Practice question and answer exam for LIC agent | Question Bank with answer of LIC Exam (Section G)

1. If the age proof submitted along with proposal is later found to be false, the insurer

• May declare the policy null and void ab initio
• May revise the premium on the basis of the actual age from the commencement
• May revise the premium and other terms of the contract
• May do any one of the three suggested above *

2. Which one of the following statements is correct?

• Age is material information and may affect the terms of underwriting *

• If age is found to be different, the only effect is on the premium rate

• Both the statements above are correct
• Both the statements above are wrong

3. Age is material for underwriting because it affects

• The amount of premium
• The decision to call for medical examinations and tests
• The plan that can be offered
• All the three factors above *

4. Which one of the following statements is correct?

• Age is important for the underwriter to consider the need for medical tests

• Age is material to decide on the plan that can be offered
• Both the statements above are wrong
• Both the statements above are correct *

5. Which one of the following statements is correct?

• The days of grace depends on the frequency of premium payment

• The number of days of grace may be 30 or 31

• Both the statements above are correct *
• Both the statements above are wrong

6. Which one of the following statements is correct?

• If premium is paid within the days of grace, there is no penalty
• If premium is not paid within the days of grace, the policy lapses
• Both the statements above are correct *

• Both the statements above are wrong

7. Which one of the following statements is correct?

• In the case of SSS policies, the grace period is one month
• If the due date is 27^th February the grace period ends on 26^th March

• Both the statements above are correct
• Both the statements above are wrong *

8. If the premium was due on 15^th July and 16^th August is a Sunday

• The grace period will end on 14^th August (Friday)
• The grace period will end on 15^th August (Saturday)
• The grace period will end on 17^th August (Monday) *
• The grace period will end as per the discretion of the insurer

9. If the monthly premium was due on 24^th February in a leap year (Tuesday)

• The grace period will end on 9^th March (Tuesday)
• The grace period will end on 10^th March (Wednesday) *
• The grace period will end on 11^th March (Thursday)
• The grace period will end on 24 th March (Wednesday)

10. Which one of the following statements is correct?

• If death occurs in grace period, the premium due is waived
• The date of payment of premium is the date on which the cheque is cleared

• Both the statements above are correct
• Both the statements above are wrong *

11. Which one of the following statements is correct?

• Premiums have to be paid by cash or cheque

• Premium can be paid electronically

• Both the statements above are correct *
• Both the statements above are wrong

12. Which one of the following statements is correct?

• When a policy lapses, the contract comes to an end *
• When a policy lapses, nothing further is payable under it

• Both the statements above are correct
• Both the statements above are wrong

13. Which one of the following statements is correct?

• A premium paid within the grace period is a payment made on the due date

• A policy is not considered to have lapsed during the days of grace

• Both the statements above are correct *
• Both the statements above are wrong

14. Which one of the following statements is correct?

• When a policy lapses, the policyholder loses everything

• When a policy lapses, some benefits are protected *

• Both the statements above are correct
• Both the statements above are wrong
  

15. Which one of the following statements is correct?

• When a policy lapses after 5 years, the insurance cover becomes zero
• If the insured dies during the days of grace, the claim will be admitted *
• Both the statements above are correct
• Both the statements above are wrong

16. Which one of the following statements is correct?

• The non-forfeiture clauses are relevant only when the premium is not paid *
• The non-forfeiture clauses operate when the loan interest is not paid
• Both the statements above are correct
• Both the statements above are wrong

17. Non-forfeiture provisions exist because

• It is not fair to the policyholders
• The Insurance Act does not allow it
• There is an accumulated reserve under the policy
• For all the above reasons *

18. Which one of the following is not a non-forfeiture option?

• Policy becomes paid up
• Grace period *
• Automatic Advance of premium
• Payment of Surrender value

19. Which one of the following statements is correct?

• The provision of grace period is a non-forfeiture option
• Grant of a loan under a policy is non-forfeiture option
• Both the statements above are correct
• Both the statements above are wrong *

20 Which one of the following statements is correct?

• Surrender Value Factor increases with the duration elapsed *
• When a policy lapses, all vested bonuses are forfeited
• Both the statements above are correct
• Both the statements above are wrong

21. Which one of the following statements is correct?

• The reserve accumulates under a policy because of level premiums *
• The reserve does not accumulate in Money Back policies
• Both the statements above are correct
• Both the statements above are wrong

22. Which one of the following statements is correct?

• Paid up value is subject to deduction of unpaid premiums
• When a policy is paid up, the surrender value option is lost
• Both the statements above are correct
• Both the statements above are wrong *

23. Which one of the following statements is correct?

• Vested bonus is also reduced along with SA in Paid up cases
• Paid up option is effective from date of first unpaid premium *
• Both the statements above are correct
• Both the statements above are wrong

24. Which one of the following statements is correct?

• Paid up option is effective from date of first unpaid premium *
• Paid up option is effective from policy anniversary after unpaid premium
• Both the statements above are correct
• Both the statements above are wrong

25. Which one of the following statements is correct?

• A paid up policy is entitled to further bonuses
• A paid up policy is entitled to further bonuses if it is a With profits policy
• Both the statements above are correct
• Both the statements above are wrong *

