C03 Principles of Insurance MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on C03 Principles 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 C03 Principles 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 C03 Principles of Insurance mcq questions that explore various aspects of C03 Principles of Insurance problems. Each MCQ is crafted to challenge your understanding of C03 Principles 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 C03 Principles of Insurance MCQs are your pathway to success in mastering this essential IC38 Life Insurance Agent Exam topic.

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C03 Principles of Insurance MCQs | Page 7 of 7

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Q61.
When does the Principle of Contribution apply in insurance contracts?

a.

It applies to all insurance policies, including life insurance.

b.

It only applies to indemnity policies, not life insurance.

c.

It applies when the policyholder files a claim.

d.

It applies to all types of insurance policies, regardless of indemnity.

Discuss
Answer: (b).It only applies to indemnity policies, not life insurance. Explanation:The Principle of Contribution applies only to indemnity policies, not life insurance.
Q62.
If Mr. Srinivas has insured his house with two insurance companies for the full value of Rs. 12 lakhs each and suffers a fire loss of Rs. 3 lakhs, how much can he claim from each of the insurers under the Principle of Contribution?

a.

Rs. 1 lakh from each insurer

b.

Rs. 2 lakhs from each insurer

c.

Rs. 1.5 lakhs from each insurer

d.

Rs. 3 lakhs from each insurer

Discuss
Answer: (c).Rs. 1.5 lakhs from each insurer Explanation:Mr. Srinivas can claim an amount of Rs. 1.5 lakhs from each of the insurers based on the Principle of Contribution.
Q63.
Why doesn't the Principle of Contribution apply to Life Insurance?

a.

Because life insurance policies are non-indemnity policies.

b.

Because life insurance has no upper limit on the losses suffered in case of loss of life.

c.

Because life insurance policies are not governed by insurance laws.

d.

Because life insurance is not a part of the insurance industry.

Discuss
Answer: (b).Because life insurance has no upper limit on the losses suffered in case of loss of life. Explanation:The Principle of Contribution doesn't apply to Life Insurance because there is no upper limit that can be placed on the losses suffered when there is a loss of life.
Q64.
Which among the following is an example of coercion?

a.

Ramesh signs a contract without having knowledge of the fine print

b.

Ramesh threatens to kill Mahesh if he does not sign the contract

c.

Ramesh uses his professional standing to get Mahesh to sign a contract

d.

Ramesh provides false information to get Mahesh to sign a contract

Discuss
Answer: (b).Ramesh threatens to kill Mahesh if he does not sign the contract Explanation:Coercion is a term used in contract law to describe the act of compelling someone to do something against their will, typically by using threats, force, or intimidation. In this question, option (b) represents a clear example of coercion, as Ramesh is threatening physical harm (killing) to Mahesh to force him to sign the contract. This is a violation of the principle of free and informed consent, which is a fundamental element of a valid contract.
Q65.
Which among the following options cannot be insured by Ramesh?

a.

Ramesh’s house

b.

Ramesh’s spouse

c.

Ramesh’s friend

d.

Ramesh’s parents

Discuss
Answer: (c).Ramesh’s friend Explanation:Insurance typically requires the presence of an insurable interest, which means that the person seeking insurance must have a financial interest in the subject matter being insured. In this case, Ramesh can have insurable interests in his house, spouse, and parents because these relationships or properties can have financial implications for him. However, Ramesh generally does not have a financial interest in a friend, so he cannot insure them directly.
Q66.
What is the significance of the principle of contribution?

a.

It ensures that the insured also contributes a certain portion of the claim along with the insurer

b.

It ensures that all the insured who are a part of the pool, contribute to the claim made by a participant of the pool, in the proportion of the premium paid by them

c.

It ensures that multiple insurers covering the same subject matter; come together and contribute the claim amount in proportion to their exposure to the subject matter

d.

It ensures that the premium is contributed by the insured in equal instalments over the year.

Discuss
Answer: (c).It ensures that multiple insurers covering the same subject matter; come together and contribute the claim amount in proportion to their exposure to the subject matter Explanation:The principle of contribution is important in general insurance contracts where there might be multiple insurance policies covering the same subject matter. This principle ensures a fair distribution of liability among the insurers based on the extent of their coverage, preventing the insured from receiving more than the actual loss suffered.
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