IC-38 Insurance Agent Exam 50 MCQ Questions with Answers – Practice Set 26
IC-38 Insurance Agent Exam MCQ Questions | 50 Fresh Questions | Insurance Operations, Policy Administration, Premiums, Claims, Customer Service and Risk Concepts
Preparing for the IC-38 Insurance Agent Examination requires a strong understanding of insurance principles, products, policy administration, customer service, claims, underwriting and the practical responsibilities of an insurance professional.
This IC-38 Practice Set 26 contains 50 fresh multiple-choice questions with four options and the correct answer immediately after each question. The questions are designed as educational practice material and focus on additional insurance concepts not emphasised in the previous sets.
Practice Note: These questions are created for IC-38 examination preparation. They are not actual or leaked examination questions. Candidates should always refer to the latest applicable official IC-38 study material and regulatory material.
IC-38 Insurance Agent Exam MCQs – Practice Set 26
1. What is an insurance premium receivable?
A. Premium amount due to the insurer but not yet collected
B. Claim amount already paid to a customer
C. Commission paid to an agent
D. Amount returned after policy cancellation
Answer: A. Premium amount due to the insurer but not yet collected
2. Why is monitoring premium receivables important for an insurer?
A. It helps monitor amounts due and supports effective financial management
B. It guarantees claim approval
C. It eliminates policy renewals
D. It determines the nominee
Answer: A. It helps monitor amounts due and supports effective financial management
3. What is earned premium?
A. The portion of premium relating to the period for which insurance coverage has been provided
B. The total amount of all future premiums
C. Only unpaid premium
D. A claim settlement amount
Answer: A. The portion of premium relating to the period for which insurance coverage has been provided
4. What is unearned premium?
A. The portion of premium relating to a future period of insurance coverage
B. A rejected claim amount
C. A commission payment
D. A surveyor's fee
Answer: A. The portion of premium relating to a future period of insurance coverage
5. Why is unearned premium important in insurance accounting?
A. It represents coverage that relates to future periods
B. It represents only claims already settled
C. It is always an agent's commission
D. It represents customer penalties
Answer: A. It represents coverage that relates to future periods
6. What is a premium refund?
A. An amount returned to a policyholder when applicable under the policy or authorised process
B. A claim investigation report
C. A new premium quotation
D. A compulsory deductible
Answer: A. An amount returned to a policyholder when applicable under the policy or authorised process
7. Which situation may potentially result in a premium refund?
A. An authorised cancellation or adjustment where the applicable terms permit a refund
B. Every claim submission
C. Every policy renewal
D. Every change of nominee
Answer: A. An authorised cancellation or adjustment where the applicable terms permit a refund
8. What should an agent do when a customer asks about a possible premium refund?
A. Check the applicable policy terms and authorised process
B. Promise the exact refund without verification
C. Decide the refund personally
D. Ignore the customer's question
Answer: A. Check the applicable policy terms and authorised process
9. What is commission in insurance distribution?
A. Remuneration payable to an eligible intermediary or agent according to applicable arrangements and rules
B. A claim amount paid to the insured
C. A policy exclusion
D. A deductible
Answer: A. Remuneration payable to an eligible intermediary or agent according to applicable arrangements and rules
10. Why should an insurance agent avoid making sales decisions solely for commission?
A. Insurance recommendations should be based on customer needs, suitability and applicable rules
B. Commission is always illegal
C. Customers cannot buy insurance through agents
D. Premiums do not matter
Answer: A. Insurance recommendations should be based on customer needs, suitability and applicable rules
