Risk and Insurance Planning Mock Test CFP

7/28/2019 Risk and Insurance Planning Mock Test CFP

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Simulated Test 02

Review of attempt 1Started on Wednesday, 6 June 2012, 02:33 AM

Completed on Wednesday, 6 June 2012, 02:36 AM

Time taken 3 mins 12 secs

Marks 0/139

Grade 0 out of a maximum of 10 (0%)

CBM Marks 0

Question 1

Marks: 1

Rationale behind principal of indemnity is that ____________.Choose one answer.

a. Insured gets compensation to the extent he has insured, irrespective of amount of loss

b. Insured does not profit from insured's loss

c. Insured profits from insured's loss

d. None of the above

Incorrect

Marks for this submission: 0/1.

Question 2

Marks: 1Whole life insurance contracts contain cash surrender values. These cash surrender values:Choose one answer.

a. Represent estimates based on projected mortality savings.

b. Are based on the past experience of the insurance company and cannot be guaranteed.

c. Represent an excess of the premiums collected over pure insurance costs and earnings

credited.

d. Are available only if the insured chooses to terminate the coverage under the policy.

Incorrect

Marks for this submission: 0/1.Question 3

Marks: 1Which of the following benefits are available in an Endowment Policy?Choose one answer.

a. A bulk of the premium is invested and a small portion is used to provide life cover.

b. An Endowment Policy provides larger life cover than a Whole Life Policy, at lower


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premium due to its cash value.

c. An Endowment Policy is similar to PPF in terms of returns but gives extra benefit of

insurance cover.

d. An Endowment Policy is usually less expensive than a Whole Life Policy due to the

fixed nature of the term.

Incorrect


Question 4Marks: 1Condition in an Insurance Contract is associated with_____________.

Choose one answer.

a. Exclusions in the Insurance Contract.

b. Limitations on the Insurers promise to perform.

c. Repudiation of claims in the Insurance Contract.


IncorrectMarks for this submission: 0/1.

Question 5

Marks: 1An absolutely assigned policy will revert to the assignor __________.

A) When the assignee dies

B) When the policy becomes a claim

C) Whenever the assignor likes it to happenD) When the assignee reassigns the policy

Choose one answer.a. When the assignee dies

b. When the policy becomes a claim

c. Whenever the assignor likes it to happen

d. When the assignee reassigns the policy


Question 6

Marks: 1

Critical illness rider in life insurance provides________.Choose one answer.

a. Long term care for major illness.

b. Assured benefits for major illness

c. Hospital expenses during illness

d. All of the above


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Incorrect


Question 7Marks: 1For repudiating a claim under section 45 of Insurance Act, 1938, non disclosure mustbe____________.Choose one answer.

a. Intentional

b. Fraudulent

c. Material

d. All of the above

Incorrect


Question 8Marks: 1Main difference between Life Insurance and Non-life insurance is ____________.Choose one answer.

a. Life insurance is based on indemnity, Non-life insurance is not

b. Non-life insurance is based on indemnity, life insurance is not

c. Nature of cover, one covers sickness other does not

d. Object of insurance


Question 9Marks: 1(A) Subrogation is a doctrine in favor of the insured.

(B) Subrogation is a doctrine in favor of the insurer.Choose one answer.

a. (A) is correct

b. (B) is correct

c. Both (A) & (B) are correct

d. Both (A) & (B) are incorrect


Question 10

Marks: 1Ram needs to decide on taking insurance of his property against fire and other perils. This

decision should depend on ____________.Choose one answer.

a. Age of the property


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b. His ability to pay premium

c. The prevalent standard practice

d. His inability to afford financial consequences of self insurance

Incorrect


Marks: 1Corporate agent can represent ___________.

