Life Insurance Agent Mock Test 1 (IC38 Life Exam)

IC38 Life Mock Test 1

Attempt IC38 Insurance Agent Exam (Life) Mock Test 1 with 50 exam-level questions including case-based and concept-based questions. Improve your preparation.

No. of Questions: 50

Time: 60 Mins

No Negative Marking

1 / 50

1. Raj (35) earns ₹8 lakh annually and supports his family. What should be the primary basis for deciding his life insurance cover?

A. His savings

B. His Human Life Value

C. His premium capacity

D. His age only

2 / 50

2. A policyholder deliberately hides heart disease in proposal form. Claim is later rejected. This is based on:

A. Indemnity

B. Contribution

C. Utmost good faith

D. Subrogation

3 / 50

3. Which situation best explains risk pooling?

A. One person paying premium

B. Many people sharing losses of few

C. Insurer paying all claims alone

D. Government funding claims

4 / 50

4. A person buys insurance and also installs safety devices. This combination represents:

A. Risk transfer only

B. Risk reduction only

C. Risk transfer + risk reduction

D. Risk avoidance

5 / 50

5. Why is life insurance not a contract of indemnity?

A. Loss cannot be measured exactly

B. Premium is fixed

C. Risk is low

D. Claims are small

6 / 50

6. A 25-year-old and 55-year-old buy same policy. Premium differs mainly due to:

A. Income difference

B. Risk of mortality

C. Policy term

D. Agent commission

7 / 50

7. If a person has multiple life policies, which principle applies at claim?

A. Contribution

B. Indemnity

C. No restriction (all policies pay)

D. Subrogation

8 / 50

8. A person wants to avoid financial impact of early death. Best solution:

A. Savings

B. Investment

C. Life insurance

D. Loan

9 / 50

9. A proposal is accepted with higher premium due to health condition. This is:

A. Rejection

B. Standard acceptance

C. Sub-standard acceptance

D. Claim settlement

10 / 50

10. A policyholder cancels policy within review period. What happens?

A. No refund

B. Full claim paid

C. Premium refunded after deductions

D. Policy continues

11 / 50

11. Which scenario represents moral hazard?

A. Faulty wiring

B. Dishonest intention to claim

C. Earthquake

D. Fire

12 / 50

12. A person invests only in savings instruments. What is the drawback?

A. High risk

B. Low returns

C. High return

D. No safety

13 / 50

13. Which is the correct sequence in financial planning?

A. Invest → Plan → Review

B. Identify goals → Assess → Plan → Implement

C. Plan → Identify → Invest

D. Review → Invest → Plan

14 / 50

14. A person buys insurance mainly to replace income. This relates to:

A. Investment

B. Protection

C. Tax saving

D. Speculation

15 / 50

15. Which is NOT a financial goal?

A. Retirement

B. Child education

C. Gambling

D. Wealth creation

16 / 50

16. A person avoids driving in risky conditions. This is:

A. Risk transfer

B. Risk reduction

C. Risk avoidance

D. Risk retention

17 / 50

17. Which factor has maximum impact on life insurance premium?

A. Location

B. Age

C. Education

D. Gender

18 / 50

18. A policyholder modifies address in policy. This is:

A. Renewal

B. Endorsement

C. Claim

D. Proposal

19 / 50

19. A person bears small losses but insures major risks. This is:

A. Risk avoidance

B. Risk retention + transfer

C. Risk reduction

D. Risk pooling

20 / 50

20. Which healthcare level includes specialized treatment?

A. Primary

B. Secondary

C. Tertiary

D. Preventive

21 / 50

21. If incorrect age is declared, insurer may:

A. Reject policy always

B. Adjust benefits

C. Ignore

D. Double premium

22 / 50

22. Which document helps customer understand product before buying?

A. Policy

B. Prospectus

C. Claim form

D. Endorsement

23 / 50

23. Which situation shows adverse selection?

A. Healthy person buys policy

B. High-risk person buys large cover

C. Young person buys policy

D. Group insurance

24 / 50

24. A person delays financial planning. What is the impact?

A. Higher savings

