Welcome to the IC 38 Exam Free Mock Test Practice Set-6! This mock test is designed to help you prepare effectively for the IC 38 exam, essential for becoming a licensed insurance agent in India. The questions in this test cover important topics such as insurance principles, regulations, ethics, and policy types, aligned with the official exam pattern.

Solving these questions will strengthen your conceptual understanding, improve accuracy, and build confidence for the exam. Make the most of this mock test to assess your knowledge and enhance your exam readiness!

IC 38 Exam Free Mock Test Practice Set-6

Q (1): Which of the insurance plans mentioned below has the least or no savings element?

1. Endowment plan
2. Term insurance plan
3. Whole life plan
4. Money back plan

Answer: II) Term insurance plan

Q (2): What Should one consider before opting for Insurance?

1. Don’t risk more than what you can afford to loose
2. Don’t risk a lot for a little
3. Consider the likely outcomes of the risk carefully
4. All of the above

Answer: IV) All of the above

Q (3): Risk transfer through risk pooling is called __

1. Savings
2. Investments
3. Risk mitigation
4. Insurance

Answer: IV) Insurance

Q (4): Origins of modern insurance business can be traced to ____

1. Lloyds
2. Botta mry
3. Rhodes
4. Malhotra Committee

Answer: I) Lloyds

Q (5): Which of the following statements is true?

1. Insurance is a method of sharing the losses of a ‘many’ by a few
2. Insurance is a method of transferring the risk of an individual to another individual
3. Insurance is a method of sharing the losses of a ‘few’ by ‘many’
4. Insurance is a method of transferring the gains of a few to many

Answer: III) Insurance is a method of sharing the losses of a ‘few’ by ‘many’

Q (6): When was Lic formed?

1. 1976
2. 1956
3. 1999
4. 2000

Answer: II) 1956

Q (7): Which of the below insurance schemes is run by an insurer and not sponsored by the Government?

1. Crop Insurance Scheme
2. Employees State Insurance Corporation
3. Jan Arogya
4. All of the above

Answer: III) Jan Arogya

Q (8): Which of the below is not an advantage of cash value insurance contracts?

1. Inculcates saving discipline
2. Safe and secure investment
3. Lower yields
4. Income tax advantages

Answer: III) Lower Yields

Q (9): Which among the following is the regulator for the insurance industry in India?

1. Insurance Regulatory and Development Authority
2. Life Insurance Corporation of India
3. Insurance Authority of India
4. General Insurance Corporation of India

Answer: I) Insurance Regulatory and Development Authority

Q (10): Which among the following is a secondary burden of risk?

1. Hospitalisation costs as a result of heart attack
2. Goods damaged cost
3. Setting aside reserves as a provision for meeting potential losses in the future
4. Business interruption cost

Answer: III) Setting aside reserves as a provision for meeting potential losses in the future

Q (11): How many life insurance companies are operating in India currently?

1. 20
2. 23
3. 26
4. 24

Answer: IV) 24

Q (12): Which among the following is a method of risk transfer?

1. Real estate
2. Insurance
3. Equity shares
4. Bank FD

Answer: II) Insurance

Q (13): Which is the first life insurance company in the world? Which is the first life insurance company in the world?

1. Bombay Mutual Assurance Society Ltd
2. Amicable Society for a Perpetual Assurance
3. Lloyds Coffee House
4. National Insurance Company Limited

Answer: II) Amicable Society for a Perpetual Assurance

Q (14): Which among the following scenarios warrants insurance?

1. The sole breadwinner of a family might die untimely
2. Stock prices may fall drastically
3. A person may lose his wallet
4. A house may lose value due to natural wear and tear

Answer: I) The sole breadwinner of a family might die untimely

Q (15): Who devised the concept of HLV?

