IC-38 Insurance Agent Exam MCQ Questions | 50 Important Insurance Questions with Answers | IRDAI Exam Preparation
Preparing for the IRDAI IC-38 Insurance Agent Examination requires a strong understanding of insurance concepts, policy terms, risk assessment, insurance products, claims, customer service and the role of an insurance agent.
This IC-38 MCQ Practice Set 2 contains 50 multiple-choice questions with four options and the answer provided immediately after each question. The questions are designed for candidates preparing for insurance agent examinations and for students who want to revise important IC-38 concepts.
Note: These are educational practice questions and are not claimed to be actual examination questions. Candidates should refer to the latest official IC-38 study material and applicable regulatory requirements for examination preparation.
IC-38 Insurance Agent Exam MCQ Questions – Set 2
1. What is a peril in insurance terminology?
A. A condition that increases the possibility of loss
B. A cause of loss or event that may cause damage
C. A financial investment
D. An insurance premium
Answer: B. A cause of loss or event that may cause damage
2. What is a hazard in insurance?
A. A condition that may increase the probability or severity of a loss
B. The amount paid as premium
C. The amount received after a claim
D. A policy document
Answer: A. A condition that may increase the probability or severity of a loss
3. Which type of hazard arises from a person's attitude or behaviour that may increase the chance of loss?
A. Physical hazard
B. Moral hazard
C. Natural hazard
D. Environmental hazard
Answer: B. Moral hazard
4. A defective electrical wiring system in a building is an example of:
A. Physical hazard
B. Moral hazard
C. Speculative risk
D. Financial gain
Answer: A. Physical hazard
5. Which of the following is generally an example of a pure risk?
A. Possibility of loss from a house fire
B. Buying shares for profit
C. Starting a new business for profit
D. Investing in cryptocurrency
Answer: A. Possibility of loss from a house fire
6. A speculative risk involves the possibility of:
A. Loss only
B. Profit only
C. Profit or loss
D. Neither profit nor loss
Answer: C. Profit or loss
7. Which of the following is generally more suitable for insurance?
A. Pure risk
B. Speculative risk
C. Investment risk
D. Business profit risk
Answer: A. Pure risk
8. What is risk pooling?
A. Combining similar risks so that losses are shared across a larger group
B. Eliminating all risks
C. Increasing the probability of accidents
D. Investing premiums only in shares
Answer: A. Combining similar risks so that losses are shared across a larger group
9. The law of large numbers is useful to insurers because:
A. It makes every individual risk predictable
B. Larger numbers of similar exposures can make actual loss experience more predictable
C. It eliminates all claims
D. It guarantees that no policyholder will suffer a loss
Answer: B. Larger numbers of similar exposures can make actual loss experience more predictable
10. What is a hazard that arises because a person is careless or indifferent to the possibility of loss?
A. Morale hazard
B. Physical hazard
C. Legal hazard
D. Natural hazard
Answer: A. Morale hazard
11. What is meant by risk transfer?
A. Moving the financial consequences of a risk to another party through an appropriate arrangement
B. Increasing the risk
C. Ignoring the risk
D. Creating a new risk
Answer: A. Moving the financial consequences of a risk to another party through an appropriate arrangement
12. Which of the following is an example of risk reduction?
A. Installing smoke detectors
B. Ignoring a dangerous situation
C. Refusing all insurance
D. Increasing exposure to danger
Answer: A. Installing smoke detectors
13. What is an exposure in insurance?
A. A situation or circumstance that creates the possibility of loss
B. The premium receipt
C. The claim settlement cheque
D. An insurance advertisement
Answer: A. A situation or circumstance that creates the possibility of loss
14. What does pooling of risks enable insurers to do?
A. Spread losses among a large number of policyholders
B. Eliminate the need for premiums
C. Guarantee profits to all customers
D. Avoid assessing risks
Answer: A. Spread losses among a large number of policyholders
15. Which of the following is a characteristic of insurance?
A. Risk sharing
B. Guaranteed absence of loss
C. Elimination of uncertainty from life
D. Guaranteed investment profit in every policy
Answer: A. Risk sharing
16. What is the meaning of "consideration" in an insurance contract?
A. Something of value exchanged between the parties to the contract
B. A claim investigation
C. A policy exclusion
D. A survey report
Answer: A. Something of value exchanged between the parties to the contract
17. In an insurance contract, the insurer's consideration is generally:
A. The premium
B. The proposal form
C. The nomination
D. The claim form
Answer: A. The premium
18. Which feature means that an insurance contract generally involves an exchange of unequal values depending on whether an insured event occurs?
