Welcome to the IC 38 Exam Free Mock Test Practice Set-7! 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-7

1. Who is protected under the In-Contestability Clause included under a Life Assurance Policy?

1. Insurer
2. Insured
3. Insurance Agent
4. Insurance Broker

Answer: (2) Insured

2. Section 45 (Indisputability Clause) of the Insurance Act, protects the Insured, from the Rejection of the Claim, by the Insurer; provided the Policy has completed –. Choose the Most Appropriate Option.

1. One Year
2. Three Years
3. Five Years
4. Seven Years

Answer: (2) Three Years

3. As per the Suicide Clause, if the Life-Assured Dies, as a Result of Suicide, After 3 Years of the Issue of the Policy, What Does the Beneficiary Receive as the Claim? 

1. Nothing
2. Premium, Paid by the Life-Assured.
3. (2 × Premium), Paid by the Life-Assured.
4. Full Face-Amount of the Policy

Answer: (4) Full Face-Amount of the Policy

4. What Does the first Premium Receipt (F.P.R.), signify?

1. Free-Look Period has ended
2. It is the Evidence, that the Policy-Contract has begun.
3. Policy cannot be cancelled, Now.
4. The policy has acquired a Certain Cash-Value.

Answer: (2) It is the Evidence, that the Policy-Contract has begun.

5. Identify the Document, that evidences a Contract, between the Insurer and the Insured.

1. Proposal-Form
2. Claim-Form
3. Nomination-Form
4. Policy-Document

Answer: (4) Policy-Document

6. If Complex Language is used to word a Certain policy document, and it has given rise to an Ambiguity, How Will it generally be construed?

1. In Favour of the Insured.
2. In Favour of the Insurer
3. The Policy will be declared as Void, and the Insurer will be asked to return the Premium, With Interest, to the Insured.
4. The Policy will be declared as Void, and the Insurer will be asked to Return the Premium, to the Insured, Without Any Interest.

Answer: (1) In Favour of the Insured.

7. With Regards To Mis-Statement of Age, Select the Valid Option:
I. An Under-Statement of Age, will result in the Original Policy being re-issued, for a Reduced Amount.
II. An Over-Statement of Age, will, usually, result in a Refund of Premium-Payment.

1. I, Only
2. II, Only
3. I and II.
4. Neither I, Nor II.

Answer: (3) I and II

8. Which of the Following, is Not a Part of a Standard Policy-Document?

1. Policy Schedule
2. Standard Provisions
3. Policy-Specific Provisions
4. Policy Forfeiture Provisions

Answer: (4) Policy Forfeiture Provisions

9. Give us, the Proof of Contract between the Insurer and the Insured.

1. Proposal-Form
2. Claim-Form
3. Nomination-Form
4. Policy Document

Answer: (4) Policy Document

10. Gives us, an Example of a Standard Policy-Provision. 

1. A Clause, Precluding the Death Due to Pregnancy, for a Lady, Who is Expecting at the Time of Writing the Contract.
2. Suicide Clause
3. A Clause, Precluding Certain Illnesses.
4. A Clause, Granting Certain Privileges to the Policy-Holder.

Answer: (2) Suicide

11. Gives us, an Example of a Policy-Specific Provision. 

1. Premium-Payment
2. Mis-Statement of Age
3. Claim-Provision
4. A Clause, Precluding the Death Due to Pregnancy, for a Lady, Who is Expecting, at the Time of Writing the Contract.

Answer: (4) A Clause, Precluding the Death Due to Pregnancy, for a Lady, Who is Expecting, at the Time of Writing the Contract.

12. Which One of the Following, forms the First Part of a Standard Insurance Policy-Document?

1. Policy-Schedule
2. Standard Provisions
3. Specific-Policy Provisions
4. Claim-Procedure

Answer: (1) Policy-Schedule

13. Select the Correct Statement.

1. The Policy Document has to be signed by a Competent Authority, but need not be compulsorily stamped according to Indian Stamp Act.
2. The Policy Document has to be signed by a Competent Authority, and should be stamped according to Indian Stamp Act.
3. The Policy Document need not be signed by a Competent Authority, but should be stamped according to Indian Stamp Act.
4. The Policy Document neither needs to be signed by a Competent Authority, nor it needs to be compulsorily stamped according to Indian Stamp Act.