11. What is an expense incurred by an insurer in acquiring insurance business generally called?
A. Acquisition expense
B. Claim reserve
C. Nomination expense
D. Salvage value
Answer: A. Acquisition expense
12. What can acquisition expenses relate to?
A. Costs associated with obtaining insurance business
B. Hospital treatment expenses of every policyholder
C. Motor vehicle repair bills
D. Claim settlement amounts only
Answer: A. Costs associated with obtaining insurance business
13. What is the loss ratio in general insurance broadly intended to indicate?
A. The relationship between claims incurred and relevant earned premium
B. The number of agents employed
C. The number of policies issued by a branch
D. The amount of investment income only
Answer: A. The relationship between claims incurred and relevant earned premium
14. If claims incurred increase while earned premium remains unchanged, what generally happens to the loss ratio?
A. It generally increases
B. It always becomes zero
C. It remains unchanged automatically
D. It becomes unrelated to claims
Answer: A. It generally increases
15. What is an expense ratio in insurance generally associated with?
A. Operating or related insurance expenses compared with an appropriate premium measure
B. Number of claims divided by nominees
C. Sum insured divided by policyholders
D. Number of hospitals divided by agents
Answer: A. Operating or related insurance expenses compared with an appropriate premium measure
16. What does a combined ratio generally bring together?
A. Claims-related costs and relevant operating expenses in relation to earned premium
B. Only investment income and assets
C. Only the number of policies and customers
D. Only premium refunds and commissions
Answer: A. Claims-related costs and relevant operating expenses in relation to earned premium
17. What does a combined ratio below 100% generally indicate in traditional general insurance analysis?
A. Underwriting income before considering other income or expenses outside the ratio
B. Guaranteed investment loss
C. Guaranteed claim rejection
D. No claims occurred
Answer: A. Underwriting income before considering other income or expenses outside the ratio
18. What does a combined ratio above 100% generally indicate?
A. Underwriting costs exceed the relevant earned premium measure
B. The insurer has no expenses
C. All claims have been rejected
D. Every policy has expired
Answer: A. Underwriting costs exceed the relevant earned premium measure
19. Why should an insurance professional understand basic insurance ratios?
A. They help provide a broader understanding of insurer operations and business performance
B. They allow an agent to approve claims
C. They replace policy wording
D. They determine a customer's medical treatment
Answer: A. They help provide a broader understanding of insurer operations and business performance
20. What is underwriting income broadly concerned with?
A. The financial result arising from insurance underwriting activities
B. Only investment returns
C. Only customer deposits
D. Only agent salaries
Answer: A. The financial result arising from insurance underwriting activities
21. What is investment income for an insurer?
A. Income earned from investments made from funds managed by the insurer, subject to applicable requirements
B. Premium paid by customers
C. Claim settlement received by policyholders
D. Agent commission
Answer: A. Income earned from investments made from funds managed by the insurer, subject to applicable requirements
22. Why is investment management important to an insurance company?
A. Insurers manage funds and need to meet financial obligations while following applicable investment requirements
B. It eliminates the need for premiums
C. It guarantees underwriting profit
D. It replaces customer service
Answer: A. Insurers manage funds and need to meet financial obligations while following applicable investment requirements
23. What is a reinsurance recoverable?
A. An amount expected to be recovered from a reinsurer under applicable reinsurance arrangements
B. A customer's premium refund
C. An agent's commission
D. A vehicle repair amount
Answer: A. An amount expected to be recovered from a reinsurer under applicable reinsurance arrangements
24. Why are reinsurance recoverables important to an insurer?
A. They represent amounts that may be recoverable under reinsurance arrangements and affect financial management
B. They represent customer bonuses
C. They eliminate all insurance risk
D. They replace underwriting
Answer: A. They represent amounts that may be recoverable under reinsurance arrangements and affect financial management
25. What is a ceded premium?
A. Premium transferred to a reinsurer under a reinsurance arrangement
B. Premium refunded to a customer
C. Premium paid directly to a hospital
D. Commission paid to a surveyor
Answer: A. Premium transferred to a reinsurer under a reinsurance arrangement
26. What is a reinsurance commission?
A. A payment or allowance that may be received by the cedant from the reinsurer according to the reinsurance arrangement
B. A claim settlement paid to the policyholder
C. A compulsory customer deductible
D. A government tax on every policy
Answer: A. A payment or allowance that may be received by the cedant from the reinsurer according to the reinsurance arrangement
27. What is a claim development pattern?
A. The way reported or incurred claims may change as additional information becomes available over time
B. The number of new insurance agents recruited
C. The growth of a customer's salary
D. The increase in vehicle speed
Answer: A. The way reported or incurred claims may change as additional information becomes available over time
28. Why can claim development be important to insurers?
A. Claims may be adjusted or become better known over time, affecting estimates and reserves
B. It determines customer age
C. It eliminates policy conditions
D. It determines vehicle registration
Answer: A. Claims may be adjusted or become better known over time, affecting estimates and reserves
29. What is a claim estimate?
A. An assessment of the likely financial amount associated with a claim based on available information
B. A guaranteed final settlement in every case
C. A customer's premium receipt
D. An insurance advertisement
Answer: A. An assessment of the likely financial amount associated with a claim based on available information
30. Why can an initial claim estimate change?
A. Additional documents, investigation findings or assessment information may become available
B. Policyholders can automatically change claim amounts
C. Premiums always change after a claim
D. Claims are never reviewed
Answer: A. Additional documents, investigation findings or assessment information may become available