A. Aleatory nature
B. Bilateral transfer
C. Permanent nature
D. Open-ended nature
Answer: A. Aleatory nature
19. An insurance contract is generally a:
A. Conditional contract
B. Contract without obligations
C. Contract without consideration
D. Contract that guarantees profit
Answer: A. Conditional contract
20. What does "consensus ad idem" broadly mean?
A. Meeting of minds or agreement upon the same thing in the same sense
B. Payment of double premium
C. Cancellation of a policy
D. Transfer of a claim
Answer: A. Meeting of minds or agreement upon the same thing in the same sense
21. What is an exclusion in an insurance policy?
A. A circumstance or event that is not covered under the policy
B. An additional premium
C. A guaranteed benefit
D. A claim payment
Answer: A. A circumstance or event that is not covered under the policy
22. What is a policy condition?
A. A provision specifying requirements or obligations under the insurance contract
B. A marketing slogan
C. A bank deposit
D. An investment certificate
Answer: A. A provision specifying requirements or obligations under the insurance contract
23. What is a warranty in an insurance contract?
A. A provision requiring compliance with a specified condition
B. A promise of guaranteed investment return
C. A claim settlement document
D. A premium discount
Answer: A. A provision requiring compliance with a specified condition
24. What is an insurance policy schedule?
A. A section containing key details of the policy and insured risk
B. A list of all insurance companies
C. A record of stock-market prices
D. A tax calculation sheet
Answer: A. A section containing key details of the policy and insured risk
25. What does the sum insured generally represent in a general insurance policy?
A. The amount specified as the maximum liability of the insurer, subject to policy terms
B. The agent's commission
C. The insurer's total annual income
D. The amount of tax paid by the policyholder
Answer: A. The amount specified as the maximum liability of the insurer, subject to policy terms
26. What is a deductible in an insurance policy?
A. The portion of a covered loss that the insured is required to bear as specified in the policy
B. The insurer's entire claim payment
C. The policy premium
D. The agent's commission
Answer: A. The portion of a covered loss that the insured is required to bear as specified in the policy
27. What is the purpose of a deductible?
A. To make the insured share part of the loss and reduce small or frequent claims
B. To guarantee every claim
C. To increase the sum insured automatically
D. To eliminate underwriting
Answer: A. To make the insured share part of the loss and reduce small or frequent claims
28. What is a policy excess?
A. An amount that the insured must bear before or as part of the insurer's liability, according to policy terms
B. An additional claim bonus
C. A type of life insurance
D. An agent's salary
Answer: A. An amount that the insured must bear before or as part of the insurer's liability, according to policy terms
29. What is a renewal of an insurance policy?
A. Continuation of insurance coverage for a further period according to applicable terms
B. Cancellation of a policy
C. Transfer of ownership of an insurer
D. Rejection of every claim
Answer: A. Continuation of insurance coverage for a further period according to applicable terms
30. What is policy lapse?
A. Termination of policy benefits because required conditions, such as premium payment, have not been met within the applicable period
B. Automatic increase in sum insured
C. Payment of a claim
D. Issuing a duplicate proposal
Answer: A. Termination of policy benefits because required conditions, such as premium payment, have not been met within the applicable period
31. What is a grace period in insurance?
A. An additional period allowed for payment of a premium after the due date, subject to policy terms
B. A period during which claims are always guaranteed
C. A period in which no premium is ever payable
D. A period for increasing the agent's commission
Answer: A. An additional period allowed for payment of a premium after the due date, subject to policy terms
