Solve -LEGAL PRINCIPLES OF LIFE INSURANCE

LEGAL PRINCIPLES OF LIFE INSURANCE

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(1)Which among the following is an example of coercion?

I. Ramesh signs a contract without having knowledge of the fine print

II. Ramesh threatens to kill Mahesh if he does not sign the contract

III. Ramesh uses his professional standing to get Mahesh to sign a contract

IV. Ramesh provides false information to get Mahesh to sign a contract



Answer:II. Ramesh threatens to kill Mahesh if he does not sign the contract

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(2)Which among the following options cannot be insured by Ramesh?

I. Ramesh’s house

II. Ramesh’s spouse

III. Ramesh’s friend

IV. Ramesh’s parents



Answer :III. Ramesh’s friend

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(3)Which element of a valid contract deals with premium?

I. Offer and acceptance

II. Consideration

III. Free consent

IV. Capacity of parties to contract



Answer:II. Consideration

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(4)_____________ relates to inaccurate statements, which are made without any

fraudulent intention.

I. Misrepresentation

II. Contribution

III. Offer

IV. Representation



Answer :I. Misrepresentation

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(5)________________ involves pressure applied through criminal means.

I. Fraud

II. Undue influence

III. Coercion

IV. Mistake



Answer :III. Coercion

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(6)Which among the following is true regarding life insurance contracts?

I. They are verbal contracts not legally enforceable

II. They are verbal which are legally enforceable

III. They are contracts between two parties (insurer and insured) as per

requirements of Indian Contract Act, 1872

IV. They are similar to wager contracts



Answer : III. They are contracts between two parties (insurer and insured) as per
requirements of Indian Contract Act, 1872

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(7)Which of the below is not a valid consideration for a contract?

I. Money

II. Property

III. Bribe

IV. Jewellery



Answer : III. Bribe

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(8)Which of the below party is not eligible to enter into a life insurance contract?

I. Business owner

II. Minor

III. House wife

IV. Government employee



 Answer :II. Minor

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(9)Which of the below action showcases the principle of “Uberrima Fides”?

I. Lying about known medical conditions on an insurance proposal form

II. Not revealing known material facts on an insurance proposal form

III. Disclosing known material facts on an insurance proposal form

IV. Paying premium on time



Answer :III. Disclosing known material facts on an insurance proposal form

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(10)Which of the below is not correct with regards to insurable interest?

I. Father taking out insurance policy on his son

II. Spouses taking out insurance on one another

III. Friends taking out insurance on one another

IV. Employer taking out insurance on employees



Answer :III. Friends taking out insurance on one another

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(11)When is it essential for insurable interest to be present in case of life insurance?

I. At the time of taking out insurance

II. At the time of claim

III. Insurable interest is not required in case of life insurance

IV. Either at time of policy purchase or at the time of claim



Answer : I. At the time of taking out insurance

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(12)Find out the proximate cause for death in the following scenario?

Ajay falls off a horse and breaks his back. He lies there in a pool of water and

contracts pneumonia. He is admitted to the hospital and dies because of

pneumonia.

I. Pneumonia

II. Broken back

III. Falling off a horse

IV. Surgery



Answer :III. Falling off a horse

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Solve WHAT LIFE INSURANCE INVOLVES

WHAT LIFE INSURANCE INVOLVES

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(1) How does diversification reduce risks in financial markets?
I. Collecting funds from multiple sources and investing them in one place
II. Investing funds across various asset classes
III. Maintaining time difference between investments
IV. Investing in safe assets

Answer: II. Investing funds across various asset classes

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(2) Which of the below is not an element of the life insurance business?
I. Asset
II. Risk
III. Principle of mutuality
IV. Subsidy

Answer: IV. Subsidy

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(3) Who devised the concept of HLV?
I. Dr. Martin Luther King
II. Warren Buffet
III. Prof. Hubener
IV. George Soros

Answer: III. Prof. Hubener

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(4) Which of the below mentioned insurance plans has the least or no amount of savings element?
I. Term insurance plan
II. Endowment plan
III. Whole life plan
IV. Money back plan

Answer: I. Term insurance plan

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(5) Which among the following cannot be termed as an asset?
I. Car
II. Human Life
III. Air
IV. House

Answer: III. Air

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(6) Which of the below cannot be categorized under risks?
I. Dying too young
II. Dying too early
III. Natural wear and tear
IV. Living with disability

Answer: III. Natural wear and tear

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(7) Which of the below statement is true?
I. Life insurance policies are contracts of indemnity while general insurance
policies are contracts of assurance
II. Life insurance policies are contracts of assurance while general insurance policies are contracts of indemnity
III. In case of general insurance the risk event protected against is certain
IV. The certainty of risk event in case of general insurance increases with time

Answer: II. Life insurance policies are contracts of assurance while general insurance policies are contracts of indemnity

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(8) Which among the following methods is a traditional method that can help determine the insurance needed by an individual?
I. Human Economic Value
II. Life Term Proposition
III. Human Life Value
IV. Future Life Value

Answer: III. Human Life Value

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(9) 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?
I. Young people are mostly dependant
II. Old people can afford to pay more
III. Mortality is related to age
IV. Mortality is inversely related to age

Answer: III. Mortality is related to age

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(10) Which of the below is not an advantage of cash value insurance contracts?
I. Safe and secure investment
II. Inculcates saving discipline
III. Lower yields
IV. Income tax advantages

Answer: III. Lower yields

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(11) Which of the below is an advantage of cash value insurance contracts?
I. Returns subject to corroding effect of inflation
II. Low accumulation in earlier years
III. Lower yields
IV. Secure investment

Answer: IV. Secure investment

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