31. What is a claim settlement voucher generally associated with?
A. Documentation connected with acceptance or payment of a claim settlement according to the applicable process
B. A proposal form
C. A premium quotation
D. A policy advertisement
Answer: A. Documentation connected with acceptance or payment of a claim settlement according to the applicable process
32. Why should a customer carefully review claim settlement documents?
A. They may contain important details regarding the settlement and applicable terms
B. They automatically increase the settlement
C. They eliminate all policy conditions
D. They replace the insurance contract
Answer: A. They may contain important details regarding the settlement and applicable terms
33. What is a partial claim settlement?
A. Settlement of an eligible portion of a claim rather than the entire amount initially claimed
B. Cancellation of every policy
C. Payment of every future claim
D. A premium discount
Answer: A. Settlement of an eligible portion of a claim rather than the entire amount initially claimed
34. Why might a claim be settled for an amount different from the amount claimed?
A. Policy limits, exclusions, deductibles, assessment or other applicable terms may affect the payable amount
B. The insurer can change any amount without reason
C. Every claim is always paid in full
D. The customer decides the settlement amount alone
Answer: A. Policy limits, exclusions, deductibles, assessment or other applicable terms may affect the payable amount
35. What is a claim payment method?
A. The authorised method through which an approved claim amount is paid to the eligible recipient
B. A method of calculating premium
C. A type of policy exclusion
D. A method of underwriting
Answer: A. The authorised method through which an approved claim amount is paid to the eligible recipient
36. Why should bank account information submitted for claim payment be accurate?
A. Incorrect payment details can cause delays or payment-related problems
B. It changes the sum insured
C. It removes the deductible
D. It guarantees claim approval
Answer: A. Incorrect payment details can cause delays or payment-related problems
37. What is a policy renewal notice?
A. A communication reminding or informing the policyholder about renewal-related information
B. A claim rejection letter
C. A medical certificate
D. A survey report
Answer: A. A communication reminding or informing the policyholder about renewal-related information
38. Why are renewal reminders useful?
A. They help customers remember upcoming renewal requirements and avoid unintended gaps in coverage
B. They guarantee automatic renewal in every case
C. They eliminate premiums
D. They change policy conditions automatically
Answer: A. They help customers remember upcoming renewal requirements and avoid unintended gaps in coverage
39. What is a policy renewal quotation?
A. Information showing applicable renewal terms and premium or other relevant details, where provided
B. A claim settlement document
C. A hospital admission form
D. A vehicle registration certificate
Answer: A. Information showing applicable renewal terms and premium or other relevant details, where provided
40. What should a customer do if the renewal quotation contains an unexpected change?
A. Review the details and seek clarification from the insurer or authorised intermediary
B. Assume the change is automatically incorrect
C. Ignore the renewal
D. Alter the document personally
Answer: A. Review the details and seek clarification from the insurer or authorised intermediary
41. What is a policy renewal gap?
A. A period during which a policy's required coverage is not in force because renewal was not completed as required
B. A gap between two customer meetings
C. A difference between two insurance agents
D. A claim investigation period
Answer: A. A period during which a policy's required coverage is not in force because renewal was not completed as required
42. Why can a renewal gap be important?
A. Losses occurring during an uninsured period may not receive the same policy protection
B. It automatically doubles the sum insured
C. It guarantees claim approval
D. It eliminates exclusions
Answer: A. Losses occurring during an uninsured period may not receive the same policy protection
43. What is policy documentation control?
A. Maintaining and managing policy-related documents accurately and systematically
B. Destroying old policy documents immediately
C. Changing policy terms without authorisation
D. Avoiding customer records
Answer: A. Maintaining and managing policy-related documents accurately and systematically
44. Why is accurate documentation important in insurance?
A. It supports policy administration, customer service, underwriting and claims processes
B. It guarantees every claim
C. It eliminates underwriting
D. It replaces customer consent
Answer: A. It supports policy administration, customer service, underwriting and claims processes
45. What is an insurance service request?
A. A customer request for an authorised policy-related service or change
B. A guaranteed claim approval
C. A new insurance law
D. A surveyor's personal opinion
Answer: A. A customer request for an authorised policy-related service or change
46. What should an agent do when a service request requires insurer approval?
A. Submit or facilitate the request through the authorised process and avoid promising an outcome
B. Approve it personally
C. Ignore the request
D. Modify insurer records without authority
Answer: A. Submit or facilitate the request through the authorised process and avoid promising an outcome
