IC-38 Insurance Agent Exam 50 MCQ Questions with Answers – Practice Set 14
IC-38 Insurance Agent Exam MCQ Questions | 50 Fresh Practice Questions | Insurance Agent Exam Preparation
Preparing for the IC-38 Insurance Agent Examination requires a clear understanding of insurance products, policy provisions, customer needs, insurance distribution and practical insurance situations.
This IC-38 Practice Set 14 contains 50 fresh MCQs with four options and the correct answer immediately after each question. The questions are intended for educational practice and conceptual revision.
Practice Note: These are practice questions created for study purposes. They are not leaked or actual examination questions. Candidates should also study the latest applicable official IC-38 study material.
IC-38 Insurance Agent Exam MCQ Questions – Practice Set 14
1. What is level term insurance?
A. Insurance where the basic death benefit generally remains level during the specified term
B. Insurance where the benefit decreases every month
C. Insurance that provides only hospitalisation benefits
D. Insurance that automatically becomes an annuity
Answer: A. Insurance where the basic death benefit generally remains level during the specified term
2. What is decreasing term insurance commonly designed for?
A. Providing protection where the insurance amount decreases over time, such as certain loan-related obligations
B. Providing unlimited investment returns
C. Providing lifetime hospitalisation coverage
D. Providing increasing retirement income
Answer: A. Providing protection where the insurance amount decreases over time, such as certain loan-related obligations
3. What is increasing term insurance?
A. Term insurance in which the insured benefit increases according to the policy terms
B. Term insurance where the benefit becomes zero immediately
C. A policy that only covers medical expenses
D. A policy without any specified term
Answer: A. Term insurance in which the insured benefit increases according to the policy terms
4. What is convertible term insurance?
A. Term insurance that may provide an option to convert to another eligible form of life insurance according to policy terms
B. A policy that automatically converts every claim into cash
C. A health insurance policy converted into motor insurance
D. A policy that can never be changed
Answer: A. Term insurance that may provide an option to convert to another eligible form of life insurance according to policy terms
5. What is key person insurance?
A. Insurance intended to protect an organisation against financial loss arising from the death or specified loss of a key individual, subject to policy terms
B. Insurance exclusively for government employees
C. Insurance covering only family members
D. Insurance for damaged buildings
Answer: A. Insurance intended to protect an organisation against financial loss arising from the death or specified loss of a key individual, subject to policy terms
6. Why might a business purchase key person insurance?
A. To provide financial protection against the economic impact of losing an important employee or executive
B. To guarantee business profits
C. To eliminate employee turnover
D. To avoid paying employee salaries
Answer: A. To provide financial protection against the economic impact of losing an important employee or executive
7. What is group term insurance?
A. Life insurance provided to a defined group under a group arrangement
B. A policy that can only cover one individual
C. A motor insurance policy for several vehicles
D. A property insurance policy for one building
Answer: A. Life insurance provided to a defined group under a group arrangement
8. In a group insurance arrangement, what is the purpose of an individual certificate where applicable?
A. To provide evidence of an individual's coverage under the group arrangement
B. To replace the insurer's entire policy
C. To establish the insurer's solvency
D. To determine the insurer's investment income
Answer: A. To provide evidence of an individual's coverage under the group arrangement
9. What is mortgage protection insurance generally intended to address?
A. Financial protection connected with an outstanding housing loan or mortgage obligation, subject to policy terms
B. Repairing damaged household furniture
C. Providing travel assistance
D. Paying motor vehicle registration charges
Answer: A. Financial protection connected with an outstanding housing loan or mortgage obligation, subject to policy terms
10. Why should a customer consider outstanding financial liabilities when assessing life insurance needs?
A. Liabilities can create financial obligations for dependants or the estate
B. Liabilities automatically increase investment returns
C. Liabilities determine the customer's nominee
D. Liabilities eliminate the need for insurance
Answer: A. Liabilities can create financial obligations for dependants or the estate
