Assignment, the policy vests absolutely with the assignee

till maturity, except in case of death of the insured during the policy

tenure, wherein the policy reverts back to the beneficiaries of the insured.

Question 10

Which of the below alteration will be permitted by an insurance company?

I. Splitting up of the policy into two or more policies

II. Extension of the premium paying term

III. Change of the policy from with profit policy to without profit policy

IV. Increase in the sum assured

Question 11

Under what circumstances would the policyholder need to appoint an

appointee?

I. Insured is minor

II. Nominee is a minor

III. Policyholder is not of sound mind

IV. Policyholder is not married

Solved DOCUMENTATION – POLICY STAGE

Solve Answer of DOCUMENTATION – PROPOSAL STAGE

CHAPTER

 DOCUMENTATION – PROPOSAL STAGE

Question 1
Which of the below is an example of standard age proof?
I. Ration card
II. Horoscope
III. Passport
IV. Village Panchayat certificate
Answer: III. Passport

Question 2
Which of the below can be attributed to moral hazard?
I. Increased risky behavior following the purchase of insurance
II. Increased risky behavior prior to the purchase of insurance
III. Decreased risky behavior following the purchase of insurance
IV. Engaging in criminal acts post being insured
Answer: I. Increased risky behavior following the purchase of insurance

Question 3
Which of the below features will be checked in a medical examiner’s report?
I. Emotional behavior of the proposer
II. Height, weight and blood pressure
III. Social status
IV. Truthfulness
Answer: II. Height, weight and blood pressure

Question 4
A __________ is a formal legal document used by insurance companies that
provides details about the product.
I. Proposal form
II. Proposal quote
III. Information docket
IV. Prospectus
Answer: IV. Prospectus

Question 5
The application document used for making the proposal is commonly known as
the __________.
I. Application form
II. Proposal form
III. Registration form
IV. Subscription form
Answer: II. Proposal form

Question 6
From the below given age proof documents, identify the one which is classified
as non-standard by insurance companies.
I. School certificate
II. Identity card in case of defence personnel
III. Ration card
IV. Certificate of baptism
Answer: III. Ration card

Question 7
Money laundering is the process of bringing _______ money into an economy by
hiding its _______ origin so that it appears to be legally acquired.
I. Illegal, illegal
II. Legal, legal
III. Illegal, legal
IV. Legal, illegal
Answer: I. Illegal, illegal

Question 8
In case the policyholder is not satisfied with the policy, he / she can return the
policy within the free-look period i.e. within ________of receiving the policy
document.
I. 60 days
II. 45 days
III. 30 days
IV. 15 days
Answer: IV. 15 days

Question 9
Which of the below statement is correct with regards to a policy returned by a
Policyholder during the free look period?
I. The insurance company will refund 100% of the premium
II. The insurance company will refund 50% of the premium
III. The insurance company will refund the premium after adjusting for
Proportionate risk premium for the period on cover, medical examination
Expenses and stamp duty charges
IV. The insurance company will forfeit the entire premium
Answer: III. The insurance company will refund the premium after adjusting for
Proportionate risk premium for the period on cover, medical examination
Expenses and stamp duty charges

Question 10
Which of the below is not a valid address proof?
I. PAN Card
II. Voter ID Card
III. Bank passbook
IV. Driving license
Answer: II. Voter ID Card

Question 11
During the _________ period, if the policyholder has bought a policy and does
not want it, he / she can return it and get a refund.
I. Free evaluation
II. Free look
III. Cancellation
IV. Free trial

Answer: II. Free look

What is customer service

What is customer service?
Customers provide the bread and butter of a business and no enterprise can afford to treat them indifferently.
What the customer really derives is a service experience.
If this is less than satisfactory , it causes dissatisfaction. If the service exceeds expectations, the customer would be delighted.
The goal of every enterprise should thus be to delight its customers.


Quality of service
It is necessary for companies and their personnel, which includes their agents , to render high quality service and delight the customer.


