C01 Introduction to Insurance MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on C01 Introduction to Insurance, a fundamental topic in the field of IC38 Life Insurance Agent Exam. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our C01 Introduction to Insurance MCQs are designed to help you grasp the core concepts and excel in solving problems.

In this section, you'll find a wide range of C01 Introduction to Insurance mcq questions that explore various aspects of C01 Introduction to Insurance problems. Each MCQ is crafted to challenge your understanding of C01 Introduction to Insurance principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace IC38 Life Insurance Agent Exam tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our C01 Introduction to Insurance MCQs are your pathway to success in mastering this essential IC38 Life Insurance Agent Exam topic.

Note: Each of the following question comes with multiple answer choices. Select the most appropriate option and test your understanding of C01 Introduction to Insurance. You can click on an option to test your knowledge before viewing the solution for a MCQ. Happy learning!

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C01 Introduction to Insurance MCQs | Page 7 of 10

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Q61.
What is the key difference between insurance and assurance?

a.

Insurance covers events that will certainly happen.

b.

Assurance is for events with uncertain timing.

c.

Insurance covers financial losses after an event.

d.

Assurance is used for general insurance contracts.

Discuss
Answer: (b).Assurance is for events with uncertain timing. Explanation:Assurance is used for events with uncertain timing, while insurance covers events that may or may not happen.
Q62.
What is the distinguishing feature of "Assurance" in the context of life insurance?

a.

The certainty of death

b.

The estimation of economic loss

c.

The option to assess losses post-event

d.

The use of the term "Assurance"

Discuss
Answer: (a).The certainty of death Explanation:"Assurance" in the context of life insurance is distinguished by the certainty of death.
Q63.
Why is the term "Assurance" used in the case of life insurance?

a.

Because the loss amount is assessed after the event

b.

Because it covers events that may or may not happen

c.

Because the timing of death is uncertain

d.

Because it is not used in India

Discuss
Answer: (c).Because the timing of death is uncertain Explanation:"Assurance" is used in the case of life insurance because the timing of death is uncertain.
Q64.
In most markets, including India, how are the terms "Insurance" and "Assurance" commonly used?

a.

They are used interchangeably

b.

"Insurance" is used for general contracts, and "Assurance" for life contracts

c.

"Assurance" is the preferred term for all types of contracts

d.

They are not used in the insurance industry

Discuss
Answer: (a).They are used interchangeably Explanation:In most markets, including India, the terms "Insurance" and "Assurance" are used interchangeably.
Q65.
Which among the following is a method of risk transfer?

a.

Bank Fixed Deposit

b.

Insurance

c.

Equity shares

d.

Real Estate

Discuss
Answer: (b).Insurance Explanation:Insurance is a method of risk transfer. Insurance involves transferring the responsibility for potential financial losses to an insurance company in exchange for the payment of premiums. If a covered event occurs, the insurance company bears the financial risk associated with it.
Q66.
What does the term 'Risk' refer to in the context of insurance?

a.

A loss that has already occurred

b.

An unexpected loss

c.

An expected loss

d.

A loss that cannot be quantified

Discuss
Answer: (c).An expected loss Explanation:'Risk' in insurance refers to an expected loss, not one that has already occurred.
Q67.
What factors determine the cost of an expected loss in insurance?

a.

Probability of loss occurrence only

b.

Severity of loss only

c.

Both the probability and severity of loss

d.

The type of peril being insured against

Discuss
Answer: (c).Both the probability and severity of loss Explanation:The cost of an expected loss in insurance is determined by both the probability of loss occurrence and the severity (amount) of the loss.
Q68.
How does the cost of risk vary based on probability and severity?

a.

It increases when the probability is high and the severity is low

b.

It is always high regardless of probability and severity

c.

It decreases when the probability is high and the severity is high

d.

It increases in direct proportion with both probability and severity

Discuss
Answer: (d).It increases in direct proportion with both probability and severity Explanation:The cost of risk increases in direct proportion with both the probability and the severity of loss.
Q69.
How does insurance function as a risk management tool?

a.

By eliminating all risks

b.

By reducing the probability of loss

c.

By transferring the financial impact of losses to an insurance company

d.

By increasing the cost of risk

Discuss
Answer: (c).By transferring the financial impact of losses to an insurance company Explanation:Insurance functions as a risk management tool by transferring the financial impact of losses to an insurance company.
Q70.
What does insurance protect individuals from?

a.

Loss of assets/wealth due to any reason

b.

Any financial impact

c.

Loss of assets/wealth due to an uninsured loss

d.

Loss of assets/wealth due to an insured loss

Discuss
Answer: (d).Loss of assets/wealth due to an insured loss Explanation:Insurance protects individuals from the financial impact of losing their assets/wealth due to an insured loss.
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