11. What is an automatic premium loan provision intended to do?
A. Where applicable, use available policy value according to policy terms to pay a premium and help prevent lapse
B. Provide an unlimited personal loan to the policyholder
C. Pay every insurance claim automatically
D. Increase the sum assured without conditions
Answer: A. Where applicable, use available policy value according to policy terms to pay a premium and help prevent lapse
12. What should a policyholder understand before using an automatic premium loan facility?
A. The facility may reduce policy value and create interest or other consequences according to the policy terms
B. It is always free of all consequences
C. It permanently increases the policy benefit
D. It guarantees maturity proceeds
Answer: A. The facility may reduce policy value and create interest or other consequences according to the policy terms
13. What is absolute assignment of a life insurance policy?
A. Transfer of the policy rights and interests to another person or entity as permitted by applicable rules and policy terms
B. Temporary change of the policyholder's address
C. Appointment of a nominee
D. Change in premium payment frequency only
Answer: A. Transfer of the policy rights and interests to another person or entity as permitted by applicable rules and policy terms
14. What is conditional assignment?
A. An assignment subject to specified conditions or circumstances
B. An assignment that can never have conditions
C. A change in medical history
D. A change in policy maturity date
Answer: A. An assignment subject to specified conditions or circumstances
15. Which statement best distinguishes assignment from nomination?
A. Assignment generally transfers specified policy rights, whereas nomination generally identifies a person to receive policy proceeds according to applicable law
B. Assignment and nomination are always identical
C. Nomination always transfers ownership of the policy
D. Assignment only changes the customer's address
Answer: A. Assignment generally transfers specified policy rights, whereas nomination generally identifies a person to receive policy proceeds according to applicable law
16. Why should a customer carefully understand an assignment before executing it?
A. Assignment can affect rights and control associated with the policy
B. Assignment only changes the policy colour
C. Assignment guarantees a higher bonus
D. Assignment eliminates all premiums
Answer: A. Assignment can affect rights and control associated with the policy
17. What is a paid-up policy?
A. A policy that continues with reduced benefits after premiums stop, where applicable under its terms and conditions
B. A policy that automatically receives unlimited benefits
C. A policy with no insured person
D. A policy that has never received any premium
Answer: A. A policy that continues with reduced benefits after premiums stop, where applicable under its terms and conditions
18. Why should a policyholder compare paid-up and surrender consequences?
A. The two options can have different effects on policy benefits and future rights
B. They always provide identical benefits
C. Both automatically increase the sum assured
D. Neither affects the policy
Answer: A. The two options can have different effects on policy benefits and future rights
19. What is surrender of a life insurance policy?
A. Voluntarily terminating the policy in accordance with applicable terms in return for any surrender value that may be payable
B. Renewing the policy automatically
C. Increasing the policy term
D. Changing the nominee only
Answer: A. Voluntarily terminating the policy in accordance with applicable terms in return for any surrender value that may be payable
20. Why should an agent explain the consequences of surrender?
A. Surrender may terminate future coverage and affect the value available to the policyholder
B. Surrender always doubles the benefit
C. Surrender automatically extends the policy
D. Surrender guarantees a death benefit
Answer: A. Surrender may terminate future coverage and affect the value available to the policyholder
21. What is a room-rent limit in health insurance?
A. A policy limit applicable to the eligible room category or room-rent expense, according to policy terms
B. A limit on the number of doctors
C. A limit on the customer's age
D. A limit on the number of nominees
Answer: A. A policy limit applicable to the eligible room category or room-rent expense, according to policy terms
22. What can happen when a health policy has a room-rent limit and the insured chooses a higher-cost room?
A. The claim may be affected according to the policy's room-rent and associated proportionate deduction provisions
B. The insurer must always pay the entire hospital bill
C. The policy automatically becomes void
D. The customer receives an additional bonus
Answer: A. The claim may be affected according to the policy's room-rent and associated proportionate deduction provisions
23. What are reasonable and customary charges in health insurance?
A. Charges generally consistent with the prevailing level for similar treatment in the relevant locality, subject to policy terms
B. Any amount demanded by a hospital without limitation
C. Only government hospital charges
D. Charges fixed by the patient
Answer: A. Charges generally consistent with the prevailing level for similar treatment in the relevant locality, subject to policy terms