High quality service and attributes

A well-known model on service quality  [named "SERVQUAL'] would give us some insights.
It highlights five major indicators of service quality:

a) Reliability : the ability to perform the promised service dependably and accurately .
 Most customers regard reliability as being the most important of the five dimensions of service quality.
It is the foundation on which trust is built.
b) Responsiveness: refers to the willingness and ability of service personnel to help customers and provide prompt response to the customers needs.
It may be measured by indicators like speed , accuracy and attitude while giving the service.
c) Assurance : refers to the knowledge , competence and courtesy of service providers and their ability to convey trust and confidence.
It is given by the customers evaluation of how well the service employee has understood needs and is capable of meeting them.
d) Empathy : is described as the human touch. It is reflected in the caring attitude and individualized attention provided to customers.
e) Tangibles : represent the physical environmental factors that the customers can see, hear and touch .
For instance the location , the layout and cleanliness and the sense of order and professionalism that one gets when visiting an insurance company's office can make a great impression on the customer .
The physical ambiance becomes especially important because it creates first and lasting impression , before and after the actual service is experienced.


Definition
Service means service of any description which is made available to potential users and includes the provision of facilities in connection with banking ,financing, insurance , transport , processing , supply of electrical or other energy,
board or lodging or both housing construction , entertainment , amusement or the purveying of news or other information .
But it does not include the rendering of any service free of charge or under a contract of personal service.

WHAT IS A SINKING FUND

WHAT IS A SINKING FUND?
A sinking fund is a part of a bond indenture or preferred stock charter that requires the issuer to regularly set money aside in a separate custodial account for the exclusive purpose of redeeming the bonds or shares.

let's assume company ABC issues $10 million of bonds that mature in 10 years.
If the bonds have a sinking fund, company ABC might be required to retire, say, $1 million of the bonds each year for 10 years.
To do so, company ABC must deposit $1 million each year into a sinking fund, which is separate from its operating funds and is used exclusively to retire this debt.
 This strategy ensures that company ABC will pay off the $10 million in 10 years

Establishing a Sinking Fund
When creating a sinking fund, the issuer sets up a custodial account and makes systematic payments into it. Payments might not begin until several years have passed. Amounts are typically fixed, although variable amounts may be allowed based on earnings levels or other criteria set by the fund's provisions. Unless preferred stock is used with sinking funds, failure to make scheduled principal and interest payments results in defaulting on the loan.

Advantages and Disadvantages of a Sinking Fund
A sinking fund improves a corporation's creditworthiness, letting the business pay investors a lower interest rate. Because of the interest savings, the corporation has more net income and cash flow for funding operations. Also, businesses may deduct interest payments given to lenders from their taxes, helping increase cash flow as well. Corporations may use the savings for covering sinking fund payments or other obligations. In addition, investors appreciate the added protection a sinking fund provides, making investors more likely to lend a company money. A business that is controlling its money is less likely to default on outstanding debt.

However, if interest rates decrease and bond prices increase, bonds may be called and investors may lose some of their interest payments, resulting in less long-term income. Also, investors may have to put their funds elsewhere at a lower interest rate, also missing out on potential long-term income.

What is a Debenture

What is a Debenture?
A debenture is a type of debt instrument that is not secured by physical assets or collateral.
Debentures are backed only by the general creditworthiness and reputation of the issuer. 
Both corporations and governments frequently issue this type of bond to secure capital.

Types
There are two types of debentures as :
1 .convertible debentures  and
2. nonconvertible debentures 

Convertible debentures are bonds that can convert into equity shares of the issuing corporation after a specific period of time.
Nonconvertible debentures are regular debentures that cannot be converted into equity of the issuing corporation. 

Debentures are generally freely transferable by the debenture holder. 
Debenture holders have no rights to vote in the company's general meetings of shareholders,
but they may have separate meetings or votes e.g. on changes to the rights attached to the debentures. 
The interest paid to them is a charge against profit in the company's financial statements.

Solved answers of APPLICATIONS OF LIFE INSURANCE

CHAPTER

 APPLICATIONS OF LIFE INSURANCE

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Question 1
The sum assured under keyman insurance policy is generally linked to which of
the following?
I. Keyman income
II. Business profitability
III. Business history
IV. Inflation index
Answer: II. Business profitability

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Question 2
Mortgage redemption insurance (MRI) can be categorised under ________.
I. Increasing term life assurance
II. Decreasing term life assurance
III. Variable life assurance
IV. Universal life assurance
Answer: II. Decreasing term life assurance