1. George Soros
2. Prof Hubener
3. Warren Buffet
4. Dr. Martin Luther King

Answer: II) Prof Hubener

Q (16): In the insurance context ‘risk retention’ indicates a situation where ___

1. Property is covered by insurance
2. The possibility of loss or damage is not there
3. One decides to bear the risk and its effects
4. Loss-producing events have no value

Answer: III) One decides to bear the risk and its effects

Q (17): The measures to reduce the chances of occurrence of risk are known as __

1. Risk avoidance
2. Loss Prevention
3. Risk transfer
4. Risk retention

Answer: II) Loss Prevention

Q (18): By transferring risk to the insurer, it becomes possible ____

1. To ignore the potential risks facing our assets
2. To make money from insurance in the event of a loss
3. To become careless about our assets
4. To enjoy peace of mind and plan one’s business more effectively

Answer: IV) To enjoy peace of mind and plan one’s business more effectively

Q (19): Which of the below is not an element of the life insurance business?

1. Risk
2. Asset
3. Subsidy
4. Principle of mutuality

Answer: III) Subsidy

Q (20): Which of the following statements is true?

1. Insurance pays when there is a loss of an asset
2. Insurance reduces the possibility of loss
3. Insurance prevents its loss
4. Insurance protects the asset

Answer: I) Insurance pays when there is a loss of an asset

Q (21): Nationalisation of Insurance was on ___

1. 19th January 1956
2. 1st October 1956
3. 1st December 1956
4. 1st September 1956

Answer: IV) 1st September 1956

Q (22): Out of 400 houses, each valued at Rs. 20,000, on average 4 houses get burnt every year resulting in a combined loss of Rs. 80,000. What should be the annual contribution of each house owner to make good this loss?

1. Rs.80/-
2. Rs.200/-
3. Rs.100/-
4. Rs.400/-

Answer: II) Rs.200/-

Q (23): Why do insurers arrange for a survey and inspection of the property before acceptance of a risk?

1. To find out whether neighbouring property also can be insured
2. To find out how the insured purchased the property
3. Find out whether other insurers have also inspected the property
4. To assess the risk for rating purposes

Answer: IV) To assess the risk for rating purposes

Q (24): Which among the following is a secondary burden of risk?

1. Business interruption cost
2. Goods damaged cost
3. Setting aside reserves as a provision for meeting potential losses in the future
4. Hospitalisation cost as a result of heart attack.

Answer: IV) Setting aside reserves as a provision for meeting potential losses in the future

Q (25): Which is the first Indian Insurance Company?

1. Life Insurance Corporation of India
2. Bombay Mutual Assurance Society Ltd.
3. National Insurance Company Ltd.
4. The Oriental Life Insurance Company Ltd.

Answer: II) Bombay Mutual Assurance Society Ltd.

Q (26): Which is the first Insurance Company in India?

1. The Oriental Life Insurance Company Ltd.
2. Life Insurance Corporation of India
3. National Insurance Company Ltd.
4. Bombay Mutual Assurance Society Ltd.

Answer: I) The Oriental Life Insurance Company Ltd.

Q (27): The cause of the risk event is known as ____

1. Peril
2. Pooling
3. Hazard
4. Risk

Answer: I) Peril

Q (28): The Asset May Be

1. Non Physical
2. Physical
3. Personal
4. All the Above

Answer: IV) All the Above

Q (29): When an insurer enters into an Insurance Contract with each person who seeks to participate in the Scheme. Such a participant is known as ____

1. Insurer
2. Insured
3. Both a and b
4. None of the Above

Answer: III) Both a and b

Q (30): How does diversification reduce risks in financial markets?

1. Maintaining the time difference between investments
2. Collecting funds from multiple sources and investing them in one place
3. Investing funds across various asset classes
4. Investing in safe assets

Answer: III) Investing funds across various asset classes

Q (31): Collecting numerous individual contributions From various People. These people have similar assets which are exposed to similar risks. This process is known as _

1. Asset
2. Risk
3. Peril
4. Pooling

Answer: IV) Pooling

Q (32): ___ Refers to protection against an event that will happen

1. Microinsurance
2. Insurance
3. Bancassurance
4. Assurance

Answer: IV) Assurance

Q (33): Which of the below is an advantage of cash value insurance contracts?