24. Why is medical necessity important in health insurance?
A. It helps determine whether a treatment or hospitalisation is medically required and eligible under applicable policy terms
B. It guarantees every hospital expense
C. It determines the nominee
D. It replaces the sum insured
Answer: A. It helps determine whether a treatment or hospitalisation is medically required and eligible under applicable policy terms
25. What are non-medical expenses in a health insurance claim?
A. Expenses that may not be considered medical treatment costs and may be excluded or limited according to policy terms
B. All hospital expenses
C. Only doctor consultation fees
D. Only surgery expenses
Answer: A. Expenses that may not be considered medical treatment costs and may be excluded or limited according to policy terms
26. Why should an insured person check non-medical expense provisions?
A. Such expenses may not be fully covered even when the associated hospitalisation is covered
B. They are always paid without limits
C. They automatically increase the sum insured
D. They determine the policyholder's age
Answer: A. Such expenses may not be fully covered even when the associated hospitalisation is covered
27. What is a domiciliary treatment provision?
A. A provision that may cover eligible medical treatment taken at home when specified conditions are satisfied
B. A provision covering only overseas treatment
C. A motor insurance benefit
D. A life insurance maturity benefit
Answer: A. A provision that may cover eligible medical treatment taken at home when specified conditions are satisfied
28. Why should an insured person check the conditions for domiciliary treatment?
A. Home-based treatment is covered only when the applicable policy requirements are satisfied
B. Every home treatment is automatically covered
C. Domiciliary treatment has no exclusions
D. It always has unlimited coverage
Answer: A. Home-based treatment is covered only when the applicable policy requirements are satisfied
29. What is an AYUSH treatment provision in health insurance?
A. A provision that may cover eligible treatment systems recognised under the applicable policy and regulations
B. A motor accident benefit
C. A life maturity benefit
D. A property insurance provision
Answer: A. A provision that may cover eligible treatment systems recognised under the applicable policy and regulations
30. Why should a customer verify AYUSH coverage before taking treatment?
A. Coverage depends on the specific policy terms, eligible systems, conditions and limits
B. Every AYUSH treatment is automatically covered
C. AYUSH treatment is never covered
D. It determines the health policy premium after a claim
Answer: A. Coverage depends on the specific policy terms, eligible systems, conditions and limits
31. What is an organ donor expense provision in health insurance?
A. A provision that may cover eligible medical expenses related to an organ donor, subject to policy conditions
B. A provision that pays the donor an unlimited amount
C. A life insurance bonus
D. A motor insurance benefit
Answer: A. A provision that may cover eligible medical expenses related to an organ donor, subject to policy conditions
32. Why should organ donor-related coverage be checked carefully?
A. Coverage may be subject to specified conditions, limits and exclusions
B. Every donor expense is automatically covered
C. It is always unlimited
D. It applies only to motor insurance
Answer: A. Coverage may be subject to specified conditions, limits and exclusions
33. What is a restoration benefit in health insurance?
A. A benefit under certain policies that can restore or reinstate the available sum insured after specified utilisation, subject to policy terms
B. A guaranteed cash reward for renewing a policy
C. A motor insurance discount
D. A life insurance surrender value
Answer: A. A benefit under certain policies that can restore or reinstate the available sum insured after specified utilisation, subject to policy terms
34. Why should a customer understand the conditions attached to restoration benefits?
A. Restoration may have limits regarding timing, illness, number of utilisations or other conditions depending on the policy
B. Restoration is always unlimited
C. Restoration automatically doubles every claim
D. Restoration eliminates all exclusions
Answer: A. Restoration may have limits regarding timing, illness, number of utilisations or other conditions depending on the policy
35. What is a consequential loss policy generally intended to cover?
A. Certain financial losses resulting from interruption or consequences of an insured physical loss, when specifically covered
B. Every business loss regardless of cause
C. Personal savings
D. Life insurance maturity proceeds
Answer: A. Certain financial losses resulting from interruption or consequences of an insured physical loss, when specifically covered
