Insurance and Banking Quiz

What is the primary purpose of insurance?

• To earn profits

• To eliminate risks

• To transfer risk from insured to insurer

• To avoid investment

Which of the following best describes insurance?

• Profit-making scheme

• A contract to manage uncertainty

• A type of gambling

• None of the above

Insurance is a mechanism to:

• Increase business profit

• Manage risk

• Promote sales

• Reduce taxes

The principle of Utmost Good Faith refers to:

• Disclosure of material facts

• Payment in cash only

• Ignoring risk

• Providing extra benefits

Which principle states that the insured should not profit from insurance?

• Indemnity

• Subrogation

• Contribution

• Proximate cause

The principle of Insurable Interest means:

• Insurer must have interest in the policy

• Policyholder must suffer loss from damage

• Premium should be paid in interest

• Claim is always more than the loss

Subrogation allows:

• Policyholder to claim double

• Insurance company to sue third party after settling claim

• Interest on premium

• Rejection of all claims

Contribution is applied when:

• There is over-insurance

• There are multiple policies

• Loss is negligible

• No premium is paid

Which of the following is not a type of life insurance?

• Term insurance

• Endowment policy

• Marine insurance

• Whole life policy

Fire insurance belongs to:

• Life insurance

• Health insurance

• General insurance

• Marine insurance