Choose one answer.

a. Only corporate insurance company

b. Multiple insurance companies

c. Only one insurance company

d. Can obtain business only from corporate


Question 12

Marks: 1A catastrophe is not likely to be insured because ______.Choose one answer.

a. It violates the principle of sharing of losses

b. It violates the principle of insurable interest

c. Insurance companies may not be having capital to handle losses of such magnitude

d. Catastrophes are very much insurable through good product designIncorrect


Marks: 1Insurance contracts are __________.Choose one answer.

a. Same as commercial contracts

b. Governed by Regular Contract Act as well as Insurance Contract Act, 1999

c. Different from regular contracts and is regulated by Insurance Contract Act 1999

d. Similar to regular contracts, but have many distinct differences, with own set of

principles


Question 14

Marks: 1


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In India, statutory trust insurance policies are normally created pursuant to

____________.

Choose one answer.

a. Estate Duty Act

b. Section 6 of the Married Women .s Property Act, 1874

c. Charity Commissioner

d. Indian Insurance Act, 1938

Incorrect


Question 15Marks: 1

The Insurance Act, 1938, in respect of insurer obligations to the rural and social sectorprovides _____.

Choose one answer.

a. Specific obligations for the rural sector and general obligations for the social sector

b. Specific level of obligations to be met in these sectors for life insurers

c. Specific obligations to be met in these sectors for all insurers

d. Broad directional guidance to focus on these sectors

Incorrect


Question 16Marks: 1Which of the following is not a ratio to measure solvency of the client?

Choose one answer.

a. Savings Ratio

b. Non mortgage debt service ratio

c. Debt service coverage ratio

d. Debts to asset ratio


Question 17

Marks: 1Ram needs to decide on taking insurance of his property against fire and other perils. Thisdecision should depend on ____________.

Choose one answer.

a. Age of the property

b. His ability to pay premium


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c. The prevalent standard practice

d. His inability to afford financial consequences of self insurance

Incorrect


Question 18Marks: 1What is the usual structure of a personal accident insurance policy?

Choose one answer.

a. The insured can alter the premium based on a narrow definition of the contingency, but

the insurer will pay the sum assured on the occurrence.

b. The contingencies which can trigger insurance payment are pre-specified. Payment is

usually in installments over a specific period after the contingency.

c. The extent of cover and its comprehensiveness determines the extent of payment afterthe event. The insurer has the rights to determine the extent of damage and the liability due.

d. The premium payable is waived after the contingency and the lump sum payment is

made on the occurrence of the insured event

Incorrect


Marks: 1Postal Life insurance is open only for employees of __________.

Choose one answer.

a. Central and State government / P&T department

b. All Central and State Government Departments, Nationalized Banks, PSU, Financial

Institutions, Local Bodies, Educational Institutions aided by the Government etc.

c. Nationalized banks / PSUs / Zila Parishads etc



Question 20

Marks: 1Which of the following benefits are available in an Endowment policy?

Choose one answer.

a. An endowment policy provides larger life cover than a whole life policy, at lower

premium due to its cash value.

b. A bulk of the premium is invested and a small portion is used to provide life cover.

c. An endowment policy provides the scope to earn investment returns along with

insurance, at a lower level of risk

d. An endowment policy is usually less expensive than a whole life policy due to the fixed

nature of the term.


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Incorrect


Question 21Marks: 1An individual has decided to purchase life insurance and comes to you as his FinancialPlanner.

You also hold an Insurance Agency License. In order to program a system of life insuranceto meet the individual's needs, which among the following would be the first step:

Choose one answer.

a. Analyzing the individual's needs and determining the amount of life insurance coverage

needed.

b. Selecting an insurance company

c. Selecting the type of policy that the individual wants to purchase.

d. Determining the rate of return that the individual would like to receive.

Incorrect


Marks: 1The risk that confronts every person or business from negligence.Choose one answer.

a. The risk that confronts every person or business from negligence.

b. The risk that confronts every person or business from negligence.

c. The risk that confronts every person or business from negligence.

d. The risk that confronts every person or business from negligence.


Question 23Marks: 1Liability Insurance is primarily concerned with the financial consequence of:Choose one answer.

a. Criminal activities

b. Unintentional Torts.

c. Intentional Torts

d. All TortsIncorrectMarks for this submission: 0/1.

