Sample Questions

IC 01 Principles of Insurance Mock Tests — 5 random MCQs with answers & explanations

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These 5 questions are randomly selected (standard MCQs only, not case-based).

Q1 What term describes the primary cause that leads to a financial loss?

  • A. Accident
  • B. Peril Correct Answer
  • C. Hazard
  • D. Risk
Explanation:
A peril is the direct cause of loss, such as fire, theft, or flood. It is the specific event that insurance provides protection against.

Marks: 1

Q2 Identifying the 'Proximate Cause' is necessary when:

  • A. There is only one event.
  • B. There is a complicated chain of events.
  • C. The first cause was an insured peril.
  • D. Both B and C Correct Answer
Explanation:
When multiple events lead to a loss, insurers must find the 'most direct' cause to see if it is one of the perils covered by the policy.

Marks: 1

Q3 Who has the authority to appoint the Chairman and members of the IRDAI corporate body?

  • A. The Reserve Bank of India
  • B. The Supreme Court of India
  • C. The Central Government of India Correct Answer
  • D. The Policyholders' Council
Explanation:
As a statutory regulator, the IRDAI leadership is appointed by the Central Government to oversee the insurance market.

Marks: 1

Q4 In group insurance, the single policy document issued to the employer is known as the:

  • A. Group Policy
  • B. Master Policy Correct Answer
  • C. Corporate Policy
  • D. Main Policy
Explanation:
The Master Policy is the primary contract held by the group organizer, while individual members receive certificates of insurance.

Marks: 1

Q5 When an insurer calculates a claim for "actual loss," they include the cost of:

  • A. Repairs
  • B. Replacing the item
  • C. Income lost due to the damage (consequential loss)
  • D. All of the above Correct Answer
Explanation:
A full claim should cover fixing the item and the financial loss caused by the item being out of use.

Marks: 1

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