Answer: (2) The Policy Document has to be signed by a Competent Authority, and should be stamped according to Indian Stamp Act.

14. What Will Happen, if the Insured-Person loses the Original Life Assurance Policy-Document?

1. The Insurance Company will issue a Duplicate Policy, Without Making Any Changes to the Contract.
2. The Insurance Contract will Come to an End.
3. The Insurance Company will issue a Duplicate Policy, with the Renewed Terms and Conditions, Based on the Current Health Declaration of the LifeAssured.
4. The Insurance Company will issue a Duplicate Policy, Without Making Any Changes to the Contract; But, Only After a Court-Order.

Answer: (1) The Insurance Company will issue a Duplicate Policy, Without Making Any Changes to the Contract.

15. Which One of the Following Documents, will be issued by the Insurance Company, on Receipt of Subsequent Premiums, After the First Premium?

1. Revival Premium Receipt
2. Restoration Premium Receipt
3. Reinstatement Premium Receipt
4. Renewal Premium Receipt

Answer: (4) Renewal Premium Receipt

16. In Order for the Policy to acquire a Guaranteed Surrender-Value (G.S.V.), For How Long, must, the Premiums be Paid, as per the Regulations?

1. 2 Consecutive Years
2. 4 Consecutive Years
3. 3 Consecutive Years
4. 5 Consecutive Years

Answer: (3) 3 Consecutive Years

17. For a Life Assurance Policy, Nomination is allowed Under — of Insurance Act, 1938.

1. Section 10
2. Section 38
3. Section 39
4. Section 45

Answer: (3) Section 39

18. Identify the Circumstances, under which, the PolicyHolder would need to appoint an Appointee.

1. Insured is a Minor
2. Nominee is a Minor
3. Policy-Holder is Not of Sound Mind
4. Policy-Holder is Not Married

Answer: (2) Nominee is a Minor

19. Illustrate the Purpose of Grace-Period.

1. It is a Period, within which, the Policy-Holder may cancel the Policy, if He or She Does Not Like the Same.
2. It grants the PolicyHolder, An Additional Time, to Pay His or Her Premium.
3. It provides a Period, within which, PolicyHolder must raise a Complaint, in Case of Any Grievance.
4. It provides a Period, after which, PolicyHolder must Pay His or Her Over-Due Premium.

Answer: (2) It grants the PolicyHolder, An Additional Time, to Pay His or Her Premium.

20. All of the Following Statements, are True, with Regard to Nomination, Except –.

1. Policy-Nomination is Not Cancelled, if the Policy is assigned to the Insurer, in Return for a Loan.
2. Nomination can be Done, at the Time of Policy-Purchase or Subsequently.
3. Nomination can be Changed, by Making an Endorsement in the Policy.
4. A Nominee has Full Rights on the Whole of the Claim.

Answer: (4) A Nominee has Full Rights on the Whole of the Claim.

21. When is a Policy, Deemed to be Lapsed?

1. If the Premiums are Not Paid on the due date.
2. If the Premiums are Not paid, Before the due date.
3. If the Premium has Not been paid, even After Expiry of Grace-Period.
4. If the Policy is surrendered.

Answer: (3) If the Premium has Not been paid, even After Expiry of Grace-Period.

22. Construct a Situation, that would require Evidence of Insurability, at Revival.

1. It has been a Week, since the Policy has been Lapsed.
2. Policy has been Lapsed, for More Than a Year.
3. Policy has been InForce, for a Year.
4. Loan against Policy has been sought.

Answer: (2) Policy has been Lapsed, for More Than a Year.

23. Construct a Valid Argument in Favour of Policy-Loans.

1. A Loan of Any Amount, can be obtained, easily.
2. Insured can decide the Terms and Conditions of the Loan.
3. There is No Legal Obligation to Re-Pay the Loan.
4. No Collateral is required.

Answer: (3) There is No Legal Obligation to Re-Pay the Loan.

24. Select the Correct Statement, with Regard to GracePeriod. Choose the Most Appropriate Option.

1. The Standard Length of the Grace-Period is 1 Month or 31 Days.
2. The Standard Length of the Grace-Period is One Quarter.
3. The Standard Length of the Grace-Period is One Week.
4. The Standard Length of the Grace-Period is One Fort-Night.

Answer: (1) The Standard Length of the Grace-Period is 1 Month or 31 Days.

