140+ Risk Management and Insurance Solved MCQs

1.

….. is a condition in which there is a possibility of an adverse deviation from a desired outcome that is expected or hope for.

A. Loss
B. Profit
C. Risk
D. Uncertainty
Answer» C. Risk
2.

Relative variation of actual loss from expected loss is called………

A. Subjective risk
B. Objective risk
C. Actual loss
D. Expected loss
Answer» B. Objective risk
3.

Risk is measurable……..

A. Loss
B. Profit
C. Uncertainty
D. None of the above
Answer» C. Uncertainty
4.

…………. Refers to a situation where outcome is not certain

A. Uncertainty
B. Loss
C. Insurance
D. None of the above
Answer» A. Uncertainty
5.

If any risk is concerned with financial loss, it is termed as………..

A. Business risk
B. Business loss
C. Financial risk
D. Insurable claim
Answer» C. Financial risk
6.

………… another name of fundamental risk

A. Systematic risk
B. Interest rate risk
C. Group risk
D. Loss
Answer» C. Group risk
7.

Pure risk situation are those where there is a possibility of………….

A. Loss or no loss
B. Loss
C. Variation
D. None of the above
Answer» A. Loss or no loss
8.

Speculative risk is a situation in which…………………… is possible

A. Loss
B. Profit
C. Either a profit or loss
D. None of the above
Answer» C. Either a profit or loss
9.

Changes is technology is a example for …………

A. Pure risk
B. Speculative risk
C. Static risk
D. Dynamic risk
Answer» D. Dynamic risk
10.

In static risk.............

A. Losses cannot be predicted
B. Losses can be predicted
C. Losses are not easily predictable
D. None of these
Answer» B. Losses can be predicted
11.

Risk which can be measured using numerical scale are known as

A. Quantifiable risk
B. Static risk
C. Dynamic risk
D. Speculative risk
Answer» A. Quantifiable risk
12.

………………is an example for personal risk

A. Business loss
B. Fire occurred in business premises
C. Risk of premature death
D. None of the above
Answer» C. Risk of premature death
13.

Property damaged because of earthquake is…………risk

A. Risk for general insurance
B. Non insurable risk
C. Property risk
D. None of the above
Answer» C. Property risk
14.

Spreading of risk otherwise termed as……….

A. Shifting of risk
B. Acceptance of risk
C. Reduction of risk
D. Spreading of risk
Answer» A. Shifting of risk
15.

Insurance is a risk management technique involving…

A. Risk retention
B. Risk avoidance
C. Loss Control
D. Risk transfer
Answer» D. Risk transfer
16.

An escape from disability or death in a plain crash by refusing to fly is called…

A. Risk shifting
B. Risk avoidance
C. Risk hedging
D. None of these
Answer» B. Risk avoidance
17.

………… is the process of reducing frequencies and severely of losses.

A. Loss prevention
B. Loss Control
C. Avoidance of risk
D. None of the above
Answer» B. Loss Control
18.

Willingness to retain whole or part of a given risk is called…………..

A. Risk retention
B. Risk carrying
C. Risk bearing
D. None of the above
Answer» A. Risk retention
19.

Annual maintenance contract for computers is …………

A. Risk avoidance
B. Loss reduction
C. Insurance
D. Transfer of risk by contract
Answer» D. Transfer of risk by contract
20.

Which of the following is a method of risk identification.

A. Insurance
B. Standard deviation method
C. Checklist method
D. None of these
Answer» C. Checklist method
21.

Risk evaluation breaks down into two parts. They are:

A. Probability of loss occurring and its severity
B. Risk calculation and risk analysis
C. Loss calculation and avoidance
D. None of the above
Answer» A. Probability of loss occurring and its severity
22.

…………….. is planned retention by which the part or full of the exposure arising a risk factor is retained by the firm

A. Reinsurance
B. Self insurance
C. Risk financing
D. None of the above
Answer» B. Self insurance
23.

IRDA Act passed in the year…………..

A. 1972
B. 1999
C. 1989
D. 2000
Answer» B. 1999
24.

A policy for protecting a group of employees in a firm is called………..

A. General Insurance
B. State life insurance
C. Group insurance
D. None of the above
Answer» C. Group insurance
25.

Committee constituted to reform insurance sector constituted in the 1993 was headed by

A. R.N. Malhothra
B. S. Narasimham
C. Manmohan Singh
D. Rangarajan
Answer» A. R.N. Malhothra
26.

When the amount for which a subject matter is insured is more that its actual value. It is called…..

A. Double insurance
B. Over insurance
C. Over premium
D. None of these
Answer» B. Over insurance
27.

Expansion of IRDA is…………….

