C02 Core Elements of Insurance MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on C02 Core Elements of 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 C02 Core Elements of 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 C02 Core Elements of Insurance mcq questions that explore various aspects of C02 Core Elements of Insurance problems. Each MCQ is crafted to challenge your understanding of C02 Core Elements of 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 C02 Core Elements of Insurance MCQs are your pathway to success in mastering this essential IC38 Life Insurance Agent Exam topic.

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C02 Core Elements of Insurance MCQs | Page 2 of 5

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Q11.
Why are losses arising out of normal wear and tear not covered in insurance?

a.

Insurance companies do not want to cover such losses

b.

It is impossible to predict wear and tear

c.

Normal wear and tear is a natural process

d.

Normal wear and tear is covered by insurance

Discuss
Answer: (c).Normal wear and tear is a natural process Explanation:Losses arising out of normal wear and tear are not covered in insurance because they are considered a natural process.
Q12.
When does insurance come into play in the event of a peril?

a.

When there is exposure to risk

b.

When there is an actual economic (financial) loss

c.

When the peril is severe

d.

When there is no exposure to risk

Discuss
Answer: (b).When there is an actual economic (financial) loss Explanation:Insurance comes into play only when there is an actual economic (financial) loss as a result of a peril.
Q13.
What is the term used to describe losses that result in total loss or bankruptcy?

a.

Critical losses

b.

Severe losses

c.

Minor losses

d.

Unpredictable losses

Discuss
Answer: (a).Critical losses Explanation:Losses that result in total loss or bankruptcy are referred to as critical losses.
Q14.
What is the primary factor that determines the extent of damage likely to be suffered in a risk event or situation?

a.

The cost of insurance coverage

b.

The degree of risk exposure

c.

The occurrence of a peril

d.

The location of the asset

Discuss
Answer: (b).The degree of risk exposure Explanation:The extent of damage likely to be suffered is determined by the degree of risk exposure.
Q15.
Which of the following would be considered a critical loss?

a.

A minor fire in a small retail store

b.

A flood causing damage to a warehouse's inventory

c.

A factory fire destroying a multinational company's inventory

d.

A small accident resulting in a minor scratch on a car

Discuss
Answer: (c).A factory fire destroying a multinational company's inventory Explanation:A factory fire that destroys a multinational company's inventory would be considered a critical loss, as it has a significant and severe impact on the business.
Q16.
What is the defining characteristic of catastrophic losses in insurance?

a.

They are easily reversible

b.

They have a minor impact on the environment

c.

They signify death or total disability for a large number of people

d.

They result from individual accidents

Discuss
Answer: (c).They signify death or total disability for a large number of people Explanation:Catastrophic losses in insurance signify death or total disability for a large number of people.
Q17.
Which of the following events would be categorized as a catastrophic loss?

a.

A small house fire

b.

A minor car accident

c.

An earthquake destroying several villages

d.

A common cold

Discuss
Answer: (c).An earthquake destroying several villages Explanation:An earthquake that completely destroys several villages would be categorized as a catastrophic loss, as it has a significant and widespread impact.
Q18.
What is the defining characteristic of marginal/insignificant losses in insurance?

a.

They are irreversible

b.

They can be easily met without imposing financial strain

c.

They have a severe impact on the environment

d.

They result from major disasters

Discuss
Answer: (b).They can be easily met without imposing financial strain Explanation:Marginal/insignificant losses in insurance can be easily met from an individual or firm's existing assets or current income without imposing any undue financial strain.
Q19.
What is a hazard in the context of insurance?

a.

The probability of a loss

b.

A feature that decreases the chance of loss

c.

A condition that increases the probability of a loss or its severity

d.

An event that is reversible

Discuss
Answer: (c).A condition that increases the probability of a loss or its severity Explanation:In the context of insurance, a hazard is a condition that increases the probability of a loss or its severity.
Q20.
What is the primary purpose of assessing hazards in insurance underwriting?

a.

To calculate the cost of insurance coverage

b.

To determine the color of assets

c.

To identify the hazards to which an asset is exposed

d.

To assess the degree of risk exposure

Discuss
Answer: (c).To identify the hazards to which an asset is exposed Explanation:The primary purpose of assessing hazards in insurance underwriting is to identify the hazards to which an asset is exposed.
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