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Question 3
Which of the below losses are covered under keyman insurance?
I. Property theft
II. Losses related to the extended period when a key person is unable to work
III. General liability
IV. Losses caused due to errors and omission
Answer: II. Losses related to the extended period when a key person is unable to work

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Question 4
A policy is effected under the MWP Act. If the policyholder does not appoint a
special trustee to receive and administer the benefits under the policy, the sum
secured under the policy becomes payable to the _____________.
I. Next of kin
II. Official Trustee of the State
III. Insurer
IV. Insured
Answer: II. Official Trustee of the State

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Question 5
Mahesh ran a business on borrowed capital. After his sudden demise, all the
creditors are doing their best to go after Mahesh’s assets. Which of the below
assets is beyond the reach of the creditors?
I. Property under Mahesh’s name
II. Mahesh’s bank accounts
III. Term life insurance policy purchased under Section 6 of MWP Act
IV. Mutual funds owned by Mahesh
Answer: III. Term life insurance policy purchased under Section 6 of MWP Act

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Question 6
Which of the below option is true with regards to MWP Act cases?
Statement I: Maturity claims cheques are paid to policyholders
Statement II: Maturity claims cheques are paid to trustees
I. I is true
II. II is true
III. Both I and II are true
IV. Neither I nor II is true
Answer: II. II is true

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Question 7
Which of the below option is true with regards to MWP act cases?
Statement I: Death claims are settled in favour of nominees
Statement II: Death claims are settled in favour of trustees
I. I is true
II. II is true
III. Both I and II are true
IV. Neither I nor II is true
Answer: II. II is true

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Question 8
Ajay pays insurance premium for his employees. Which of the below insurance
premium will not be treated deductible as compensation paid to employee?
Choice I: Health insurance with benefits payable to employee
Choice II: Keyman life insurance with benefits payable to Ajay
I. I only
II. II only
III. Both I and II
IV. Neither I nor II
Answer: II. II only

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Question 9
The practice of charging interest to borrowers who pledge their property as
collateral but leaving them in possession of the property is called
_____________.
I. Security
II. Mortgage
III. Usury
IV. Hypothecation
Answer: II. Mortgage

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Question 10
Which of the below policy can provide protection to home loan borrowers?
I. Life Insurance
II. Disability Insurance
III. Mortgage Redemption Insurance
IV. General Insurance
Answer: III. Mortgage Redemption Insurance

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Question 11
What is the objective behind Mortgage Redemption Insurance?
I. Facilitate cheaper mortgage rates
II. Provide financial protection for home loan borrowers
III. Protect value of the mortgaged property
IV. Evade eviction in case of default
Answer: II. Provide financial protection for home loan borrowers

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Financial planning

Financial planning:

If we want to invest our money we should first think twice about it .
The points to keep in our investment are : Time of period , return of the money with percentage and time.

We should have a financial planning
Financial planning plays a crucial role in building a life with less worry. Careful planning can help set your priorities and work steadily to achieve your various goals.
Types of goals:
1) Short term Goals

2) Medium term Goals

3) Long term Goals

Elements of financial planning include::
#Investing - allocation assets based on one's risk taking appetite,
#Risk management,
#Retirement planning,
#Tax and estate planning , and
#Financing one's needs

Life stages and priorities:
a) Learner -till say age 20-25
b)Earner - from 25 onward
c)Partner - on getting marriage at say 28 - 30
d)Parent - say 28 to 35
e) Provider - say age  35- 55
f) Empty nester - age 55- 65
g) Retirement - the twilight years - age 60 and beyond

As we can see above , the economic life cycle has three phases:
Student phase - first phase is the pre job when typically a student.
Working phase - phase of work begin individual comes to earn more than he consumes and thus begins to save and invest fund.
Retirement phase - process he accumulates wealth and builds assets which would provide funds for various needs in future including an income later years, when one has retired and stopped working.


To achieve one's financial goals , one must follow a disciplined savings in investment vehicles that  best suit one's risk taking appetite.
An unplanned, impulsive approach to financial planning is one of the prime causes of financial distress that affects individuals.

These goals may be short term : Buying an LCD TV set or a family vacation.
They could be medium term : Buying a house or a vacation abroad.
The long term goals may include : Education or marriage of one's child or post retirement provision

Tears wipe by yourself

Wipe your tears by yourself if other comes to wipe then they will do business of it