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Which is the correct statement regarding risk?
Which risk management technique is followed by a person who is not doing things that expose one to risk?
If a person is employing strategies to reduce the likelihood or the severity of loss caused by a particular risk he is most likely doing
If an individual takes insurance he most likely manages risk by:
If the probability of risk occurrence is low and the cost of loss is small he most likely manages such risk by:
When the likelihood of loss is significant and/or when the cost of a loss is substantial a person should most likely manage risk:
Which of the following statement is correct:Statement 1: Insurance cover both speculative and pure risk.Statement 2: Insurance cover only pure risk
Which of the following statement is correct?Statement 1: Perils are cause of loss and Hazards are the things that increase the chance of loss by a perilStatement 2: Hazards are cause of loss and perils are the things that increase the chance of loss by a hazard.
Moral hazards most likely refer to:
Morale hazards most likely refer to:
Under which step of risk management the advisor will identify what the client wants from his or her risk management program and evaluate all the client’s risk exposures and provide guidance in meeting the resulting risk management goals
Under which step of risk management the advisor will view tax returns investment statements wills and trust documents policy checklists legal documents risk analysis questionnaires and financial statements.
Monitoring and reviewing risk management recommendation is required to be done by advisor as part of risk management process.
The process by which the insurer determines whether a risk is reasonable to accept at what price and with what conditions refer to:
Which of the following are the most likely factors which should be considered before accepting risk:
The insurer works with the idea that with enough homogeneous risks or exposure units potential losses for the entire group become somewhat predictable the principle is refer to:
Which of the following is least likely a characteristic of insurance policy:
The insurer has the power to draft the contract while the potential policyholder only has the right of refusal and he/she cannot counter the offer or create a new contract for the insurer to agree to.Which characteristic of insurance policy is referred:
When a person is most likely to have a insurable interest in the insured:
Principle of indemnity in insurance least likely refer to:
Duty of disclosure apply to:
An insurer will sue the individual who caused covered harm to an insured after it has settled the insured’s claim to recover amounts paid to the insured to cover the loss this ensures that the insured does not gain from insurance policy.
Which property of insurance contract refer here:
Divya is keen to buy a life insurance policy and is looking for a right kind of insurance agent for this purpose. Which amongst the following is the most valuable criteria to be considered by Divya for selecting a good insurance agent?
The benefits of a group insurance scheme apply uniformly to all the individuals. Which one of the following statements correctly describe a feature of a group insurance scheme offered by the employer?
Nidhi is fond of investing in high value fine arts and other collectibles. She is eager to insure her high value collection. Which of the following is the most important factor to be addressed by Nidhi for purchasing the personal property coverage?
Which one of the following changes in actuarial assumption will not increase the plan cost of Group Gratuity scheme for an employer?
Which of the following primary risk management strategies intends to retain the risk, but reduce the likelihood of financial impact?
While recommending a life cover, it is important for a financial planner to first identify the client’s priorities along with a focus on funding. Which one of the following type of life cover may be most beneficial for a client who wants lifetime coverage with a flexibility of premiums, no participation in equity/bond market but is fine with the uncertainty about cash values?
Jessica is determining whether to work for an insurer as an advisor. She would also like to be sure of the company’s persistency relative to the industry. Which of the following correctly reflects the feature of persistency of the insurer?
Sunil has taken a money back policy with a basic sum assured of Rs. 5,00,000 and a maturity period of 25 years. Survival benefits of 15% each are paid under the policy at the end of the 5th, 10th, 15th and the 20th year. In addition, accrued bonus of Rs. 750 per thousand sum assured and an interim bonus of Rs. 25 per thousand sum assured, are also payable under the policy. What will be the death claim amount if Sunil dies in the 25th year of the policy?
