Insurance

Insurance MCQs with Answers and Explanations | Life, Health & General Insurance Objective Questions

Enhance your understanding of Insurance and Risk Management with our comprehensive collection of MCQs with answers and detailed explanations. Topics include principles of insurance, life insurance, health insurance, fire insurance, marine insurance, reinsurance, risk management, premium calculation, claims settlement, insurance laws, and regulatory framework. These objective questions are ideal for students, teachers, and candidates preparing for competitive and professional exams (CA, ACCA, ICMA, MBA, BBA, CSS, PMS, NTS, FPSC, PPSC, UPSC, insurance licensing exams, etc.). Each MCQ is followed by a clear explanation to strengthen concepts, improve problem-solving skills, and boost exam performance. Perfect for practice, revision, and self-assessment in the field of Insurance.

731. Which of the following funds provides for predominant investment in equities?

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Equity fund
Debt fund
Balanced fund
Money market fund
✅ The correct answer is A.
Equity fund provides for predominant investment in equities. An equity fund is a fund that invests in stocks, also called equity securities. Equity funds are practical investments for most people. The attributes that make equity funds most suitable for small individual investors are the reduction of risk.

735. Choose the incorrect sentence out of the following ones.

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Life Insurance policies are contracts of indemnity
Life insurance contracts are valued contracts and not contracts of indemnity
In Non-Life contacts there is no assurance
There is no certainty of risk occurrence in non-Life contracts
✅ The correct answer is A.
A policy of insurance on one’s own life is not an indemnity because it is merely a contract to pay a certain sum in the event of death.

736. In respect of nomination, which of the following statements are correct?

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More than one person can be nominated
Nomination can be done either at the time of commencement or later
Nomination can be changed by making an endorsement
All of the above
✅ The correct answer is D.
All the above statements regarding nomination are true.
More than one person can be nominated, Nomination can be done either at the time of commencement or later and Nomination can be changed by making an endorsement.

738. Which of the following statements is incorrect?

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Insurance agent should indicate the scale of commission if asked by the customer
Insurance agent should share the commission by way of rebate
Insurance agent should disclose his licence on demand
Insurance agent should indicate the premium to be charged
✅ The correct answer is B.
All the options are correct, except option 3. Sharing commission with a client is illegal.

739. A policy can be surrendered only if it has acquired

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Legal value
Money value
Policy value
Paid-up value
✅ The correct answer is D.
A policy can be surrendered only if it has acquired paid-up value. In case of life insurance, if you surrender a policy before the completion of its full term, you could get back a portion of the money you paid as premium, after deducting charges. This money is surrender value.

740. How does investment duration affect returns?

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There is no relationship whatsoever
With greater duration of investment returns are larger
If the duration is larger the rate of returns is likely to be smaller
With greater duration of investment larger tax possibility is likely
✅ The correct answer is B.
investment duration affect returns with greater duration of investment returns are larger. Generally, the higher the duration of a bond or a bond fund (meaning the longer you need to wait for the payment of coupons and return of principal), the more its price will drop as interest rates rise.