Question 24

Marks: 1Some time back Umangs investment advisor, also a CFPCM, recommended him a savingsproduct stating that it offered an assured annual return of 12%. Umang was skeptic aboutthe returns and did not invest. You realize that the product has been misrepresented. In


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reality it is the simple rate of interest with a lock in period of 10 years. According to you

________.

Choose one answer.

a. The advisor has violated Code of Ethics of Fairness

b. The advisor has violated Code of Ethics of Integrity

c. The advisor has violated Code of Ethics of Professionalism

d. The advisor has violated Code of Ethics of Diligence

Incorrect


Question 25Marks: 1During the initial discussions Charu wants to know from you the nature of compliance by

which you are bound to FPSB Indias Code of Ethics. You have explained to him that for

every practicing CFPCM certificant it is _____ to adhere to FPSB Indias Code ofEthics.

Choose one answer.

a. Discretionary

b. Mandatory

c. Obligatory

d. Depends upon the country of operation

Incorrect


Question 26

Marks: 1Charu has authorized one of his executives for day to day interactions with you in relation to

his Financial Planning. One day the executive asked you the relation between thePercentage Rate and Basis Point in the financial context. According to you ________.

Choose one answer.

a. 1 Percentage = 100 Basis Point

b. Percentage Rate + 100 = Basis Point

c. Basis Point + 100 = Percentage Rate

d. Basis Point = Percentage Rate


Question 27Marks: 1Charu has heard about the Rule of 72 but is not familiar with its application. You explain

to him, citing an example, that if any investment doubles in a 13 year time frame, thenaccording to this rule, the applicable rate of interest on this investment would have beenclose to____________.

Choose one answer.

a. 5.47% p.a


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b. 5.54% p.a

c. 1.80% p.a

d. 4.25% p.a

Incorrect


Marks: 1

Before providing Financial Planning to a prospective client it is mandatory that the planner

discloses_________.

Choose one answer.

a. His credentials and educational background

b. The number of clients he presently advises

c. The size of his clients portfolio

d. How he will earn for the services he is providing


Question 29

Marks: 1In law, considerations sufficient to support contracts fall into two categories, namely__________.

Choose one answer.

a. Explicit considerations & tacit considerations

b. Executory considerations & recovered considerations

c. Private ownership & corporate entities

d. Executory considerations & executed considerations


Question 30

Marks: 1Deficit financing provision in the Budget will lead to the following/s.

(A) Increase in money supply

(B) Adjustment of interest rate(C) Rise in prices

(D) Fall in national income.Choose one answer.

a. (A) only

b. (A) & (C) only.

c. (A), (B) & (C) only


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d. All the above

Incorrect


Question 31

Marks: 1

Money has time value. It derives this value due to existence of several conditions. Whichone of the following is not one of the conditions contributing to the existence of this value?

Choose one answer.

a. The fees and commission sources of the firm

b. Possibility of increase in tax rates over time.

c. Ability to buy/ rent assets generating revenue

d. Cost of foregoing present consumptions

Incorrect


Question 32Marks: 1You are applying for an overdraft facility with the bank. What is the rate of interest you willpay on this facility?

Choose one answer.

a. The bank will apply a flat rate of interest on the amount of overdraft allowed to actually

utilize.

b. The bank will apply a flat rate of interest on the amount of overdraft allowed to you.

c. The bank will apply rate of interest linked to the term deposit rate, on the amount of

overdraft utilized.

d. The bank will apply rate of interest linked to the term deposit rate, on the averageamount of overdraft remaining unutilized from the OD limit.

Incorrect


Marks: 1The Nifty has doubled since the last time you advised your client to reduce his equityexposure. The client is annoyed. What might be the most appropriate action to take

immediately?Choose one answer.

a. Apologize for wrongly forecasting the market

b. Change his asset allocation by increasing his equity exposure

c. Help the client understand the logic of his asset allocation

d. Rebalance his asset allocation by reducing equity investments

Incorrect


Question 34


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Marks: 1A professional indemnity policy protects the insured from risk arising out of_________________.Choose one answer.

a. Intentional misconduct

b. Misrepresentation of professional competence

c. Negligence

d. Undisclosed conflict of interest

Incorrect


Marks: 1Which of the following is a concurrent indicator of the phase of the business cycle?