Subhash and Sujata have two daughters, Supriya and Sunidhi, age 6 and 4 years, respectively. While Subhash works in a bank, Sujata is a home maker and will prefer to remain so until both children attain 18 years of age. Subhash wants to buy a life cover which would take care of the living and school expenses of both children till their age of 18. At present, Subhash spends annually a sum of Rs. 90,000 on Supriya and Rs. 82,000 on Sunidhi for meeting these needs. How much life cover should Subhash purchase to fund this requirement? Assume inflation of expenses to be 5% per year and Subhash’s investments to yield a return of 7% per year during the entire period.
Many long-term care policies include a provision for respite care. Which one of the following is the true representation of feature in a respite care?
Arun, aged 35, is analyzing a 20-year endowment policy with a premium of Rs. 15,200 and a sum assured of Rs. 3.50 lakh. For this policy the insurer has historically declared reversionary bonuses and terminal bonus of Rs. 30 and Rs. 90 per thousand sum assured, respectively. Meanwhile, a term plan with the same sum assured and time period is available for a premium of Rs. 3,450. Assuming he survives the 20-year period, what annual rate of return should be generated by Arun on the differential component of the premium, to match the terminal value under the endowment policy?
Michael’s gross earnings were US$ 4000 per month prior to his disability caused by an accident. He re-joins work soon and although he would be working full time his gross earnings are reduced to US$ 3000 per month. Michael has a residual disability income policy which has US$ 2500 benefit amount, a 25% residual disability provision, where reduction in income should be greater than 20% of gross earnings. What will be Michael’s gross monthly income, including the monthly pay outs from his residual disability policy?
Ashish, aged 27, buys an endowment plan for a 33-year term starting from May 12, 2012. The annual premium is Rs. 7,500, premium payment mode being annual. The sum assured under the policy is Rs. 2,00,000 with double accidental benefit. Ashish meets with an unfortunate road accident on June 2, 2020, which proved fatal for him. What will be the claim amount payable to Ashish’s family if the last premium paid was on May 12, 2019?
Insurance policies are legal contracts. Each party to a contract has a legal relationship with the company and vice versa. As a legal contract, there are standard terms and conditions and several elements to consider in a company evaluation when selecting an insurance company. The fact that a policy owner accepts the standard wording of an insurance contract, with no opportunity to negotiate variances to the wording, makes the policy one of:
Katrina and Aamir were also just recently married and they want to insure some personal use property as they received a lot of gold and other expensive gifts at the wedding. Katrina is asking some questions regarding the various insurance contracts being discussed. With a contract of insurance for property, and for a valid life insurance contract, the policy owner must have an insurable interest:
Lara is a member of her employer’s extended health care plan, which has a €150 annual family deductible based on a calendar year, and provides for the employee to pay a 25% coinsurance. If Lara’s family has eligible health claims that total €4,200 this year, how much will Lara receive as a reimbursement under the health care plan?
Rohit has been working with XYZ Ltd for the last 5 years. His employer does not provide health insurance cover to its employees. Rohit has one health policy in his name but feels that the cover is not adequate. Which one of the following variants of hospitalization policy can Rohit choose for adding cover to his existing plan?
A loss assessor in insurance sector is an individual, or a firm, who deals with cases related to a claim. Which one of the following statements correctly describe the function of a loss assessor?
Whole life insurance policies are fixed or bundled. That is, the policy face amount or death benefit, mortality charges, premium and cash value components are all bundled into the policy. Universal life (UL) policies are often referred to on the policy as flexible premium adjustable life. They have the same elements as a whole life policy, but unbundle the components—mortality charges, expense charges, and interest rates—and keep them separate. When an individual opts to pay the minimum contribution on a universal life insurance policy, what does this contribution cover?
The way insurance operates, insurers base premiums, in large measure, on the likelihood of a loss occurring. This means that a high-probability risk will cost quite a bit—perhaps as much as the financial loss—to insure. Comparing the cost of insuring against a possible loss with the potential amount of financial loss is most likely an example of which of the three rules of risk management.
