Monday 10 July 2017

Banking Awareness

Q1. _____________ a/an arrangement by which a company or the state undertakes to provide a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a specified premium.
(a) Insurance
(b) Banking
(c) Market Risk
(d) Premium
(e) Prompt Corrective Action (PCA)
S1. Ans.(a)
Sol. Insurance is an arrangement by which a company or the state undertakes to provide a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a specified premium.

Q2. In which among the following year the Life Insurance sector and Life Insurance Corporation came into existence?
(a) 1949
(b) 1935
(c) 1951
(d) 1962
(e) 1956
S2. Ans.(e)
Sol. An Ordinance was issued on 19th January 1956 nationalising the Life Insurance sector and Life Insurance Corporation came into existence in the same year.
Q3. IRDA was constituted as a _________ to regulate and develop the insurance industry in 1999. 
(a) Regulatory body
(b) Amendment body
(c) autonomous body
(d) All of the above
(e) None of the given options is true
S3. Ans.(c)
Sol. Insurance Regulatory and Development Authority (IRDA) set up as the autonomous body under the IRDA Act in 1999.
Q4. An insurance ________ is the amount of money that an individual or business must pay for an insurance policy.
(a) premium
(b) agent
(c) health insurance
(d) broker
(e) clause
S4. Ans.(a)
Sol. An insurance premium is the amount of money that an individual or business must pay for an insurance policy. The insurance premium is considered income by the insurance company once it is earned, and also represents a liability in that the insurer must provide coverage for claims being made against the policy.

Q5. In 1993, the Government set up a committee under the chairmanship of _________ former Governor of RBI, to propose recommendations for reforms in the insurance sector.
(a) Gorwala Committee 
(b) RN Malhotra
(c) B Sivaraman Committee
(d) Rangarajan Committee
(e) None of the given options is true

S5. Ans.(b)
Sol. In 1993, the Government set up a committee under the chairmanship of RN Malhotra, former Governor of RBI, to propose recommendations for reforms in the insurance sector.The objective was to complement the reforms initiated in the financial sector.
Q6. IRDA stands for-
(a) Insurance Regulatory and Department Authority 
(b) Insurance Regulatory and Development Assembly 
(c) Insurance Regulatory and Development Association
(d) Insurance Regulatory and Development Authority
(e) Insurance Regulatory and Development Agency
S6. Ans.(d)
Sol. for IRDA stands Insurance Regulatory and Development Authority.
Q7. In which year, the IRDA was incorporated as a statutory body? 
(a) April 2000
(b) April 2001
(c) April 2002
(d) April 2003
(e) April 2004
S7. Ans.(a)
Sol. Following the recommendations of the Malhotra Committee report, in 1999, the Insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the insurance industry. The IRDA was incorporated as a statutory body in April 2000.

Q8. Name the organisation, which regulates the Indian insurance industry to protect the interests of the policyholders and work for the orderly growth of the industry.
(a) IRDA
(b) RBI
(c) SEBI
(d) NABARD
(e) LIC
S8. Ans.(a)
Sol. IRDA is regulated the Indian insurance industry to protect the interests of the policyholders and work for the orderly growth of the industry.
Q9. Frames regulations for the insurance industry in terms of Section ________ of the Insurance Act 1938 from the year 2000 has registered new insurance companies in accordance with regulations.
(a) section 124C
(b) section 194B
(c) section 114A
(d) section 127E
(e) section 118A
S9. Ans.(c)
Sol. Frames regulations for the insurance industry in terms of Section 114A of the Insurance Act 1938 From the year 2000 has registered new insurance companies in accordance with regulations. Monitors insurance sector activities for healthy development of the industry and protection of policyholders’ interests.
Q10. What is the functions and duties of IRDA?
(a) Registering and regulating insurance companies
(b) Promoting professional organisations in insurance.
(c) Regulating investment of policyholders’ funds by insurance companies.
(d) All of the above
(e) None of the given options is true

S10. Ans.(d)
Sol. Functions and Duties of IRDA
Section 14 of the IRDA Act, 1999 lays down the duties, powers and functions of IRDA.
1. Registering and regulating insurance companies.
2. Protecting policyholders’ interests.
3. Licensing and establishing norms for insurance intermediaries.
4. Promoting professional organisations in insurance.
5. Regulating and overseeing premium rates and terms of non-life insurance covers.
6. Specifying financial reporting norms of insurance companies.
7. Regulating investment of policyholders’ funds by insurance companies.
8. Ensuring the maintenance of solvency margin by insurance companies.
9. Ensuring insurance coverage in rural areas and of vulnerable sections of society.
Q11. ____________ is a financial cover for a contingency linked with human life, like death, disability, accident, retirement etc. 
(a) Health Insurance 
(b) Life Insurance
(c) Motor Insurance 
(d) Travel Insurance 
(e) Group Insurance
S11. Ans.(b)
Sol. Life Insurance is a financial cover for a contingency linked with human life, like death, disability, accident, retirement etc. Human life is subject to risks of death and disability due to natural and accidental causes. When human life is lost or a person is disabled permanently or temporarily, there is the loss of income to the household.
Q12. ULIP is a life insurance product, which provides risk cover for the policyholder along with investment options to invest in any number of qualified investments such as stocks, bonds or mutual funds. What is the meaning of "I" in ULIP? 
(a) Insurance
(b) Initial
(c) Investment
(d) Instalment
(e) None of the given options is true
S12. Ans.(a)
Sol. Unit Linked Insurance Plans (ULIP) is a life insurance product, which provides risk cover for the policyholder along with investment options to invest in any number of qualified investments such as stocks, bonds or mutual funds. As a single integrated plan, the investment part and the protection part can be managed according to specific needs and choices.
Q13. Net asset value NAV is the value per share of a mutual fund or an exchange-traded fund (ETF) on a specific date or time.
NAV stands for-
(a) Net Asset Voice
(b) Nominal Asset Value 
(c) Non Asset Value 
(d) Net Agency Value  
(e) Net Asset Value
S13. Ans.(e)
Sol. Net asset value (NAV) is the value per share of a mutual fund or an exchange-traded fund (ETF) on a specific date or time.
Q14. In ________ insurance, schemes are offered by insurance companies to provide certain classes of individuals, the benefit of insurance coverage at moderate cost.
(a) group insurance
(b) motor insurance
(c) travel insurance
(d) life insurance
(e) health insurance
S14. Ans.(a)
Sol. Another kind of insurance is group insurance. In group insurance, schemes are offered by insurance companies to provide certain classes of individuals, the benefit of insurance coverage at moderate cost.
Q15. ____________ a/an is the section of an insurance policy dealing with various coverages, exclusions, duties of the insured, locations covered and conditions that terminate coverage.
(a) Actuary
(b) Broker
(c) Agent
(d) Clause
(e) None of the given options is true
S15. Ans.(d)
Sol. The clause is a section of an insurance policy dealing with various coverages, exclusions, duties of the insured, locations covered and conditions that terminate coverage.

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