47. What is a customer service turnaround time?
A. The expected or defined time taken to process or respond to a service request
B. The policy's sum insured
C. The customer's premium
D. The claim deductible
Answer: A. The expected or defined time taken to process or respond to a service request
48. Why should an agent avoid promising a specific service completion time without confirmation?
A. Actual processing time may depend on documentation, verification and the insurer's authorised process
B. Every request is completed immediately
C. Agents control all insurer systems
D. Processing time never varies
Answer: A. Actual processing time may depend on documentation, verification and the insurer's authorised process
49. What is escalation in customer service?
A. Referring a matter to an appropriate higher or specialised level when it cannot be resolved at the current level
B. Cancelling every customer policy
C. Increasing premium without authority
D. Rejecting a claim automatically
Answer: A. Referring a matter to an appropriate higher or specialised level when it cannot be resolved at the current level
50. What is the most appropriate approach when an insurance agent cannot resolve a customer's issue?
A. Record the issue accurately and guide the customer through the appropriate authorised escalation or grievance process
B. Ignore the customer
C. Promise an unofficial solution
D. Alter insurer records personally
Answer: A. Record the issue accurately and guide the customer through the appropriate authorised escalation or grievance process
Quick Revision – IC-38 Practice Set 26
This set covers:
Premium receivables
Earned premium
Unearned premium
Premium refunds
Insurance commission
Acquisition expenses
Loss ratio
Expense ratio
Combined ratio
Underwriting income
Investment income
Reinsurance recoverables
Ceded premium
Reinsurance commission
Claim development
Claim estimates
Claim settlement vouchers
Partial claim settlement
Claim payment methods
Bank details for claim payments
Renewal notices
Renewal quotations
Renewal gaps
Policy documentation control
Service requests
Service turnaround time
Customer-service escalation
IC-38 Exam Preparation Tips
1. Learn Basic Insurance Accounting Terms
Some insurance examination questions may test your understanding of terms such as:
Earned premium
Unearned premium
Premium receivable
Acquisition expense
Claims incurred
Underwriting income
Understanding the basic meaning is more useful than simply memorising terminology.
2. Understand Insurance Ratios
Remember the broad relationships:
Loss Ratio → Claims compared with earned premium
Expense Ratio → Relevant expenses compared with premium
Combined Ratio → Claims-related costs + expenses compared with earned premium
These ratios help explain the operational performance of general insurance business.
3. Understand Why Claim Estimates Can Change
A claim is not necessarily settled based only on the first amount estimated.
Additional information can become available through:
Documents
Investigation
Assessment
Repair estimates
Loss assessment
Policy verification
Therefore, an initial estimate and final settlement can differ.
4. Remember the Difference Between Earned and Unearned Premium
Earned premium: Relates to insurance coverage already provided.
Unearned premium: Relates to coverage for a future period.
5. Customer Service Requires Proper Escalation
An agent should not try to personally resolve matters beyond their authority.
A professional approach is:
Listen → Record → Verify → Follow authorised process → Escalate where appropriate → Update customer
Frequently Asked Questions About IC-38 Practice Set 26
What is earned premium?
Earned premium is the portion of premium relating to the period for which insurance coverage has already been provided.
What is unearned premium?
Unearned premium relates to the future period of insurance coverage.
What is loss ratio?
It broadly measures claims incurred in relation to earned premium.
What is combined ratio?
It broadly combines claims-related costs and relevant operating expenses in relation to earned premium.
What is a reinsurance recoverable?
It is an amount that an insurer expects to recover from a reinsurer under applicable reinsurance arrangements.
Why can claim estimates change?
Additional information may become available during investigation, assessment or claim processing.
What is a renewal gap?
A renewal gap is a period when required insurance coverage is not in force because renewal was not completed as required.
What should an agent do when they cannot resolve a customer complaint?
The agent should follow the appropriate authorised escalation or grievance process rather than making an unsupported promise.
Conclusion
IC-38 Practice Set 26 provides 50 fresh MCQs covering insurance accounting terminology, premium concepts, insurance ratios, reinsurance recoverables, claim estimation, claim settlement, renewal administration and customer-service escalation.
Regularly practising concept-based questions can help candidates develop a stronger understanding of the terminology used in the insurance industry and prepare more effectively for the IC-38 examination.
Continue practising with PDFnotebooks for more IC-38 Insurance Agent Exam MCQs, insurance study material, question banks and competitive examination resources.