B. Lower risk

C. Financial instability

D. Guaranteed income

25 / 50

25. Why is regular review of financial plan important?

A. To increase premium

B. To adjust to changes

C. To cancel policy

D. To avoid risk

26 / 50

26. Which is correct about savings vs investment?

A. Savings high risk

B. Investment low return

C. Savings low risk

D. Both same

27 / 50

27. A person takes multiple policies intentionally to profit. This is prevented by:

A. Indemnity

B. Underwriting

C. Contribution

D. Subrogation

28 / 50

28. Which principle identifies real cause of loss?

A. Indemnity

B. Contribution

C. Proximate cause

D. Good faith

29 / 50

29. A policyholder fails to disclose smoking habit unknowingly. This is:

A. Fraud

B. Innocent misrepresentation

C. Warranty breach

D. Hazard

30 / 50

30. Main purpose of financial planning is:

A. Profit maximization

B. Financial security

C. Risk increase

D. Avoid savings

31 / 50

31. A person with irregular income wants financial security for family. What is most suitable?

A. Savings account

B. Fixed deposit

C. Life insurance

D. Mutual fund

32 / 50

32. A person buys insurance and also keeps emergency fund. This shows:

A. Risk avoidance

B. Risk transfer only

C. Risk diversification

D. Combined financial planning approach

33 / 50

33. Which factor is most important while deciding sum assured?

A. Premium affordability only

B. Agent suggestion

C. Future financial needs of family

D. Tax benefit

34 / 50

34. A policyholder exaggerates income to get higher cover. This is:

A. Fraud

B. Misrepresentation

C. Negligence

D. Hazard

35 / 50

35. Which of the following is an example of financial risk?

A. Death of earning member

B. Rainfall

C. Temperature

D. Pollution

36 / 50

36. A person starts financial planning at early age. Benefit is:

A. Higher risk

B. Lower returns

C. Better wealth accumulation

D. No benefit

37 / 50

37. Which situation shows proper risk management?

A. Ignoring risks

B. Taking all risks

C. Transferring major risks

D. Avoiding planning

38 / 50

38. Which is NOT a function of life insurance?

A. Protection

B. Income replacement

C. Risk elimination

D. Savings

39 / 50

39. A person reviews financial plan yearly. This helps in:

A. Increasing premium

B. Adjusting to life changes

C. Cancelling policy

D. Avoiding tax

40 / 50

40. A young individual delays buying life insurance. What is likely impact?

A. Lower premium later

B. Higher premium later

C. No change

D. No need for insurance

41 / 50

41. A person depends fully on investment for protection. What is risk?

A. High safety

B. Lack of protection

C. High liquidity

D. Guaranteed return

42 / 50

42. Which scenario represents physical hazard?

A. Dishonesty

B. Carelessness

C. Faulty construction

D. Fraud

43 / 50

43. A person buys insurance after falling sick. This is:

A. Risk pooling

B. Adverse selection

C. Risk reduction

D. Risk avoidance

44 / 50

44. Which is key objective of financial planning?

A. Increase expenses

B. Reduce savings

C. Achieve financial goals

D. Avoid investments

45 / 50

45. A person with high dependents should:

A. Avoid insurance

B. Take low cover

C. Take adequate life cover

D. Only invest

46 / 50

46. Which is correct about life insurance claim?

A. Limited to loss

B. Based on indemnity

C. Full sum assured paid

D. Depends on asset value

47 / 50

47. Which factor does NOT affect financial planning?

A. Income

B. Age

C. Lifestyle

D. Weather

48 / 50

48. A person transfers all risks without assessing them. This is:

A. Good planning

B. Poor planning

C. Risk avoidance

D. Risk reduction

49 / 50

49. A policyholder fails to pay premium. Result is:

A. Claim paid

B. Policy lapses

C. Bonus increases

D. Risk reduces

50 / 50

50. Which is most important benefit of life insurance?

A. Financial protection

B. High returns

C. Short-term savings

D. Quick profit

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