Choose one answer.

a. Wholesale price Indexb. Index of Industrial production

c. Labor costs and capacity utilization

d. Order levels in the manufacturing sector

Incorrect


Question 36

Marks: 1What is the main difference between the personal Financial Planning needs of the employed

and the self-employed?Choose one answer.

a. Attitude to risk/Risk appetite

b. Need to fund childrens education

c. Need to fund retirement

d. The extent of employer-provided pension benefits, if any

Incorrect


Question 37

Marks: 1Anand was driving his car home from work, when a pit dug by the Municipal Corporation in

the road, remained open and unmarked. He met with an accident and had to be hospitalizedfor 3 months. What are the insurance claims that can arise from this accident?

Choose one answer.

a. Anand can claim personal insurance for the accident, as it was not caused by negligenceon his part; the municipal corporation cannot claim third party loss insurance to pay

damages to Anand, as it was negligent. Anand can claim insurance for damage due.


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b. Anand can claim temporary disability insurance and insurance for his damaged car

c. Anand has to apply to the municipal corporation for damages, which the corporation willpay out of its claims for liability to third party. His motor insurance will cover damages to

his car.

d. Since the municipal corporation was negligent, it would not be able to lodge a claim torecover payment of damages to Anand. Anand will only receive motor insurance claims on

his car.

Incorrect


Question 38Marks: 1Sujata was standing on the terrace of her building hanging out clothes. She accidentally fell

off and landed on the sunshield of the next floor, which crashed and damaged the car of herneighbour parked below. What are the insurance claims that arise from this event?

Choose one answer.

a. Sujata can claim personal accident insurance. Both her neighbours will claim property

insurance for the freak accident.

b. Sujata cannot claim accident insurance as the accident was caused by her negligence.

Her neighbours can claim property insurance cover for loss to their property.

c. Sujatas neighbours will collect damages from her, which Sujata can pay out of insurance

cover for losses to third parties.

d. Sujatas neighbours will not be able to claim insurance, as the damage to their property

due to such freak accidents is not usually covered by insurance. Sujata will be able to claim

her accident insurance, as she did not fall intentionally.

Incorrect


Question 39Marks: 1Vinayak, 36 years and married, works for a multinational firm, which provides adequatemedical and related covers. He is also able to accumulate sick leave. He already has his own

home and savings of Rs. 35 lakh, which are well invested.Which insurance cover does he require the most?

Choose one answer.

a. Life Cover

b. Medical Cover

c. Property Insurance

d. Temporary Total Disablement Cover


Question 40

Marks: 1The Insurance Act was passed in _________Choose one answer.


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a. 1956

b. 1938

c. 1872

d. 1881IncorrectMarks for this submission: 0/1.Question 41

Marks: 2Your client has bought life insurance and medical insurance, but has not bought a cover for

permanent disability. His argument is that he is paying too much by way of premium forrisks that he believes are "farfetched" and "not likely to affect him". What would you advise

the client?

Choose one answer.

a. A financial planner can persuade the client to consider the losses from permanentdisability and highlight the risks to the client and recommend an appropriate policy for him.

b. If a client is not willing to bear the costs of premium, it can be assumed that he is willing

to bear the costs of risk retention. Insurance may not be necessary in such cases.

c. If losses that would occur to the client in the event of permanent disability are higherthan what he can bear, the client is better off buying insurance. The costs of insuring

against losses, which have lower probability of happening, will in any case be lower.

d. The amount of insurance a person will buy depends on his perception of risks and their

impact on him. It would not be possible to persuade this client to buy more insurance.


Question 42

Marks: 2

Suresh has not bought accident insurance cover, though his two-wheeler is covered for

damages from accidents. He wears a helmet and drives carefully. What can you say abouthis risk management?

Choose one answer.

a. Suresh has insured the property risk. He controls some of his personal risk and retains the

rest of the risk.

b. Suresh has controlled his personal risk and insured his property riskc. Suresh has not done anything to manage his risks and has to immediately go for accidentand personal risk cover. He cannot rely on third party damages alone to cover the risk of

the road.

d. Suresh has transferred his personal risk to other drivers of the road, insured his property

risk and can claim damages is accidents are caused by third party negligence

Incorrect


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Question 43

Marks: 2Which of the following is a correct interpretation of the Rules of Conduct pertaining to the

Ethic of Confidentiality?

