Insurance Test Questions

1. Describe the basic purpose of general insurance.

2. On what basis is the premium payable for insurance calculated?

3. A claim made under an insurance contract is restricted to the amount of the financial loss actually suffered. What are the two terms used to describe this basic principle?

4. What is the fundamental difference between life and non-life insurance?

5. What is meant by a 'new-for-old' insurance contract?

6. Against what main hazards would you advise a home owner to insure?

7. What is the meaning of the term 'excess' in an insurance contract?

8. What do you understand by the term 'public liability'?

9. Premiums payable on renewal of a contract for general insurance may not be identical with the original premium. Suggest three reasons for this.

10. It is illegal to drive a motor vehicle on a public highway without stipulated minimum insurance. What is the minimum cover required by law?

11. What risks additional to those required by the law do most third-party insurance contracts include?

12. What do you understand by the term 'comprehensive cover' in the case of motor insurance?

13. Premiums for motor insurance vary very widely indeed. On what main bases do the underwriters assess the risks, and thus the premiums?

14. Describe the operation of the 'no-claims bonus' system.

15. Give examples of nonlife insurance other than for buildings, house contents and motor car, that might be appropriate for private individuals in certain circumstances.

16. What is meant by the term 'level premiums' in connection with life assurance?

17. What five main considerations govern the scale of premiums for life assurance?

18. Define whole-life assurance. What are its main purposes?

19. What is term life assurance?

20. Term assurance can be arranged to provide benefits in the form of a regular income for dependants instead of a single capital sum. What is the name given to this form of cover?

21. Only one kind of life assurance can provide benefits that the insured person can live to enjoy. What is this? Describe how it works.

22. Explain the difference between annual reversionary bonuses and terminal bonuses.

Joint Life Assurance

It is common practice for a married couple to take out life assurance on each life. Often they choose an endowment policy on the life of the husband and a (much cheaper) term policy on the life of the wife. The purpose in insuring the life of the wife, even though she may not necessarily be earning an income, is to give financial protection to the husband should he be faced with the problem of bringing up a family single-handed and of having to employ a housekeeper.

Consideration should be given in such circumstances to an alternative and usually very much more economical way of providing... see: Joint Life Assurance

Refunds, Personal And Business Finance 2017

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