All Courses
Get the App Signup / Login
Sign in Open App
B Com Exam  >  B Com Tests  >  Principles of Insurance  >  Test: Concept of Insurance - 1 - B Com MCQ

Test: Concept of Insurance - 1 - B Com MCQ


Test Description

10 Questions MCQ Test Principles of Insurance - Test: Concept of Insurance - 1

Test: Concept of Insurance - 1 for B Com 2024 is part of Principles of Insurance preparation. The Test: Concept of Insurance - 1 questions and answers have been prepared according to the B Com exam syllabus.The Test: Concept of Insurance - 1 MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Concept of Insurance - 1 below.
Solutions of Test: Concept of Insurance - 1 questions in English are available as part of our Principles of Insurance for B Com & Test: Concept of Insurance - 1 solutions in Hindi for Principles of Insurance course. Download more important topics, notes, lectures and mock test series for B Com Exam by signing up for free. Attempt Test: Concept of Insurance - 1 | 10 questions in 10 minutes | Mock test for B Com preparation | Free important questions MCQ to study Principles of Insurance for B Com Exam | Download free PDF with solutions
Test: Concept of Insurance - 1 - Question 1
Save

Why is purchasing life insurance at a young age recommended?

Detailed Solution for Test: Concept of Insurance - 1 - Question 1
Purchasing life insurance at a young age is often recommended because it typically comes with lower premium costs. Young individuals are considered lower risk by insurance companies, as they are less likely to have serious health issues. This results in more affordable premiums compared to buying insurance at an older age when the risk of health problems increases. Additionally, starting early allows individuals to lock in lower rates for the duration of their policy, making it a cost-effective decision.
Test: Concept of Insurance - 1 - Question 2
Save

Why do insurance companies charge higher premiums for individuals with a smoking or drinking habit?

Detailed Solution for Test: Concept of Insurance - 1 - Question 2
Insurance companies charge higher premiums for individuals with smoking and drinking habits because these habits are associated with an increased risk of health problems and mortality. Smoking and excessive alcohol consumption can lead to various serious health issues, including heart disease, cancer, and liver problems. Since insurance is all about assessing and managing risk, individuals engaging in these habits are considered higher risk, resulting in higher premium costs to compensate for the increased likelihood of claims.
1 Crore+ students have signed up on EduRev. Have you? Download the App
Test: Concept of Insurance - 1 - Question 3
Save

Why do insurance companies charge higher premiums for individuals engaged in risky activities like skydiving or mountain climbing?