Choose one answer.

a. A Member must when requested by the client, provide to a person authorized by theclient, all original documents prepared or received by the Member in undertaking the

advisory task.

b. A Member owes to the Members partners or co-owners a responsibility to act in good

faith (expectations of Confidentiality) only while in business together, not thereafter.

c. The Member shall maintain the same standards of confidentiality to employers as to

clients.

d. Under no circumstance, will any Member divulge any information or knowledge

regarding the FPSB India or its members that they may know or be exposed to.


Question 44Marks: 2A village has 400 houses valued at Rs. 200000 each. Every year 4 houses get burnt. This

risk is distributed amongst all house owners. How much each owner contributes to cover the

risk?Choose one answer.

a. Rs. 1000

b. Rs. 200

c. Rs. 2000

d. Rs. 500

Incorrect


Question 45Marks: 2

(A) The insurer can compensate the insured only once in case of any particular criticalillness.

(B) The insured person has to survive for 30 successive days after the diagnosis of criticalillness to lodge the claim.

Choose one answer.

a. (A) is correct

b. (B) is correct



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Incorrect


Question 46

Marks: 2

(A) If the assignee dies after the death of life assured and before settlement, the policymoney would be payable to the heirs of the assignee.

(B) If the assignee dies after the death of life assured and before settlement, the policymoney would be payable to the heirs of the life assured.

Choose one answer.

a. (A) is correct

b. (B) is correct




Question 47

Marks: 2

Which of the following statement is false about warranty in an insurance contract?

(i) Declarations on the proposal form can be warranties by reference.(ii) Warranties help the insurer to ensure that the risk stays the same during currency of thepolicy.(iii) Warranties have to be followed literally.

Choose one answer.

a. (i)

b. (ii)

c. All of the above


IncorrectMarks for this submission: 0/2.Question 48

Marks: 2

Which of the following statement/s is/are correct?


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(i) The dismemberment accident rider has provision for cover if the insured loses either of

the limbs.

(ii) The dismemberment accident rider provides compensation if the insured dies during theaccident.

Choose one answer.

a. (i) is correct

b. (ii) is correct

c. Both (i) and (ii) are correct

d. Both (i) and (ii) are not correct

Incorrect


Question 49

Marks: 2

Which of the following statement/s is/are correct?

(i) There is extra risk in the life of a handicapped person;(ii) A woman observing purdah cannot be insured due to moral hazard.

Choose one answer.

a. Only (i)

b. Only (ii)

c. Both (i) & (ii)

d. Neither (i) nor (ii)

Incorrect


Question 50Marks: 2

Insurable liability in case of 3rd party liability insurance risk is best defined as:

Choose one answer.

a. The risk that confronts every person or business from negligence.

b. The risk that confronts every person or business from a public wrong.

c. The risk that confronts every person or business resulting from intentional orunintentional behavior that could result in the injury of another person or damage to

property.

d. The risk that confronts every person or business resulting from intentional behavior that

could result in the injury of another person or damage to property.


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Incorrect


Question 51Marks: 1

Money has time value. It derives this value due to existence of several conditions. Which one of

the following is not one of the conditions contributing to the existence of this value?Choose one answer.

a. The fees and commission sources of the firm.

b. Possibility of increase in tax rates over time.

c. Ability to buy/ rent asset generating revenue.

d. Cost of foregoing present consumptions.

Incorrect


Marks: 2

(A) In level term insurance policies, the coverage remains constant throughout the term.

(B) The premium payable in level term insurance policies can remain same or increase withincrease in insured age.

Choose one answer.

a. (B) is correct

b. Neither (A) nor (B) are correct

c. Both (A) & (B) are correctd. (A) is correct


Question 53

Marks: 2Which of the following statement is false about warranty in an insurance contract?

(A) Declarations on the proposal form can be warranties by reference.

(B) Warranties help the insurer to ensure that the risk stays the same during currency of

the policy.