Harpreet wants to renew his car insurance policy. His vehicle is 5 years old and it’s IDV as on date is Rs. 2.52 lakh. He has received the following quotation from his insurer for breakup of premiums: (Own Damage) Base Premium – Vehicle Rs. 5,200 Premium – Electrical fittings 7% of Base premium (Liability premium) Basic Third Party Rs. 2,050 Legal liability to driver Rs. 150 No claim bonus (NCB) 35% What would be the gross premium payable by Harpreet for his car insurance for the coming year, ignoring the taxes?
Professional indemnity protects professionals from claims and legal costs arising from financial loss or damage of property. Which one of the following categories of claims can be covered under such policies?
Mohit had purchased only compulsory third party policy for his car. He jumped a red light and collided with another car and then with the boundary wall of a nearby house. Damage to his car was of Rs. 25,000, damage to other car was of Rs. 10,000 and damage to the boundary wall of the house was of Rs. 20,000. How much claim will the insurance company pay to Mohit?
Every policy document contains standard sections, also called components. Which one of the following statements correctly defines the provision featured in the policy component?
Endorsements are an important part of policy document and can be issued at the time of purchase, mid-term or during the renewal period of the insurance policy. Which of the following statement correctly defines the meaning of endorsement in the context of an insurance policy?
Due to the complexity of the risk management process and potential severity of the consequences, it is important for advisors to develop a focused and well-organized process for consistently assessing and addressing risk management issues. The risk management process can be shown as a six step process to assess exposure to financial risk. Developing risk treatment approaches for risk exposures and select appropriate alternatives most likely fall under which of the following steps:
You are helping to evaluate your client’s risk management needs. Rani is a fairly new client and you are working through the collecting of quantitative and qualitative information. Rani is an executive in a global firm and travels extensively to developing countries setting up operations. Rani’s skills are sought after and she is regularly contacted by recruiters but she is very happy with her current employer and she loves the work that she does despite some of the risks travelling to remote locations. Rani’s success in the corporate world has led her to take on a volunteer role as a Director at a local not-for-profit charity focused on youth and education. Rani’s existing life insurance from the company is just one year of base salary and limited disability coverage and she has never purchased any additional insurance. Rani has no health issues and both her parents are over 80 years old, fit and active and she believes that “she has good genes”. Rani has two children who are both in high school. Rani is not willing to consider a desk job just yet as she loves being out in the field. Which of the following statements regarding the evaluation of Rani’s risk management needs is most likely correct?
The major risk management areas are: property, liability, life, health, and disability. Financial advice is a holistic process, and recommendations a financial advisor makes in one area often have an impact on one or more other areas. Few individuals can effectively address all financial needs to the same degree and at the same time. In the case of a client with limited funds, risk-management goal prioritization is a valuable activity as risk transfer always costs money to implement. Which of the following statements regarding risk management strategies is most likely correct?
It is important for a financial advisor to help their client’s prioritize action steps to assist their client’s in implementing risk management strategies. Conducting a risk management audit is the most appropriate way to begin developing and optimizing a risk management strategy. In a risk management audit with your client, the information gathered includes the following: your client Kareena has just started her own consulting business after a long and successful career with a major employer but has lost employer-sponsored medical benefits. Kareena has also been appointed as a Director to a non-profit organization board. Kareena’s successful career has enabled her to be classified as a “high net worth individual” (HNWI). Kareena has no dependents. The insurance priorities for Kareena in the order of most important to least important are most likely:
Product liability insurance covers the risk faced by manufacturers, and sellers, by their product or service. Which one of the following statements correctly describe the general provision available to the insured under product liability insurance?
ABC Ltd. is in the business of manufacturing smartphones. One day, the assembly line went wrong during the manufacturing process. Although the issue did not affect all the phones, some of the affected phones did tend to overheat and explode. Which one of the following liability insurance should have been taken by ABC Ltd. beforehand?
A gas station had a leak in an underground storage tank. Within a day or two, nearby residents noticed gasoline in their water wells. Which one of the following liability insurances should have been taken by the owner of the gas station to cover claims?
Aniket wants to renew his car insurance policy. His vehicle is 4 years old and it’s IDV as on date is Rs. 4.25 lakh. He has received the following quotation from his insurer for breakup of premiums: (Own Damage) Base Premium – Vehicle Rs. 8,100 Premium – Electrical fittings 5% of Base premium (Liability premium) Basic Third Party Rs. 4,250 Legal liability to driver Rs. 650 No claim bonus (NCB) 25% What would be the gross premium payable by Aniket for his car insurance for the coming year, ignoring the taxes?
Employer’s Liability Act provides for the protection of workmen at their workplaces and to safeguard their related interests. Which one of the following statement correctly describes the feature or provision under the Employer’s Liability Act?
Risk management and insurance planning can be shown as a process that has six steps. Which of the following is the second step in the process?
You are having a discussion with your client regarding their estate planning. Which of the following actions an individual takes while alive will least likely have a direct impact on the smooth transition of their estate?
A person who creates a trust of property owned by him is known as the ____ of the trust.
After the death of Priyanka’s first husband, Gana, she had a new will prepared that left everything to her parents. Priyanka moved on with her life and five years later married Sunny. Neither Priyanka nor Sunny felt an urgent need to update their wills. If Priyanka were to die under the current circumstances, how will her estate most likely be distributed?
Steve, and John inherited the family cottage from their parents. Neither have children. Their parent’s wishes were that at the death of one of the children, the property will pass to the other child. This arrangement cannot be superseded by a will. The handling of the cottage for estate distribution purposes most likely refers to which form of ownership?
Which of the following is most likely considered to be community property when owned by partners while living in a community property state?
In an irrevocable trust, ownership of assets transferred by the settlor vests with the Trust and after such transfer is effected, they are no longer considered personal assets of the settlor. What is the advantage of such a structure?
By a ______, the ownership of a property is transferred voluntarily and without consideration.
A simple way to make probate less expensive is to have a well-written, current, valid will that provides all the direction needed to administer the estate. Which of the following statements regarding probate is most likely correct?
A has created an irrevocable trust in which he is the ‘protector’. A has reserved the right, as protector, to remove any trustees at his will, and appoint new trustees in their place. A is desirous of appointing himself as a trustee. Can he do this?
Which of the following statements is FALSE? 1. Testamentary succession is the succession in which the property is transferred as per the will made by the person after his death. 2. Intestate succession is when a person holding the ownership of the property passes away without making any proper will
If you do not identify suspected incapacity to appropriate individuals, you may become legally liable for your actions. Which of the following is the least likely course of action for a financial planner in planning for incapacity?
FPSB has categorized the financial planner competencies into three financial planning functions: Collection, Analysis and Synthesis. Which of the following list of selected steps in the estate planning process is most likely correct?
Who are included under the Hindu Succession Act?
Which of the following is not a type of Will?
A. Holograph Will
B. Mutual Will
C. Contingent Will
D. Third Party Will
Which of the following is most likely a characteristic of a cross-purchase buy-sell agreement funded with life insurance?
Several types of documents that provide advance directives for medical and other personnel can be applied. Which of the following powers of attorney enables a principal to grant powers that remain in effect throughout the principal’s incapacity?
Muslim law recognises which of the following two types of heirs?
A. Sharers B. Residuaries C. Receivers D. Acceptors
What type of trust is most likely created when property is transferred to a trust permanently and the grantor cannot terminate the trust?
Which of the following statements are correct related to Trust?
A. Author – Person who creates the trust
B. Beneficiary – The person for whose benefit the trust is created or the confidence is accepted
C. Trust Deed – Agreement executed between the settlor and the Managing Trustee of the trust
D. Managing Trustee – Person who manages the activities of the trust
Which of the following statements is False? A. In the case of Christians, the laws of Indian Succession Act, 1925 is applicable to both testamentary and intestate succession.