25. Which One of the Following Alterations, will be permitted, by an Insurance Company? 

1. Splitting-Up of the Policy into Two or More Policies.
2. Extension of the Premium-Paying-Term.
3. Change of the Policy from “With-Profits” Policy to “WithoutProfits” Policy.
4. Increase in the SumAssured.

Answer: (1) Splitting-Up of the Policy into Two or More Policies.

26. Explain the Concept of Surrender-Value.

1. Maximum Compensation, Available Under Policy.
2. Cash-Value, Associated with the Policy, in Case, the Premiums have been Paid, for 3 Years, at least.
3. Minimum Compensation, Available Under the Policy.
4. Compensation, Available Under the Policy, At Any Given Point of Time.

Answer: (2) Cash-Value, Associated with the Policy, in Case, the Premiums have been Paid, for 3 Years, at least.

27. How Many Persons, can be nominated under a Policy? Choose the Most Appropriate Option.

1. Exactly One
2. Exactly Two
3. Exactly Three
4. One or More Than One

Answer: (4) One or More Than One

28. Describe the Purpose of Nomination.

1. To Transfer the Rights of the Policy.
2. To Appoint a Person, to Receive the PolicyMonies, in the Event of the Life-Assured’s Death.
3. To Surrender the Policy.
4. To Create an Estate.

Answer: (2) To Appoint a Person, to Receive the PolicyMonies, in the Event of the Life-Assured’s Death.

29. Describe the Purpose of Assignment.

1. To Transfer the Rights of the Policy.
2. To Appoint a Person, to Receive the PolicyMonies, in the Event of the Life-Assured’s Death.
3. To Surrender the Policy.
4. To Create an Estate.

Answer: (1) To Transfer the Rights of the Policy.

30. Illustrate the Process involved in Ordinary Revival of Policy.

1. Write a New Policy, whose Date-ofCommencement is Within Two Years of the Original Date-ofCommencement of the Lapsed Policy.
2. Payment of Arrears, With Interest.
3. Get a Loan on the Lapsed Policy, as a Consideration for Revival-Purposes.
4. Pay the PremiumArrears, in Instalments.

Answer: (2) Payment of Arrears, With Interest.

31. Which One of the Following Documents, is not accepted as a Standard Age-Proof Document?

1. School-Leaving Certificate
2. Pass-Port
3. Horoscope
4. Employer’s Certificate

Answer: (3) Horoscope

32. Which One of the Following Statements, is Correct, with Regard to ‘Anti-Selection’?

1. Anti-Selection is the Process, used by the Insurance Company, to ensure, it does not endup selecting Un-Ethical Agents.
2. Anti-Selection is the Tendency of People, Who suspect or know that, their Chance of Experiencing a Loss is High, to seek-out the Insurance, Eagerly; and to gain in the Process.
3. Anti-Selection is the Process, used by the Insurance Company, to ensure, it does not endup launching the Insurance Products, that are Not Suitable for the Prospective PolicyHolders.
4. Anti-Selection is the Process, used by the Insurance Company, to ensure, it does not endup selecting the Wrong Investment-Products, for deploying the Premiums, collected from the Policy-Holders.

Answer: (2) Anti-Selection is the Tendency of People, Who suspect or know that, their Chance of Experiencing a Loss is High, to seek-out the Insurance, Eagerly; and to gain in the Process.

33. Who among the Following Individuals, are considered as High-Risk by Insurance Companies? Choose the Most Appropriate Option.

1. Individuals, who, regularly consume ‘Paan Masala
2. Teetotaller
3. Individuals, who are Under the Influence of Sedatives and Other Stimulants.
4. Individuals, who consume NonVegetarian Food, Regularly.

Answer: (3) Individuals, who are Under the Influence of Sedatives and Other Stimulants.

34. Who among the Following, is Likely to be Exposed to Health-Hazard, in His or Her Occupation?

1. Yoga-Instructor
2. Film-Stunt-Artist
3. Dancer in a Night-Club
4. Person, Exposed to Mining Dust

Answer: (4) Person, Exposed to Mining Dust

35. Who among the Following, is Likely to be Exposed to Accidental Hazard, in His or Her Occupation? Choose the Most Appropriate Option.

1. Medical-Professional
2. Tourist-Guide
3. Demolition-Experts
4. Marketing-Executive, Who is regularly on the Field.

Answer: (3) Demolition-Experts

36. — implies that if the Life-Assured dies from a Specified Cause, within a Given Period, Only a Decreased Amount of Death-Benefit may be Payable.