(C) Warranties have to be followed literally.Choose one answer.

a. (A)

b. (B)

c. (A), (B) & (C)



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Incorrect


Question 54Marks: 2Raj insures his home worth Rs. 60 lakh for Rs. 30 lakh. The house is destroyed in a fire andhe suffers losses worth Rs. 20 lakh. How much will he receive from the Insurance Company?

Choose one answer.

a. Rs. 20 lakh

b. Rs. 16 lakh

c. Rs. 10 lakh


Incorrect


Question 55Marks: 2

Jack and Jill approach you to be their Financial Planner Their funds are limited and theirneeds are many. Some of their needs are:

1) To start an investment plan for funding their child's education2) To set up a Testamentary Trust for their child3) To set up a contingency fund amounting to 3 months of living expenses

4) To start saving for retirement

5) To purchase life and health insurance.Arrange these needs in the descending order of priority.

Choose one answer.a. 4, 5, 1, 3 & 2

b. 3, 5, 1, 4 & 2

c. 2, 3, 4, 5 & 1

d. 5, 2, 3, 1 & 4

Incorrect


Question 56Marks: 2

A 6% 2014 GOI Bond of Rs.100 Face Value trades at Rs.102 on 15/12/2004.There is a Call Option in 2008. The Yield to Call will be ________ than the Yield to Maturity.Choose one answer.

a. Higher

b. Lower

c. Same


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d. Cannot Say

Incorrect


Question 57

Marks: 2

Which of the following statement is correct?Choose one answer.

a. Actuary uses Mortality Table to fix up Annuity Premium

b. Annuitants live longer than most persons

c. Actuary uses special Annuity Table to calculate Annuity Premium

d. All the above

Incorrect


Marks: 2Consider a portfolio of two investments viz. A & B. The sum total of volatility of A and Brespectively, represented by standard deviation of the two investments, will be equal to thevolatility of the portfolio as a whole if _________________Choose one answer.

a. Aand B have a correlation of Zero

b. Aand B have a correlation of 1

c. The portfolio is equally divided between Aand B

d. The return on the portfolio is equal to the sum of returns of Aand B

IncorrectMarks for this submission: 0/2.Question 59

Marks: 2Which of the following is a correct interpretation of the Rules of Conduct pertaining to the

Ethic of Confidentiality?Choose one answer.

a. A Member must when requested by the client, provide to a person authorized by the

client, all original documents prepared or received by the Member in undertaking the

advisory task.

b. A Member owes to the Members partners or co-owners a responsibility to act in good

faith (expectations of confidentiality) only while in business together, not thereafter.

c. The Member shall maintain the same standards of confidentiality to employers as to

clients.

d. Under no circumstance, will any Member divulge any information or knowledge

regarding the FPSB India or it members that they may know or be exposed to.

Incorrect



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Question 60

Marks: 2Which of the following is a tort of negligence?

Choose one answer.

a. Mr. Joy was playing golf. He swings a new golf club on the fairway and the head of the

club flies off, and hit another golfer who was standing 20 feet away.b. Mr. Vishal takes medication that he knows makes him drowsy and then proceeds to

drive. He gets into an accident injuring the passengers in another car.

c. Mrs. Jaya locks Ms. Rani in a room to prevent her from leaving the building

d. Mrs. Priti experienced a sudden surge of chest pain while driving, which causes her to

lose control of her car and hit another car

Incorrect


Question 61

Marks: 4

Manju purchased an annuity for Rs. 26000 in the current year. Under the contract, Manjuwill receive Rs. 300 each month for the rest of her life. According to actuarial estimates,Manju will live to receive 100 payments and will receive a 3% return on her investment.Which one of the following statements is true?

Choose one answer.

a. If Manju collects Rs. 3000 in the current year, the Rs. 3000 is treated as a recovery of

capital and thus is not taxable.

b. If Manju lives to collect more than 100 payments, all amounts received after the 100th

payment must be included in her gross income.

c. If Manju dies after collecting a total of 50 payments, she has an economic loss that is not

deductible.

d. If Manju lives to collect more than 100 payments, she must amend her prior years returns

to increase her taxable portion of each payment received in the past.