36. What is business interruption insurance generally concerned with?
A. Loss of income or additional expenses resulting from an insured interruption of business, subject to policy terms
B. Employee retirement benefits
C. Personal accident compensation only
D. Motor vehicle depreciation
Answer: A. Loss of income or additional expenses resulting from an insured interruption of business, subject to policy terms
37. What is burglary insurance primarily concerned with?
A. Loss or damage resulting from burglary or related insured events as defined by the policy
B. Life insurance maturity
C. Health treatment expenses
D. Retirement income
Answer: A. Loss or damage resulting from burglary or related insured events as defined by the policy
38. Why should burglary and theft not automatically be treated as identical insurance terms?
A. Their definitions and coverage conditions can differ according to the policy wording
B. They always mean exactly the same thing
C. Theft is always excluded from insurance
D. Burglary is always covered under life insurance
Answer: A. Their definitions and coverage conditions can differ according to the policy wording
39. What is fidelity guarantee insurance designed to address?
A. Certain financial losses caused by dishonest acts of employees, subject to the policy terms
B. Medical expenses of employees
C. Retirement income
D. Motor vehicle repair costs
Answer: A. Certain financial losses caused by dishonest acts of employees, subject to the policy terms
40. What is marine cargo insurance generally concerned with?
A. Loss or damage to goods during transit by covered means, subject to policy terms
B. Life insurance for ship passengers
C. Health insurance for sailors only
D. Building fire insurance only
Answer: A. Loss or damage to goods during transit by covered means, subject to policy terms
41. What is inland transit insurance?
A. Insurance relating to goods transported within the country by specified modes of inland transportation, subject to policy terms
B. Insurance covering only international flights
C. Life insurance for transport workers
D. Insurance for hospitalisation
Answer: A. Insurance relating to goods transported within the country by specified modes of inland transportation, subject to policy terms
42. What is a floating policy in property or marine insurance generally intended to address?
A. Coverage of property or goods located at different places or exposed to movement, subject to specified terms
B. Coverage of only one named individual
C. Life insurance for a floating employee
D. A policy with no sum insured
Answer: A. Coverage of property or goods located at different places or exposed to movement, subject to specified terms
43. What is a declaration policy generally useful for?
A. Situations where the value of goods or stock fluctuates and declarations are made according to the policy arrangement
B. Life insurance for children only
C. Fixed-term personal accident cover only
D. Health insurance with no sum insured
Answer: A. Situations where the value of goods or stock fluctuates and declarations are made according to the policy arrangement
44. Why can a declaration policy be useful for businesses with fluctuating stock levels?
A. It can accommodate changing stock values through declarations under the policy arrangement
B. It guarantees the exact value of stock throughout the year
C. It eliminates the need for records
D. It automatically covers every type of property loss
Answer: A. It can accommodate changing stock values through declarations under the policy arrangement
45. What is a floating policy different from a standard policy covering one specifically identified location?
A. A floating arrangement may provide coverage across specified locations or changing locations under defined conditions
B. A floating policy has no terms
C. A floating policy never has a sum insured
D. A floating policy only covers life insurance
Answer: A. A floating arrangement may provide coverage across specified locations or changing locations under defined conditions
46. What is professional indemnity insurance intended to protect against?
A. Certain professional liability claims arising from alleged errors, omissions or negligence in professional services, subject to policy terms
B. Loss of personal savings due to investment decisions
C. Hospital room expenses
D. Vehicle registration costs
Answer: A. Certain professional liability claims arising from alleged errors, omissions or negligence in professional services, subject to policy terms
47. Why might a professional require professional indemnity insurance?
A. Professional services can create liability exposures if clients suffer covered financial loss due to alleged professional errors or omissions
B. It guarantees that the professional will never make a mistake
C. It guarantees business profits
D. It replaces all other insurance policies
Answer: A. Professional services can create liability exposures if clients suffer covered financial loss due to alleged professional errors or omissions
48. What is product liability insurance generally designed to address?
A. Certain legal liabilities arising from injury or property damage caused by a defective product, subject to policy terms
B. Damage to the manufacturer's own office only
C. Life insurance benefits for customers
D. Employee retirement benefits
Answer: A. Certain legal liabilities arising from injury or property damage caused by a defective product, subject to policy terms