26. Which one of the following statements is correct?

• A policy is made paid up only if the paid up value is of a minimum amount
• If the paid up value is not up to a level, the cash value is paid
• Both the statements above are correct *
• Both the statements above are wrong

27. Which one of the following statements is correct?

• When premium is advanced from Surrender Value, the policy does not lapse
• The premium advanced under the Non-Forfeiture option, remains a debt
• Both the statements above are correct *
• Both the statements above are wrong

28. Which one of the following statements is correct?

• In cases of automatic advance of premium, policies are entitled to bonus *
• Paid up policies are entitled to bonus
• Both the statements above are correct
• Both the statements above are wrong

29. Which one of the following statements is correct?

• In cases of automatic advance of premium, the Surrender value increases
• In cases of Paid up polices, the Surrender value increases
• Both the statements above are correct *
• Both the statements above are wrong

30. In what aspect is Automatic Premium Advance same as Extended Term Assurance?

• In amount of SA payable on death *
• In amount of SA payable on maturity
• In the extent of debt on the policy at the time of claim
• In the right to bonus

31. How does Automatic Advance of Premium differ from Extended Term Assurance?

• In the duration for which the policy will remain in force *
• In the amount of SA payable on death
• In the ease of reviving the policy to original terms
• Likelihood of terminating without any cash payment to the policyholder

32. Which one of the following statements is correct?

• In Extended Term Assurance option, the full instalment premium is advanced
• In Automatic Premium Advance option, the full instalment premium is advanced*
• Both the statements above are correct
• Both the statements above are wrong

33. Which of the following aspects are common to the three non-forfeiture options?

• They seek to protect the policyholder’s interests *
• The extent of insurance cover on death
• The extent of debt on the policy
• The amount payable on maturity

34. In which of the following aspects do the three non-forfeiture options differ?

• The extent of insurance cover
• The amount of debt on the policy
• The amount payable on maturity
• On all the above three *

35. Which one of the following statements is correct?

• When a policy lapses, it is beneficial to the insurer
• When a policy lapses, it is beneficial to the other policyholders
• Both the statements above are correct
• Both the statements above are wrong *

36. Which one of the following statements is correct?

• When a policy lapses, the agent’s prospect for new business improves
• When a policy lapses, the insurer benefits as his liability ceases
• Both the statements above are correct
• Both the statements above are wrong *

37. Which one of the following statements is correct?

• A lapse is effectively a case of adverse selection
• A lapse should make the agent reflect on the correctness of the sale
• Both the statements above are correct *
• Both the statements above are wrong

38. Which one of the following statements is correct?

• A policy lapses only when the policyholder decides that he does not want it
• A lapse may happen because of temporary financial difficulties *
• Both the statements above are correct
• Both the statements above are wrong

39. Which one of the following statements is correct?

• A revival is the opposite of a lapse *
• The policyholder can, at any time, demand that the lapsed policy be revived
• Both the statements above are correct
• Both the statements above are wrong

40. Which one of the following statements is correct?

• A revival is as important as a new proposal for insurance *
• A revival is done only on evidence of continued good health
• Both the statements above are correct
• Both the statements above are wrong

41. Which one of the following statements is correct?

• Revivals are in the interest of the policyholders
• Revivals are in the interest of the insurers
• Both the statements above are correct *
• Both the statements above are wrong

42. Which one of the following statements is correct?

• Revivals are not done unless the entire outstanding premium is paid
• Revivals are not done unless the underwriter agrees
• Both the statements above are correct
• Both the statements above are wrong *

43. Which one of the following statements is correct?

• The requirement of medical examination varies according to the duration of lapse
• The requirement of medical examination depends on the SA
• Both the statements above are correct *
• Both the statements above are wrong

44. Which one of the following statements is correct?

• Whenever a policy is revived, a new policy is issued
• Whenever a policy is revived, endorsements are placed on the policy
• Both the statements above are correct
• Both the statements above are wrong *

45. Which one of the following statements is correct?

• When only balance premiums are required, the revival is automatic
• When evidence of good health is required, the underwriter decides on revival
• Both the statements above are correct *
• Both the statements above are wrong

46. Which one of the following statements is correct?

• On revival, the relevant SA for underwriting is original SA
• On revival, the relevant SA for revival is the original SA less Paid Up value *
• Both the statements above are correct
• Both the statements above are wrong

47. Which one of the following statements is correct?

• A revived policy effectively, is a new contract.
• Duty to disclose all material facts, revives on revival
• Both the statements above are correct *
• Both the statements above are wrong

48. Which one of the following statements is correct?

• Errors in the statements made at the time of revival can nullify the policy *
• The principle of utmost good faith does not apply at the time of revival
• Both the statements above are correct
• Both the statements above are wrong

49. Which one of the following statements is correct?

• On revival, the original terms of the policy will not be affected
• On revival, the original terms of the policy may be changed *
• Both the statements above are correct
• Both the statements above are wrong

50. Which one of the following statements is correct?

• The terms of a revived policy will be the same as the original
• On revival, the original terms of the policy may be changed *
• Both the statements above are correct
• Both the statements above are wrong