A. Insurance reforms and development agency
B. Insurance restriction and development authority
C. Insurance regulatory and development authority
D. None of the above
Answer» C. Insurance regulatory and development authority
28.

First private life insurance company was registered in India in……….

A. 1999
B. 2000
C. 2002
D. 1978
Answer» B. 2000
29.

When did Government of India nationalized life insurance business.

A. 1956
B. 1978
C. 1991
D. 2002
Answer» A. 1956
30.

…………….. is a policy where the insurer undertakes to make good the loss upto the amount mentioned in the policy

A. Specific policy
B. Valued policy
C. Average policy
D. None of these
Answer» C. Average policy
31.

………… Clause generally inserted in all general insurance contract to discourage under insurance

A. Specific clause
B. General clause
C. Valuation clause
D. Average clause
Answer» D. Average clause
32.

Who pays premium under social security group insurance?

A. Every member of the group
B. Government
C. LIC
D. None of the above
Answer» C. LIC
33.

…………..is concerned with the conversion of a firms asset and earning power against risk of accidental loss.

A. Risk retention
B. Risk management
C. Risk control
D. Risk identification
Answer» D. Risk identification
34.

If the market interest rate is higher, the cost of insurance…

A. Increases
B. Moderate
C. Decreases
D. No change
Answer» C. Decreases
35.

As age increases risk on the life………..

A. Increases
B. Decreases
C. No change
D. None of the above
Answer» A. Increases
36.

Premium of a policy is calculated on the basis of……

A. Income of the insured
B. Agent’s report
C. Risk associated with the policy
D. None of the above
Answer» C. Risk associated with the policy
37.

“Human life is an income generating asset”. The statement is……

A. True
B. Partly true
C. False
D. Partly false
Answer» A. True
38.

Maximum period of a policy in case of insurance other than life insurance is…..

A. 12 months
B. 24 months
C. No limit
D. None of these
Answer» A. 12 months
39.

The business of insurance is related to protection of…………

A. Status
B. Economic value of asset
C. Savings
D. Profit
Answer» B. Economic value of asset
40.

Reinsurance also termed as…..

A. Double insurance
B. Reinsurance of reinsurance
C. Insurance of insurance
D. None of these
Answer» C. Insurance of insurance
41.

The danger of loss from the unforeseen circumstances in future refers to _____

A. Risk
B. Perils
C. Hazards
D. Damage
Answer» A. Risk
42.

_________ is concerned with the conversion of a firm’s asset and earning power against risks of accidental loss.

A. Risk retention.
B. Risk management.
C. Risk control.
D. Risk identification.
Answer» B. Risk management.
43.

________ involved those losses that occur even if there were no changes in the economic environment.

A. Dynamic risk.
B. Static risk.
C. Fundamental risk.
D. Particular risk.
Answer» B. Static risk.
44.

Risks are not suited to treatment by insurance refers to ____________

A. Static risk.
B. Property risk.
C. Dynamic risk.
D. Liability risk.
Answer» C. Dynamic risk.
45.

Fundamental risk is also termed as _________

A. Particular risk.
B. Speculative risk.
C. Group risk.
D. Pure risk.
Answer» C. Group risk.
46.

Unemployment, war, inflation, earthquakes etc., are the examples of ________

A. Pure risk.
B. Particular risk.
C. Personal risk.
D. Fundamental risk.
Answer» D. Fundamental risk.
47.

Any risk involved a situation where there is a possibility of gain refers to ________

A. Liability risk.
B. Personal risk.
C. Pure risk.
D. Speculative risk.
Answer» D. Speculative risk.
48.

Direct or Consequential losses refer to _________

A. Dynamic risk.
B. Particular risk.
C. Property risk.
D. Pure risk.
Answer» C. Property risk.
49.

Spreading of risk otherwise termed as _________

A. Shifting of risk.
B. Acceptance of risk.
C. Reduction of risk.
D. Spreading of risk.
Answer» D. Spreading of risk.
50.

The principle of prevention is better than cure refers to __________

A. Avoiding of risk.
B. Reduction of risk.
C. Transferring of risk.
D. Shifting of risk.
Answer» A. Avoiding of risk.
51.

Insurance is a risk management technique involving____________

A. risk retention.
B. risk avoidance.
C. loss control.
D. risk transfer.
Answer» D. risk transfer.
52.

Risk management follows a systematic process which involves _______ steps.

A. two.
B. three.
C. four.
D. five.
Answer» D. five.
53.

Organizations are mainly concerned with managing

A. pure risks.
B. speculative risks.
C. personal risks.
D. other risks
Answer» A. pure risks.
54.

The first step in risk management process is

A. risk avoidance.
B. risk identification.
C. insurance.
D. risk evaluation.
Answer» B. risk identification.
55.

Which of the following steps in the risk management process helps in determining sum insured under policies?