1. Low accumulation in earlier years
2. Returns subject to the corroding effect of inflation
3. Secure investment
4. Lower yields

Answer: III) Secure investment

Q (34): Which is one of the major forms of Risk Transfer

1. Mutual Fund
2. Fixed Deposit
3. Assurance
4. Insurance

Answer: IV) Insurance

Q (35): Which among the following is a wealth accumulation product?

1. Term Insurance Policy
2. Shares
3. Bank Loans
4. Savings Bank Account

Answer: II) Shares

Q (36): Which of the below-mentioned insurance plans has the savings element?

1. Term insurance plan
2. Endowment plan
3. All the Above
4. None of the Above

Answer: II) Endowment plan

Q (37): Cold calling is ____

1. Meeting people unannounced
2. Meeting customers in winter
3. Meeting customers when they are suffering from cold
4. Meeting customer after fire was extinguished

Answer: I) Meeting people unannounced

Q (38): Which of the below cannot be categorised under risks?

1. Dying too early
2. Dying too young
3. Natural wear and tear
4. Living with disability

Answer: III) Natural wear and tear

Q (39): Which of the below options best describes the process of insurance?

1. Sharing the losses of many by a few
2. Sharing the losses of few by many
3. One sharing the losses of a  few
4. Sharing of losses through subsidy

Answer: II) Sharing the losses of few by many

Q (40): Which of the following is true concerning Life insurance selling

1. Not selling any tangible product but only an idea
2. Mass-marketed through malls and other retail sales outlets
3. The salesperson does not go to the prospect, the prospect visits the salesperson
4. The salesman role is sharing hard medical information with a professional

Answer: I) Not selling any tangible product but only an idea

Q (41): Which of the below statements is true?

1. In the case of general insurance, the risk event protected against is certain insurance the risk event protected against is certain
2. The certainty of risk events in the case of general insurance increases with time
3. Life insurance policies are contracts of indemnity while general insurance policies are contracts of assurance
4. Life insurance policies are contracts of assurance while general insurance policies are contracts of indemnity

Answer: IV) Life insurance policies are contracts of assurance while general insurance policies are contracts of indemnity

Q (42): Which among the following cannot be termed as an asset?

1. Air
2. Car
3. House
4. Human Life

Answer: I) Air

Q (43): With regards to the valuation of assets by insurance companies, ____ is the value at which the life insurer has purchased or acquired its assets.

1. Market value
2. Discounted present value
3. Discounted future value
4. Book value

Answer: IV) Book value

Q (44): Pradip wants to invest in wealth Accumulation Products. In Below of the which product he should invest.

1. Bank FD
2. Shares
3. Life Insurance
4. General Insurance

Answer: II) Shares

Q (45): What does unbundling of life insurance products refer to?

1. Correlation of life insurance products with bonds
2. Separation of the protection and savings element
3. Amalgamation of protection and savings element
4. None of the above

Answer: II) Separation of the protection and savings element

Q (46): Ramesh, 16 years old has proposed a Life insurance contract with ABC insurance company. He is a student and he has no income. His father died at 40 years of age. But the proposal has been declined by the insurance company. What is the major reason?

1. He has no income
2. His father expired at 40 years of age
3. Ramesh is a minor
4. He is a student

Answer: III) Ramesh is a minor

Q (47): Which among the following is a limitation of traditional life insurance products?

1. Yields on these policies are high
2. Clear and visible method of arriving at surrender value
3. The rate of return is not easy to ascertain
4. Well-defined cash and savings value component

Answer: III)  The rate of return is not easy to ascertain

Q (48): _______ was the first legislation enacted to regulate the conduct of insurance companies in India

1. The Insurance Act 2000
2. Provident Fund Act 1912
3. The Insurance Act 1938
4. The Life Insurance Companies Act of 1938

Answer: III) The Insurance Act 1938

Q (49): Which of the below is the most appropriate explanation for the fact that young people are charged a lesser life insurance premium as compared to old people?

1. Old people can afford to pay more
2. Young people are mostly dependent
3. Mortality is related to age
4. Mortality is inversely related to age

Answer: III) Mortality is related to age

Q (50): What is the full form of FPR in insurance?

1. Full payment receipt
2. First premium receipt
3. First payment receipt
4. Full preview record

Answer: II) First premium receipt