IC-38 Life Insurance Mock Test – English

Subject: Life Insurance
Total Questions: 50
Total Marks: 50
Time: 60 Minutes
Question Type: Multiple Choice Questions (MCQs)

Instructions

• Each question has four options.
• Select the one best answer.
• Check the answer key only after completing the test.
• This is a practice mock test and not an official examination paper.

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Question 1

What is the primary purpose of insurance?

A. To maximize investment returns
B. To provide financial protection against risks and losses
C. To increase taxation
D. To provide bank loans

Question 2

Who is a Proposer in a life insurance contract?

A. The insurance agent
B. The person who submits the proposal for insurance
C. The nominee only
D. The surveyor

Question 3

Who is the Life Assured?

A. The person whose life is insured under the policy
B. The insurance agent
C. The insurer’s employee
D. The nominee only

Question 4

What does “risk” generally mean in insurance?

A. A guaranteed profit
B. The possibility of an uncertain event causing a loss
C. A fixed income
D. The policy term

Question 5

What is a premium in life insurance?

A. Bonus paid by the insurer
B. Amount paid by the policyholder for insurance protection
C. Claim amount
D. Surrender value

Question 6

Which principle requires compensation for the actual financial loss suffered, where the principle of indemnity applies?

A. Utmost Good Faith
B. Indemnity
C. Contribution
D. Proximate Cause

Question 7

The principle of Utmost Good Faith requires:

A. Only the insurer to disclose information
B. Both parties to disclose material facts honestly
C. Only the agent to provide information
D. The nominee to provide all information

Question 8

What is Insurable Interest?

A. The bonus earned on a policy
B. A legitimate financial interest in the continued existence of the insured life
C. The market value of a policy
D. The agent’s commission

Question 9

What is the main purpose of a Nominee in a life insurance policy?

A. To decide the premium
B. To facilitate receipt of policy proceeds after the death of the life assured
C. To sell the policy
D. To conduct medical examinations

Question 10

What does Assignment generally mean in life insurance?

A. Transfer of rights or ownership in a policy to another person
B. Cancellation of a policy
C. Increase in premium
D. Rejection of a claim

Question 11

What is a major feature of term insurance?

A. Life protection for a specified period
B. Only health expense coverage
C. Only accident protection
D. Guaranteed lifetime investment

Question 12

Under a typical term insurance policy:

A. Death during the policy term may result in a death benefit
B. A maturity benefit is always payable
C. No premium is required
D. Only hospitalization expenses are covered

Question 13

Whole Life Insurance primarily provides:

A. One-day protection
B. Life insurance protection for the whole life, subject to policy terms
C. Travel insurance
D. Hospitalization coverage only

Question 14

What is a common feature of an Endowment Policy?

A. Only death benefit
B. Death benefit plus maturity benefit if the policy conditions are met
C. Only accident benefit
D. Only hospitalization benefit

Question 15

What is a typical feature of a Money Back Policy?

A. Periodic survival benefits may be paid during the policy term, subject to policy conditions
B. No life cover is provided
C. Only one payment is made after death
D. No premium is payable

Question 16

What does ULIP stand for?

A. Universal Life Investment Plan
B. Unit Linked Insurance Plan
C. United Life Insurance Policy
D. Unit Life Income Plan

Question 17

In a ULIP, a portion of the premium may be linked to:

A. Investment funds represented by units
B. Only a bank savings account
C. The agent’s personal account
D. Government salaries

Question 18

What is a Rider?

A. An additional benefit or cover attached to the basic policy
B. A premium receipt
C. A claim form
D. A nomination form

Question 19

What is the purpose of a Critical Illness Rider?

A. To provide an additional benefit on diagnosis of specified critical illnesses, subject to policy terms
B. To cover every investment loss
C. To repair vehicles
D. To cover travel expenses

Question 20

An Accidental Death Benefit Rider may provide an additional benefit when:

A. Death occurs due to an accident, subject to policy conditions
B. Death occurs only due to natural causes
C. The policy is purchased
D. The policy matures

Question 21

What is the main purpose of a Proposal Form?

A. To provide information needed by the insurer to assess the risk
B. To determine only the agent’s commission
C. To obtain immediate claim payment
D. To automatically cancel the policy

Question 22

What is Underwriting?

A. Assessment of risk and determination of terms on which insurance may be accepted
B. Collection of premium only
C. Advertising of insurance products
D. Payment of claims only

Question 23

Deliberately hiding a material fact may violate which principle?

A. Utmost Good Faith
B. Contribution
C. Proximate Cause
D. Subrogation

Question 24

Why may a medical examination be required for life insurance?

A. To assess the health-related risk of the proposed life assured
B. To determine the agent’s commission
C. To change the nominee
D. To change the policy language

Question 25

Which factors can influence life insurance premium?

A. Age
B. Risk-related information
C. Policy term
D. All of the above

Question 26

What is Moral Hazard?

A. Additional risk arising from a person’s attitude, behavior, or dishonesty
B. Weather-related risk
C. Market price risk only
D. Interest-rate risk only

Question 27

What does a Policy Document generally contain?