A. risk identification.
B. risk retention.
C. risk transfer.
D. risk evaluation.
Answer» D. risk evaluation.
56.

Main emphasis of risk management is on

A. risk retention.
B. reduction of cost of handling risk.
C. risk transfer.
D. insurance.
Answer» B. reduction of cost of handling risk.
57.

When the subject is partially lost by a peril insured against, it is called ___________

A. General average loss.
B. Constructive total loss.
C. Actual total loss.
D. Particular average loss.
Answer» D. Particular average loss.
58.

The Concept of Insurance is ___________

A. to share losses by many
B. to make money out of death
C. to earn interest
D. to earn a status
Answer» A. to share losses by many
59.

Insurance covers the risk of most certain event _____

A. birth of a person
B. protection of the childhood
C. Protection in old age
D. death of a person
Answer» D. death of a person
60.

Insurance cover _______

A. protects assets
B. prevents loss
C. reduces the impact of loss
D. insurances immorality
Answer» C. reduces the impact of loss
61.

The person whose risk is insured a is called ____________

A. Insured
B. Assured
C. Indemnity
D. Both a and b
Answer» D. Both a and b
62.

The person who agrees to compensate the loss arisingfrom the risk is called the ______

A. insurer
B. assurer
C. underwriter
D. all the above
Answer» D. all the above
63.

Risk insured against death is a contract of _________

A. assurance
B. agreement
C. indemnity
D. disagreement
Answer» A. assurance
64.

________ is a document which provides evidence of the contract of insurance.

A. Proposal form
B. Policy form
C. Cover note
D. Certificate of Insurance
Answer» B. Policy form
65.

The proportion of the risk which the direct insurer holds on his own account refers to _______

A. Line
B. Retention
C. Retrocession
D. Ceding insurer
Answer» B. Retention
66.

A Re-insurance of re-insurance refers to _____

A. Line
B. Retention
C. Retrocession
D. Cession
Answer» C. Retrocession
67.

Reinsurance also termed as ______

A. insurance of insurance
B. reinsurance of reinsurance
C. double insurance
D. reinsurance
Answer» A. insurance of insurance
68.

When the same risk and subject matter is insured with more than one insurer is called as _______

A. Double Insurance
B. Over Insurance
C. Reinsurance
D. Non-Proportional Reinsurance
Answer» A. Double Insurance
69.

When the amount for which a subject matter is insured is more than its actual value it is called _____

A. Double Insurance
B. Over Insurance
C. Reinsurance
D. Non-Proportional Reinsurance
Answer» B. Over Insurance
70.

The business of insurance is related to protection of ________

A. status
B. savings
C. economic value of assets
D. profits
Answer» C. economic value of assets
71.

Who are the beneficiaries of Insurance?

A. Society
B. Individual
C. Business
D. All of these
Answer» D. All of these
72.

In insurance contracts, the insurance company is also known as ________

A. Insured
B. Beneficiary
C. Insurer
D. policy holder
Answer» C. Insurer
73.

For introduction of a group scheme, we need a ______

A. Large group of persons
B. Small group of persons
C. Homogeneous group
D. Insured group
Answer» C. Homogeneous group
74.

When choosing group life insurance, most groups buy _______

A. whole life insurance
B. one year renewable group term assurance
C. variable life insurance
D. universal life insurance
Answer» B. one year renewable group term assurance
75.

On the death of the bread-earner, two losses occur in the family-one is loss of human life and the other _____

A. Loss of insurance
B. Loss of investment
C. Loss of bank deposits
D. Earning power of family
Answer» D. Earning power of family
76.

Consideration on the part of the life insured in respect of a life insurance contract is _______

A. a promise to take a new policy
B. the insured promise to pay the premium under the policy
C. the payment made towards premium by the insured
D. proposal completed and signed by the person
Answer» B. the insured promise to pay the premium under the policy
77.

The policy holder’s duty to disclose material facts lies at the time of ______

A. taking a policy
B. revival of policy
C. reinstatement of surrendered policy
D. all of the above
Answer» D. all of the above
78.

Master policy is issued for _______

A. Term insurance schemes
B. permanent insurance
C. individual insurance
D. group insurance schemes
Answer» D. group insurance schemes
79.

Who pays premium under social security group insurance scheme?

A. Every member of the group
B. Panchayat of the village
C. 50% by a social security fund maintained by LIC of India
D. LIC of India
Answer» C. 50% by a social security fund maintained by LIC of India
80.

Subrogation means ______

A. something of monetary value
B. to make good loss
C. payment of premium
D. transfer of rights of an insured to another person
Answer» D. transfer of rights of an insured to another person
81.

What is full form of FPA in the context of marine underwriting?