1. Mortality-Rate
2. Lien
3. Anti-Selection
4. Mortgage

Answer: (2) Lien

37. Which One of the Following Statements, is In-Correct, with Regard to Numerical Rating Method of Underwriting?

1. Under this Method, Underwriters assign the Positive Rating-Points for All Negative or Adverse Factors.
2. Under this Method, Underwriters assign the Positive Points for Any Positive or Favourable Factors.
3. Under this Method, the Total Number of Points, so assigned, will decide How Much ExtraMortality-Rating (E.M.R.), it has been given.
4. Under this Method, if the Extra-MortalityRating (E.M.R.) is Very High, Insurance may even be declined.

Answer: (2) Under this Method, Underwriters assign the Positive Points for Any Positive or Favourable Factors.

38. Which One of the Following Statements, is In-Correct, with Regard to Judgement Method of Underwriting? 

1. Under this Method, Subjective Judgement is used.
2. This Method is especially used in Case of Complex Cases.
3. In this Method, the Company may seek Expert Opinion of Medical Doctor.
4. In this Method, the Underwriter assign Positive or Negative Rating-Points to the Adverse Factors.

Answer: (4) In this Method, the Underwriter assign Positive or Negative Rating-Points to the Adverse Factors.

39. Mr. Vimal is a 32-Years’ Old, Healthy, Non-Smoker, Teetotaller Individual; Who applies for Life Assurance from ABC Limited Insurance Company. Which One of the Following Statements, will Hold True, with Regard to Risk-Acceptance by the Insurance Company?

1. Risk will be Accepted at Ordinary Rates.
2. Risk will be Accepted With an Extra, Over the Tabular Rate of Premium.
3. Risk will be Accepted, With a Lien on SumAssured.
4. Risk will be Accepted, With a Restrictive Clause.

Answer: (1) Risk will be Accepted at Ordinary Rates.

40. If, Mr. Brijesh, a 40-Years’ Old Individual, is perceived as a ‘Sub-Standard Risk’, by the Insurance Company, then, Which One of the Following Statements, will Hold True, with Regard to Risk-Acceptance by the Insurance Company?

1. Risk will be Accepted at Ordinary Rates.
2. Risk will be Accepted at Lower Rates.
3. Risk will be Accepted With an Extra, Over the Tabular Rate of Premium.
4. Risk will be Declined.

Answer: (3) Risk will be Accepted With an Extra, Over the Tabular Rate of Premium.

41. What is meant by ‘Risk-Classification’? Choose the Most Appropriate Option.

1. The Process, in which, Individual Lives are Categorised and Assigned to Different Risk-Classes, Depending on the Degree of Risks, they Pose.
2. The Tendency of People, Who suspect or know that, their Chance of Experiencing a Loss is High, to seek-out the Insurance, Eagerly; and to gain in the Process.
3. The Process of Evaluating Each Proposal for LifeAssurance in Terms of the Degree of Risk, it represents; and then Deciding: Whether or Not to Grant the Insurance, and on What Terms.
4. The Process, in which, the Applicants, Who are Exposed to Similar Degrees of Risk, are Placed in the Same Premium-Class.

Answer: (1) The Process, in which, Individual Lives are Categorised and Assigned to Different Risk-Classes, Depending on the Degree of Risks, they Pose.

42. — means that the Applicants, Who are exposed to Similar Degrees of Risk, must be placed in the Same Premium Class. 

1. Selection of Risk
2. Anti-Selection
3. Moral Hazard
4. Equity

Answer: (4) Equity

43. Which One of the Following Statements, is Correct, with Regard to ‘Sub-Standard Lives’, under RiskClassification? Choose the Most Appropriate Option.

1. Sub-Standard Lives consist of those Individuals, whose Anticipated Mortality corresponds to the Standard Lives, represented by the Mortality-Table.
2. Sub-standard lives consist of those Individuals, whose Anticipated Mortality is Significantly Lower Than Standard Lives, and hence, could be charged a Lower Premium.
3. Sub-standard lives consist of those Individuals, whose Anticipated Mortality is Higher Than the Average Lives or Standard Lives, but, are still considered to be Insurable.
4. Sub-standard lives consist of those Individuals, whose Impairments and Anticipated Extra Mortality are So Great, that, they cannot be provided with insurance, at an Affordable Cost.