Detailed Solution for Test: Concept of Insurance - 1 - Question 3
Insurance companies charge higher premiums for individuals engaged in risky activities like skydiving or mountain climbing because these activities increase the likelihood of accidents or injuries. From the insurer's perspective, engaging in such high-risk pursuits raises the chances of a policyholder making a claim due to injuries sustained during these activities. To compensate for the elevated risk, higher premiums are applied to such policies.
Test: Concept of Insurance - 1 - Question 4
Save
Why is the medical history of the insured's family taken into account when determining the premium amount?
Detailed Solution for Test: Concept of Insurance - 1 - Question 4
The medical history of the insured's family is considered because it helps assess the risk of hereditary health conditions. Some medical conditions, such as certain types of cancer or heart diseases, can have a genetic component. If there have been instances of such conditions in the insured's family, there may be an increased likelihood of the insured developing similar health issues. Insurance companies take this into account when calculating premiums because it affects the overall risk associated with insuring the individual.
Test: Concept of Insurance - 1 - Question 5
Save
What factor plays a significant role in determining the premium amount of a life insurance policy?
Detailed Solution for Test: Concept of Insurance - 1 - Question 5
The age of the insured is a crucial factor in determining the premium amount of a life insurance policy. Younger individuals typically pay lower premiums because they are considered lower risk in terms of potential health issues. As people age, the likelihood of developing health conditions increases, leading to higher premium costs. Therefore, it is often advisable to purchase life insurance at a younger age to secure more affordable rates.
Test: Concept of Insurance - 1 - Question 6
Save
Why do insurance companies charge different premiums based on the mode of premium payment (e.g., monthly, quarterly, annually)?
Detailed Solution for Test: Concept of Insurance - 1 - Question 6
Insurance companies charge different premiums based on the mode of premium payment to cover administrative costs. When policyholders make more frequent payments, such as monthly or quarterly, the administrative and processing costs for the insurance company increase. To offset these additional expenses, insurance companies charge slightly higher premiums for more frequent payment modes. On the other hand, annual payments are typically less expensive because they reduce administrative overhead.
Test: Concept of Insurance - 1 - Question 7
Save
What role does the insured's profession play in determining life insurance premiums?
Detailed Solution for Test: Concept of Insurance - 1 - Question 7
The insured's profession can significantly impact life insurance premiums. Insurance companies may charge higher premiums for individuals in high-risk professions such as shipping, transport, mining, piloting aircraft, fisheries, oil and gas, and other occupations where the risk of accidental death or injury is elevated. This is because the nature of these professions increases the likelihood of filing insurance claims, and insurers adjust premiums accordingly to manage the associated risks.
Test: Concept of Insurance - 1 - Question 8
Save
What is the primary purpose of including a beneficiary in a life insurance policy?
Detailed Solution for Test: Concept of Insurance - 1 - Question 8
The primary purpose of including a beneficiary in a life insurance policy is to specify who will receive the death benefit upon the insured's passing. Beneficiaries are individuals or entities designated by the policyholder to receive the proceeds of the policy when the insured dies. This ensures that the intended recipients receive the financial protection provided by the life insurance policy, which can be used to cover expenses, debts, or other financial needs after the insured's death.
Test: Concept of Insurance - 1 - Question 9
Save
What term is commonly used to refer to the amount paid out by a life insurance policy upon the death of the insured?
Detailed Solution for Test: Concept of Insurance - 1 - Question 9
The term commonly used to refer to the amount paid out by a life insurance policy upon the death of the insured is the "death benefit." This is the sum of money that the insurance company provides to the designated beneficiaries upon the insured's passing, serving as financial protection to cover various expenses and financial needs during a difficult time.
Test: Concept of Insurance - 1 - Question 10
Save
What is the primary purpose of a life insurance policy?
Detailed Solution for Test: Concept of Insurance - 1 - Question 10
Life insurance primarily serves as a financial safety net for the insured's loved ones in case of their untimely death. It provides a payout, known as the death benefit, to the beneficiaries, helping them cope with the financial impact of losing the insured. This benefit can be used for various purposes, including covering daily expenses, paying off debts, or ensuring a comfortable future for the family. While some life insurance policies may offer additional features like tax benefits or cash value accumulation, their core purpose remains the protection of the insured's dependents.
49 videos|51 docs|14 tests
Join Course
Information about Test: Concept of Insurance - 1 Page
In this test you can find the Exam questions for Test: Concept of Insurance - 1 solved & explained in the simplest way possible. Besides giving Questions and answers for Test: Concept of Insurance - 1, EduRev gives you an ample number of Online tests for practice
49 videos|51 docs|14 tests
Join Course
Download as PDF

Important Questions for Concept of Insurance - 1

Find all the important questions for Concept of Insurance - 1 at EduRev.Get fully prepared for Concept of Insurance - 1 with EduRev's comprehensive question bank and test resources. Our platform offers a diverse range of question papers covering various topics within the Concept of Insurance - 1 syllabus. Whether you need to review specific subjects or assess your overall readiness, EduRev has you covered. The questions are designed to challenge you and help you gain confidence in tackling the actual exam. Maximize your chances of success by utilizing EduRev's extensive collection of Concept of Insurance - 1 resources.

Concept of Insurance - 1 MCQs with Answers

Prepare for the Concept of Insurance - 1 within the B Com exam with comprehensive MCQs and answers at EduRev. Our platform offers a wide range of practice papers, question papers, and mock tests to familiarize you with the exam pattern and syllabus. Access the best books, study materials, and notes curated by toppers to enhance your preparation. Stay updated with the exam date and receive expert preparation tips and paper analysis. Visit EduRev's official website today and access a wealth of videos and coaching resources to excel in your exam.

Online Tests for Concept of Insurance - 1 Principles of Insurance

Practice with a wide array of question papers that follow the exam pattern and syllabus. Our platform offers a user-friendly interface, allowing you to track your progress and identify areas for improvement. Access detailed solutions and explanations for each test to enhance your understanding of concepts. With EduRev's Online Tests, you can build confidence, boost your performance, and ace Concept of Insurance - 1 with ease. Join thousands of successful students who have benefited from our trusted online resources.
© EduRev
Education Revolution
Follow Us
Signup to see your scores go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup