Solved -FINANCIAL PLANNING

FINANCIAL PLANNING

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(1) Which among the following would you recommend in order to seek protection
against unforeseen events?
I. Insurance
II. Transaction products like bank FD’s
III. Shares
IV. Debentures
Answer: I. Insurance

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(2) When is the best time to start financial planning?
I. Post retirement
II. As soon as one gets his first salary
III. After marriage
IV. Only after one gets rich
Answer: II. As soon as one gets his first salary

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(3) Which among the following is not an objective of tax planning?
I. Maximum tax benefit
II. Reduced tax burden as a result of prudent investments
III. Tax evasion
IV. Full advantage of tax breaks
Answer: III. Tax evasion

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(4) An individual with an aggressive risk profile is likely to follow wealth _______
investment style.
I. Consolidation
II. Gifting
III. Accumulation
IV. Spending
Answer: III. Accumulation

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(5) Which among the following is a wealth accumulation product?
I. Bank Loans
II. Shares
III. Term Insurance Policy
IV. Savings Bank Account
Answer: II. Shares

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(6) Savings can be considered as a composite of two decisions. Choose them from
the list below.
I. Risk retention and reduced consumption
II. Gifting and accumulation
III. Spending and accumulation
IV. Postponement of consumption and parting with liquidity
Answer: IV. Postponement of consumption and parting with liquidity

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(7) During which stage of life will an individual appreciate past savings the most?
I. Post retirement
II. Earner
III. Learner
IV. Just married
Answer: I. Post retirement

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(8) What is the relation between investment horizon and returns?
I. Both are not related at all
II. Greater the investment horizon the larger the returns
III. Greater the investment horizon the smaller the returns
IV. Greater the investment horizon more tax on the returns
Answer: II. Greater the investment horizon the larger the returns

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(9) Which among the following can be categorised under transactional products?
I. Bank deposits
II. Life insurance
III. Shares
IV. Bonds
Answer: I. Bank deposits

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(10) Which among the following can be categorized under contingency products?
I. Bank deposits
II. Life insurance
III. Shares
IV. Bonds
Answer: II. Life insurance

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(11) Which of the below can be categorized under wealth accumulation products?
I. Bank deposits
II. Life insurance
III. General insurance
IV. Shares
Answer: IV. Shares

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(12) __________ is a rise in the general level of prices of goods and services in an
economy over a period of time.
I. Deflation
II. Inflation
III. Stagflation
IV. Hyperinflation
Answer: II. Inflation

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(13) Which of the below is not a strategy to maximize discretionary income?
I. Debt restructuring
II. Loan transfer
III. Investment restructuring
IV. Insurance purchase
Answer : IV. Insurance purchase

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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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