32. What is underwriting primarily concerned with?
A. Evaluating the characteristics and potential losses associated with a proposed risk
B. Designing advertisements
C. Collecting government taxes
D. Printing brochures
Answer: A. Evaluating the characteristics and potential losses associated with a proposed risk
33. Which information can be relevant to an insurer when assessing a risk?
A. Nature and characteristics of the risk
B. Favourite colour of the agent
C. Newspaper preference of the customer
D. Social-media followers of the agent
Answer: A. Nature and characteristics of the risk
34. What is risk classification?
A. Grouping risks with similar characteristics for underwriting and pricing purposes
B. Cancelling all high-risk policies
C. Classifying customers according to their income alone
D. Selecting insurance advertisements
Answer: A. Grouping risks with similar characteristics for underwriting and pricing purposes
35. What is the purpose of rating in insurance?
A. To determine an appropriate premium based on relevant risk factors
B. To calculate an agent's educational qualification
C. To determine the number of claims a customer can make without reference to the policy
D. To select policy nominees
Answer: A. To determine an appropriate premium based on relevant risk factors
36. What does "loading" generally mean in insurance pricing?
A. An additional amount added to the standard premium because of additional risk or specified factors
B. A reduction in premium
C. Cancellation of coverage
D. Payment of a claim
Answer: A. An additional amount added to the standard premium because of additional risk or specified factors
37. What is a proposal in insurance?
A. An application made by a person seeking insurance coverage
B. A claim settlement
C. A renewal receipt
D. A court order
Answer: A. An application made by a person seeking insurance coverage
38. What is the purpose of a medical examination when required for an insurance proposal?
A. To provide relevant information for assessment of the insured risk
B. To guarantee policy maturity
C. To determine the agent's commission
D. To replace the proposal form
Answer: A. To provide relevant information for assessment of the insured risk
39. What is adverse selection?
A. The tendency for people with higher-than-average risk to seek or retain insurance disproportionately
B. The selection of an insurance advertisement
C. The cancellation of every policy
D. The selection of an agent by an insurer
Answer: A. The tendency for people with higher-than-average risk to seek or retain insurance disproportionately
40. Why is adverse selection a concern for insurers?
A. It can result in a risk pool with a higher expected level of losses
B. It eliminates all insurance claims
C. It guarantees lower premiums
D. It removes the need for underwriting
Answer: A. It can result in a risk pool with a higher expected level of losses
41. What is moral hazard in insurance most closely associated with?
A. Dishonest behaviour intended to increase the likelihood or size of a loss
B. A natural disaster
C. A decrease in insurance premiums
D. A government tax
Answer: A. Dishonest behaviour intended to increase the likelihood or size of a loss
42. What is the main purpose of claim investigation?
A. To establish relevant facts and assess the claim in accordance with policy terms
B. To automatically reject claims
C. To increase premiums for all customers
D. To replace underwriting
Answer: A. To establish relevant facts and assess the claim in accordance with policy terms
43. What is a claim intimation?
A. Notification to the insurer about the occurrence of an insured event or loss
B. A request for a new policy
C. A premium discount request
D. A policy advertisement
Answer: A. Notification to the insurer about the occurrence of an insured event or loss
44. Why should a policyholder report an insured loss promptly?
A. To enable the insurer to initiate the claims process and take necessary action within applicable requirements
B. To automatically increase the sum insured
C. To avoid paying future premiums
D. To guarantee the claim irrespective of policy terms
Answer: A. To enable the insurer to initiate the claims process and take necessary action within applicable requirements