A. Terms, conditions, benefits, and other details of the insurance contract
B. Only the agent’s identity
C. Only bank details
D. Only medical reports

Question 28

What is the purpose of a Free Look Period?

A. To provide the policyholder an opportunity to review the policy and make a decision according to applicable rules
B. To increase the agent’s commission
C. To double the sum assured
D. To permanently reduce the premium

Question 29

What is a Grace Period?

A. Additional time allowed after the premium due date to pay the premium, subject to policy terms
B. Time before buying a policy
C. Time after a claim is settled
D. Time required for medical examination

Question 30

If the premium is not paid within the applicable grace period, the policy may:

A. Lapse according to its terms
B. Automatically double in value
C. Become permanently free
D. Automatically transfer to another insurer

Question 31

What does Revival mean?

A. Restoring a lapsed policy according to applicable conditions
B. Selling the policy
C. Removing the nominee
D. Advertising the policy

Question 32

What is Surrender Value?

A. The amount payable, if any, when an eligible policy is surrendered according to its terms
B. The death benefit
C. The agent’s commission
D. Medical expenses

Question 33

What does a Paid-up Policy generally mean?

A. A policy where future premiums stop and reduced benefits may continue, subject to eligibility and policy terms
B. A policy that is immediately cancelled
C. A policy that always pays the full sum assured
D. A policy where only the agent is paid

Question 34

When is a Maturity Benefit generally payable?

A. When an eligible policy reaches its maturity date according to its terms
B. The day after purchase
C. Every time premium is paid
D. When nomination is changed

Question 35

A Death Claim relates to:

A. The death of the life assured
B. Policy renewal only
C. Policy surrender only
D. Premium payment only

Question 36

Why is a death certificate generally required for a death claim?

A. To establish proof of death
B. To reduce the premium
C. To increase the bonus
D. To sell the policy

Question 37

An important responsibility of a life insurance agent is to:

A. Provide accurate and appropriate information to customers
B. Hide material facts
C. Make false promises
D. Alter forms without authorization

Question 38

While selling a life insurance policy, an agent should:

A. Understand the customer’s needs and explain a suitable product
B. Always sell the most expensive policy
C. Guarantee benefits that are not provided
D. Hide policy conditions

Question 39

Which is an example of Mis-selling?

A. Misrepresenting important policy terms or benefits
B. Providing accurate information
C. Understanding customer requirements
D. Explaining policy documents

Question 40

What is the purpose of the Insurance Ombudsman mechanism?

A. To help resolve eligible insurance grievances and complaints
B. To advertise insurance products
C. To recruit agents
D. To determine all insurance premiums

Question 41

What does IRDAI stand for?

A. Insurance Regulatory and Development Authority of India
B. Indian Risk Development Association of Insurance
C. Insurance Revenue Department of India
D. Indian Regulatory Department of Assurance

Question 42

What is a major role of IRDAI?

A. Regulation and development of the insurance sector in India
B. Operating all banks
C. Controlling only the stock market
D. Collecting income tax

Question 43

The concept of Human Life Value is related to:

A. The economic value of a person’s future income and financial contribution
B. The value of a house
C. The value of a vehicle
D. The balance in a bank account only

Question 44

When assessing life insurance needs, which factors should be considered?

A. Family’s financial needs
B. Number of dependants
C. Future income and liabilities
D. All of the above

Question 45

What is the main difference between Nomination and Assignment?

A. They are exactly the same
B. Nomination facilitates receipt of policy proceeds, while Assignment involves transfer of policy rights
C. Assignment is only a medical examination
D. Nomination is only a premium payment

Question 46

In a participating life insurance policy, a Bonus may generally relate to:

A. A policyholder’s eligible share in declared surplus, according to policy terms
B. The agent’s salary
C. Medical examination charges
D. Application fees

Question 47

What is generally meant by a Participating Policy?

A. An eligible policy that may participate in the insurer’s declared surplus/bonus according to its terms
B. A policy with no benefits
C. An accident-only policy
D. A health-only policy

Question 48

What does Need-based Selling mean?

A. Recommending suitable insurance solutions after assessing the customer’s needs
B. Giving every customer the same policy
C. Selling only policies with higher commission
D. Ignoring the customer’s financial situation

Question 49

If a customer does not understand a policy condition, the agent should:

A. Get the customer to sign without explanation
B. Explain the condition clearly and provide appropriate clarification
C. Give incorrect information
D. Hide the document

Question 50

Which is the most appropriate approach for a good life insurance agent?

A. Transparency, accurate information, and focus on the customer’s needs
B. Focusing only on sales targets
C. Hiding important exclusions
D. Making false promises about benefits

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Answer Key

Q.	Ans.	Q.	Ans.
1	B	26	A
2	B	27	A
3	A	28	A
4	B	29	A
5	B	30	A
6	B	31	A
7	B	32	A
8	B	33	A
9	B	34	A
10	A	35	A
11	A	36	A
12	A	37	A
13	B	38	A
14	B	39	A
15	A	40	A
16	B	41	A
17	A	42	A
18	A	43	A
19	A	44	D
20	A	45	B
21	A	46	A
22	A	47	A
23	A	48	A
24	A	49	B
25	D	50	A