49. Why is policy wording important in liability insurance?
A. Liability coverage depends on defined insured events, exclusions, conditions and applicable limits
B. Every liability claim is automatically payable
C. Liability policies have no exclusions
D. Policy wording has no legal relevance
Answer: A. Liability coverage depends on defined insured events, exclusions, conditions and applicable limits
50. What should an insurance agent do when a customer asks whether a specific unusual loss is covered?
A. Check the applicable policy wording and authorised product information before giving a definitive answer
B. Guarantee that the claim will be paid
C. Guess based on another customer's policy
D. Tell the customer that every loss is covered
Answer: A. Check the applicable policy wording and authorised product information before giving a definitive answer
Important IC-38 Topics Covered in Practice Set 14
This set focuses on several additional insurance concepts:
Level term insurance
Decreasing term insurance
Increasing term insurance
Convertible term insurance
Key person insurance
Group term insurance
Group insurance certificates
Mortgage protection
Financial liabilities
Automatic premium loan
Absolute assignment
Conditional assignment
Paid-up policies
Surrender
Room-rent limits
Proportionate deduction
Reasonable and customary charges
Medical necessity
Non-medical expenses
Domiciliary treatment
AYUSH coverage
Organ donor expenses
Restoration benefit
Consequential loss
Business interruption insurance
Burglary insurance
Fidelity guarantee insurance
Marine cargo insurance
Inland transit insurance
Floating policies
Declaration policies
Professional indemnity insurance
Product liability insurance
Liability policy wording
IC-38 Preparation Tips
1. Learn Product Differences
Do not memorise only the names of insurance products. Understand what risk each product is designed to address.
For example:
Level term: generally level death benefit during the term.
Decreasing term: benefit decreases according to policy terms.
Key person insurance: addresses a business's financial exposure to loss of a key individual.
Professional indemnity: addresses certain professional liability exposures.
2. Read Health Insurance Conditions Carefully
Health insurance questions can involve details such as:
Room-rent limits
Proportionate deductions
Medical necessity
Reasonable and customary charges
Domiciliary treatment
AYUSH treatment
Organ donor expenses
Restoration benefits
The exact coverage always depends on the applicable policy wording.
3. Understand General Insurance Products
General insurance questions may test your understanding of:
Burglary
Fidelity guarantee
Marine cargo
Inland transit
Business interruption
Professional indemnity
Product liability
4. Avoid Assuming Every Loss Is Covered
A policy does not necessarily cover every loss simply because the customer has insurance.
Always consider:
Insured event + policy terms + exclusions + conditions + limits
5. Give Accurate Customer Information
An insurance agent should not guess when explaining technical coverage. If uncertain, the appropriate approach is to verify the information using authorised product documents or the insurer's official resources.
Frequently Asked Questions About IC-38
What is level term insurance?
It is term insurance where the basic death benefit generally remains level during the specified term, subject to policy conditions.
What is decreasing term insurance?
It is term insurance in which the insured amount decreases over time according to the policy structure.
What is key person insurance?
It is insurance intended to protect a business against certain financial consequences arising from the loss of a key individual.
What is restoration benefit in health insurance?
It is a benefit available in some health policies that may restore the available sum insured after specified utilisation, subject to the policy's conditions.
What is professional indemnity insurance?
It provides coverage for certain professional liability exposures arising from alleged errors, omissions or negligence in professional services, subject to policy terms.
What is product liability insurance?
It is insurance intended to address certain legal liabilities arising from injury or property damage caused by a defective product.
What is a declaration policy?
It is an insurance arrangement that can be used where the value of insured stock or goods fluctuates, with declarations made according to the policy requirements.
Conclusion
IC-38 Practice Set 14 introduces another 50 practice questions covering life insurance products, health insurance provisions, property and marine insurance, liability insurance and professional insurance concepts.
Candidates should focus on understanding what each product covers, what limitations may apply and why policy wording matters.
For examination preparation, combine these practice questions with the latest applicable official IC-38 study material and regular revision.
Continue practising with PDFnotebooks for more IC-38 Insurance Agent Exam MCQs, insurance study resources and competitive examination preparation materials.