45. What is fraud in insurance?
A. Deliberate deception intended to obtain an improper insurance benefit
B. A normal policy renewal
C. A legitimate claim
D. A premium payment
Answer: A. Deliberate deception intended to obtain an improper insurance benefit
46. Which practice can help reduce insurance fraud?
A. Proper verification and investigation of suspicious claims
B. Accepting every claim without checking
C. Ignoring inconsistencies in documents
D. Avoiding customer identification
Answer: A. Proper verification and investigation of suspicious claims
47. Why should an insurance agent maintain confidentiality of customer information?
A. To protect customer privacy and comply with applicable requirements
B. To increase sales automatically
C. To avoid issuing policy documents
D. To guarantee claim settlement
Answer: A. To protect customer privacy and comply with applicable requirements
48. What is mis-selling in insurance?
A. Selling an insurance product through misleading or inappropriate representation of its features or suitability
B. Correctly explaining policy benefits
C. Providing a policy document
D. Renewing a policy according to its terms
Answer: A. Selling an insurance product through misleading or inappropriate representation of its features or suitability
49. Why is proper documentation important in insurance transactions?
A. It creates a record of relevant information, communications and contractual details
B. It guarantees every claim
C. It eliminates the need for customer consent
D. It removes all exclusions from a policy
Answer: A. It creates a record of relevant information, communications and contractual details
50. Which approach should an insurance agent follow when recommending an insurance product?
A. Explain relevant features, benefits, limitations and applicable terms accurately
B. Promise that every claim will be paid
C. Hide exclusions to complete the sale
D. Provide false information to obtain the customer's signature
Answer: A. Explain relevant features, benefits, limitations and applicable terms accurately
IC-38 Exam Quick Revision – Set 2
Before appearing for the IC-38 Insurance Agent Exam, candidates should revise these important concepts:
Peril and hazard
Physical, moral and morale hazards
Pure and speculative risk
Risk pooling
Law of large numbers
Risk transfer and risk reduction
Elements of an insurance contract
Consideration
Aleatory and conditional contracts
Policy exclusions
Policy conditions
Warranties
Policy schedule
Sum insured
Deductibles and excess
Policy renewal
Policy lapse
Grace period
Underwriting
Risk classification
Insurance rating
Loading
Medical underwriting
Adverse selection
Claims investigation
Claim intimation
Insurance fraud
Customer confidentiality
Mis-selling
Insurance documentation
IC-38 Insurance Agent Exam Preparation Tips
1. Understand insurance terminology
IC-38 preparation becomes easier when candidates understand terms such as risk, peril, hazard, premium, sum insured, deductible, underwriting and claim.
2. Learn the principles of insurance
The fundamental principles of insurance are important for understanding how insurance contracts operate. Candidates should revise each principle with practical examples.
3. Practise MCQ questions
Regular practice helps candidates become familiar with objective questions and identify topics that require additional revision.
4. Study the relevant line of business
Depending on the examination category, candidates should also study the applicable Life Insurance, General Insurance or Health Insurance material in addition to the common IC-38 topics.
5. Use official study material
Candidates should compare practice questions with the latest official study material and model question banks issued by the Insurance Institute of India.
Frequently Asked Questions About IC-38
What is the IC-38 examination?
IC-38 is associated with the examination and training framework for insurance agents in India. The study material covers common insurance concepts along with material relevant to different lines of insurance.
What should I study for the IC-38 exam?
Candidates should study insurance fundamentals, risk management, insurance principles, contracts, underwriting, claims, documentation, customer service, grievance redressal and the relevant insurance-specific material.
Are these IC-38 MCQs actual exam questions?
No. These questions are created as a practice and revision resource. They should not be treated as leaked or actual examination questions.
How can I prepare for the IC-38 Insurance Agent Exam?
A useful preparation approach is to read the applicable official IC-38 study material, understand the concepts, revise important terminology and practise objective questions regularly.
Conclusion
This IC-38 Insurance Agent Exam 50 MCQ Practice Set 2 provides another collection of questions covering important insurance concepts such as risk, hazards, insurance contracts, underwriting, rating, claims, policy terms, fraud, customer service and ethical insurance practices.
Use this set along with the latest official IC-38 study material and relevant model question banks for systematic examination preparation.
Keep practising with PDFnotebooks for more IC-38 MCQ questions, insurance exam practice sets, competitive examination question banks, study notes and educational resources.