B. The Indian Succession Act, 1925 is applicable to laws relating to the testamentary succession in the case of Sikhs. However, in the case of intestate succession of Sikhs the Hindu Succession Act, 1956 is applicable.
Which of the following two statements are wrong?
A. Public Trusts: This trust is for a closed group. In other words, the beneficiaries can be identified. Eg: A trust created for the relatives and friends of the author.
B. Private Trusts: This trust is created for a large group i.e, the public in large. Eg: Non-Profit NGO’s Charitable Institutions for the general public.
A Will will be revoked if which of the following options are exercised?
A. By execution of a subsequent Will
B. By writing and declaring an intention to revoke the Will
C. By burning, tearing or otherwise destroying the Will
Your client Josh is an owner of an apartment that he purchased with his brother Brad together 12 years ago for €200,000 with a tenancy in common agreement. Josh contributed 25% and Brad contributed 75%. Today the house is valued at €550,000. There is a 50% capital gains tax in the territory. You are helping Josh to determine his estate value at death. Both brothers have children and their will’s leave everything to their children. Which of the following statements regarding Josh’s estate value at death is most likely correct?
Your clients have been partners for almost 10 years and are planning to get married in 6 months. Several states and a few territories have a category of property ownership between spouses known as community property. They need some advice with regards to laws of succession and in particular they have some questions regarding the community property regime in your territory. Which of the following statements regarding community property is most likely correct?
Which of the following statements are correct in the context of gifting an immovable property? A. In case of gifting of immovable property (i.e., land or building), the recipient would be required to pay income tax if the stamp duty value of the property exceeds Rs 50,000 and such property is received without adequate consideration. B. Any inadequate consideration received wherein the difference between the consideration and stamp duty value exceeds higher of Rs 50,000 and 5 percent of consideration, such difference shall be taxed in the hands of the recipient.
When can a trust get extinguished? A. When its purpose is completely fulfilled, or B. When its purpose becomes unlawful, or C. When the fulfilment of its purpose becomes impossible by destruction of the trust-property or otherwise, or D. When the trust being revocable, is expressly revoked
Which of the following statements describing the attributes of trusts is most likely correct?
Your Client, A, has approached you and wishes to create a trust during his lifetime, for the benefit of his wife, B and son C. He has decided that B and C will share the income equally. He has also decided that he wants such trust to survive him and therefore does not have any intention of dissolving the trust. Which trust structure would be most suitable to achieve A’s wishes?
A is a resident Indian who owns several properties abroad. During his lifetime, he wishes to create an entity that holds these properties, for the benefit of his children in the USA. What type of entity would be best suited for A?
A, received two gifts during the financial year 2019-2020, both by cash deposits in her bank account. Her sister, B gifted her INR 200,000 and her friend C, gifted her INR 38,000. Advise A on the taxability of these gifts under the Indian Income Tax Act, 1961.
The gross value of Helen’s estate was €1,000,000 and she left outstanding debts of €200,000, prior to the calculation of any income taxes owing. Probate fees in Helen’s territory are 0.5% per €1,000 on the first €100,000 and 1.5 per €1,000 over €100,000. The probate fees on Helen’s estate are most likely closest to:
A trust that is created by a decedent’s will and made effective at death is most likely a(n):
Mr. X gifted land to his friend for Rs. 1.50 lakhs. The stamp duty value is Rs. 4 lakhs. What is the taxable value of the gift?
Which of the following statements regarding the taxation of trust income is most likely correct?
Which of the following statements are True?
A. Contingent/Conditional Wills: Execution of these wills are dependent on happening of an event and if that event occurs in the future only then the will is to become effective
B. Holograph Wills: Wills which are handwritten by the testator himself are known as Holographic Wills.
Can shares in a HUF be bequeathed?
Four partners (A,B,C,D) have an equal ¼ interest in a partnership valued at €24,000,000. If the partners use the buy-sell cross purchase method, how much coverage should partner B have on the life of each of the other partners?
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