A. Foreign Policy Association
B. Free of Particular Average
C. Free Port Association
D. Food and Perishable Accounting
Answer» C. Free Port Association
82.

Premium fixed by insurance company must be sufficient to _____

A. meet the claims
B. cover the expenses
C. both (a) and (b)
D. none of these
Answer» C. both (a) and (b)
83.

Broker’s Association of India was granted recognition by IRDA on _________.

A. Dec 11, 2001.
B. Dec 11, 2002.
C. Dec 11, 1999.
D. Dec 11, 2003.
Answer» A. Dec 11, 2001.
84.

Foreign equity participation is allowed in insurance sector up to a limit of ____ percent.

A. 80.
B. 73.
C. 49.
D. 26 .
Answer» D. 26 .
85.

Moral hazard may be suspected in cases where _____

A. the life to be insured is old.
B. the insurance is for a very large sum insured
C. in the both the cases
D. none of the above cases
Answer» C. in the both the cases
86.

Which one of the following statements is correct?

A. The underwriter assesses the risk
B. No policy can be issued without underwriter decision
C. Both (a) an (b) statements are correct
D. Both (a) and (b) statements are wrong
Answer» C. Both (a) an (b) statements are correct
87.

Which one of the following statements is correct?

A. Underwriting is done only when there is a medical examination
B. Medical examination is necessary before a policy can be issued
C. Both (a) an (b) statements are correct
D. Both (a) and (b) statements are wrong
Answer» D. Both (a) and (b) statements are wrong
88.

Which one of the following statements is correct?

A. Workingwomen are treated at par with men
B. Educated women are treated at par with men
C. Both (a) an (b) statements are correct
D. Both (a) and (b) statements are wrong
Answer» C. Both (a) an (b) statements are correct
89.

Financial underwriting is done to evaluate ____

A. the probability of the policy lapsing in future
B. the possibility of moral hazard
C. Both (a) an (b) statements are correct
D. Both (a) and (b) statements are wrong
Answer» B. the possibility of moral hazard
90.

The net premium will be ______

A. less than the risk premium
B. more than the risk premium
C. calculated by adding expenses to the risk premium
D. more than the pure premium
Answer» A. less than the risk premium
91.

When interest rates fall, the tabular premium rates are likely to _______

A. increase
B. decrease
C. remain the same
D. equal
Answer» A. increase
92.

The reason for charging level premium is _______

A. risk increases as age increases
B. it is convenient to the policyholders
C. it is convenient to the insurer
D. all the above reasons
Answer» D. all the above reasons
93.

What is meant by a claim under an insurance policy?

A. Any demand made by the policy holder on the insurer
B. A demand to fulfill the policyholders obligations
C. A demand to fulfill the insurer's obligations
D. All the three above
Answer» D. All the three above
94.

Which one of the following statement is correct?

A. A death claim within two years of commencement is treated as an early claim
B. A death claim within two years of revival is treated as an early claim
C. Both (a) and (b) statements are correct
D. Both (a) an (b) statements are wrong
Answer» C. Both (a) and (b) statements are correct
95.

Which one of the following statement is correct?

A. Maturity proceeds are paid to the nominee, if the policyholder dies earlier
B. Maturity proceeds are paid to the heirs, if the policy holders dies earlier
C. Both the above statements are correct
D. Both the above statements are wrong
Answer» B. Maturity proceeds are paid to the heirs, if the policy holders dies earlier
96.

Which one of the following statement is correct?

A. No claim is paid unless the original policy is produced
B. Claim can be paid even without the original policy, if it is lost
C. Both the above statements are correct
D. Both the above statements are wrong
Answer» B. Claim can be paid even without the original policy, if it is lost
97.

Which one of the following statement is correct?

A. In the case of SSS policies, the grace period is one month
B. If the due date is 27th February the grace period ends on 26th March
C. Both (a) and (b) statements are correct
D. Both (a) and (b) statements are wrong
Answer» D. Both (a) and (b) statements are wrong
98.

Which one of the following statement is correct?

A. If death occurs in grace period, the premium due is waived.
B. The date of payment of premium is the date on which the cheque is cleared
C. Both (a) and (b) statements are correct
D. Both (a) and (b) statements are wrong
Answer» D. Both (a) and (b) statements are wrong
99.

Which one of the following statement is correct?

A. When a policy lapses, the policy holders loses everything
B. When a policy lapses, some benefits are protected
C. Both statements are Correct
D. Both the statements are wrong
Answer» B. When a policy lapses, some benefits are protected
100.

Which one of the following statement is correct?

A. In group insurance, a single policy is issued covering many persons
B. A master policy covers servants of a master
C. Both the statements above are correct
D. Both statements above are wrong
Answer» A. In group insurance, a single policy is issued covering many persons
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