Answer: (3) Sub-standard lives consist of those Individuals, whose Anticipated Mortality is Higher Than the Average Lives or Standard Lives, but, are still considered to be Insurable.

44. Which One of the Following Statements, is Correct, with Regard to ‘Declined Lives’, under RiskClassification?

1. ‘Declined Lives’ consist of those Individuals, whose Anticipated Mortality corresponds to the Standard Lives, represented by the Mortality-Table.
2. ‘Declined Lives’ consist of those Individuals, whose Impairments and Anticipated Extra Mortality are So Great, that they could not be provided InsuranceCoverage, at an Affordable Cost.
3. ‘Declined Lives’ consist of those Individuals, whose Anticipated Mortality is Higher Than the Average Lives or Standard Lives, but are still considered to be Insurable.
4. ‘Declined Lives’ consist of those Individuals, whose Anticipated Mortality is Significantly Lower Than Standard Lives, and hence, could be charged a Lower Premium.

Answer: (2) ‘Declined Lives’ consist of those Individuals, whose Impairments and Anticipated Extra Mortality are So Great, that they could not be provided InsuranceCoverage, at an Affordable Cost.

45. If an Insurance Company accepts a Risk, with a Lien on Sum-Assured, then What Does this imply? 

1. Lien implies that, if the Life-Assured Dies from a Specified Cause, Within a Given Period, Only a Decreased Amount of Death-Benefit may be Payable.
2. Lien implies that, the Risk is Being Accepted, by the Company, for a Limited Period.
3. Lien implies that, the Insurance Company is Accepting the Risk, at Lower Rate of Premium, as compared to the Tabular-Rate.
4. Lien implies that, the Insurance-Proposal is Postponed, till a Specified Period.

Answer: (1) Lien implies that, if the Life-Assured Dies from a Specified Cause, Within a Given Period, Only a Decreased Amount of Death-Benefit may be Payable.

46. When the Insurer promises to pay the Insured, a Specified Amount at the End of the Term, if the Insured survives the Plan’s Entire Term, then the Claim will be known as –. 

1. Survival-Benefit Payment
2. Surrender of Policy
3. Death-Claim
4. Maturity-Claim

Answer: (4) Maturity-Claim

47. If Insurance Company makes Periodical Payments, to the Insured, at Specified Intervals, During the Term of the Policy, then, these Payments are being made as per –. 

1. Survival-Benefit Payments
2. Surrender-Value
3. Rider-Benefit
4. Conditional Assignment

Answer: (1) Survival-Benefit Payments

48. A Life Assurance Company paid the Treatment Costs to the Insured, During the Event of Hospitalisation of the Insured, During the Policy-Term. This is an Example of –. 

1. Survival-Benefit Payments
2. Surrender-Value
3. Rider-Benefit
4. Conditional Assignment

Answer: (3) Rider-Benefit

49. ABC Insurance Company has offered an Insurance-Plan to Mr. Krishna, with a Provision of Survival-Claim. How will the Company ascertain the Survival-Claim? Choose the Most Appropriate Option. 

1. Claim will be ascertained, as per the Conditions, stipulated in the Policy.
2. Claim will be ascertained, based on the Dates, which are determined, at the Beginning of the Contract, it-self.
3. Claim will occur, when the Policy-Holder decides to cancel the Contract.
4. Claims will be ascertained, based on the Medical and Other Records, provided by the Policy-Holder, in Support of His Claim.

Answer: (1) Claim will be ascertained, as per the Conditions, stipulated in the Policy.

50. Ms. Kavita purchases a Critical Illness (C.I.) Rider, along with, a Term Assurance Plan, from ABC Insurance Company. How Will, the Company ascertain the Claim for the Critical Illness (C.I.) Rider? Choose the Most Appropriate Option. 

1. Claim will be ascertained, as per the Conditions, stipulated in the Policy.
2. Claim will be ascertained, based on the Dates, which are determined, at the Beginning of the Contract, it-self.
3. Claim will occur, when the Policy-Holder decides to cancel the Contract.
4. Claims will be ascertained, based on the Medical and Other Records, provided by the Policy-Holder, in Support of Her Claim.

Answer: (4) Claims will be ascertained, based on the Medical and Other Records, provided by the Policy-Holder, in Support of Her Claim.