Question 62

Marks: 4Binding Authority of an insurance broker means __________.Choose one answer.

a. The authority of brokers to accept risks within certain limits and term as set out by the

insurers

b. The contract by which a broker is bound to the insurance companies

c. The contract by which a broker is bound to the clients

d. The regulatory authority that binds brokers to the regulations

Incorrect


Question 63Marks: 4


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Ragini purchased a ULIP scheme in which she invested Rs 1 lakh per annum regularly for 3

years, having paid the third installment a year ago. Tarun no longer wants Ragini to

continue with this Plan and wants to know the amount to be received if the policy issurrendered now.You approach the insurance company and get the following details:

(i) The premium allocation to the Fund is 85% for the first year and 97% in each of the nexttwo years.

(ii) Annual fund management charges are 1.5% of the year1end corpus.(iii) Policy administration charges are Rs. 720 p.a. and Mortality charges are Rs. 1,500 p.a,both recovered from the year1end corpus.

(iv) Constant growth of investment experienced in the last three years is 15% p.a.

(v) Surrender charge is 5% of the corpus outstanding at the time of withdrawal.

Choose one answer.

a. Rs. 2,90,500

b. Rs. 3,32,785

c. Rs. 3,38,300

d. Rs. 3,50,300


Question 64

Marks: 4Akash has bought textile machinery, worth Rs. 50 Lakh, for his factory. On advice of a

Financial Consultant, he took a reinstatement insurance contract for Rs. 50 lakh. Straightline depreciation over a 10 year period applies here. In the third year due to heavy rains the

factory was inundated and the machines were under water for over a week. Similarmachines cost Rs. 55 Lakh now. Akash puts in a claim for Rs. 55 Lakh. What will he be paidby the insurance company?

Choose one answer.

a. Rs. 50 Lakh

b. Rs. 45 Lakh

c. Rs. 55 Lakh

d. Rs. 40 Lakh

Incorrect


Marks: 4What should be the life insurance cover of Jay such that in case he meets any eventuality

today, his family should receive Rs. 5 Lakhs p.a. for 45 years? Assume life insuranceproceeds of Jay are invested in risk free instruments bearing interest rate 6% p.a. (Note:Inflation 4.5% p.a.)Choose one answer.


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a. Rs. 1,64,75,213/-

b. Rs. 2,24,26,000/-

c. Rs. 1,67,12,456/-

d. Rs. 81,91,591/-IncorrectMarks for this submission: 0/4.Question 66

Marks: 4Dr. Anil present age 57 would be retiring at the age of 60. He wants to cater for 25 years of

life post retirement. His present monthly expenses are Rs. 35000 which tend to increasewith inflation @ 6.3% p.a. What would be the corpus required by him at the time of

Retirement if future earnings from pension Rs. 15000 (Pension is inflation linked) are taken

into consideration?Note: Long term rate of return is 9%Choose one answer.

a. Rs.61,02,237/-

b. Rs.60,13,137/-

c. Rs.93,97,750/-

d. Rs.93,77,900/-

Incorrect


Marks: 4Life Insurance Company ABC Ltd entered into a reinsurance arrangement with life insurance

to company XYZ Ltd. On accepting a proposal for Rs 500,000/- life cover, ABC Ltd transfersRs 100,000 XYZ Ltd.

The above transaction indicates that:

Choose one answer.

a. ABC Ltd. is the ceding company with retention of Rs 400,000/-

b. XYZ Ltd. is the ceding company with retention of Rs 100,000/-.

c. ABC Ltd. is the reinsurance company with a retention of Rs 400,000/-.

d. XYZ Ltd. is the reinsurance company with a retention of Rs 100,000/-.

Incorrect


Marks: 4Sanjeev invests Rs.5000 in a Bank Deposit today @ 8% p.a compounded monthly. He hopes

that this investment will enable him to fund his college education (estimated to cost Rs.

9000) which commences after 4 years. What will be the value of this investment in fouryears?Choose one answer.


23/25

a. Rs. 6802

b. Rs. 6870

c. Rs. 6878

d. Rs. 6925IncorrectMarks for this submission: 0/4.Question 69

Marks: 4

Rakesh wants to plan for his dream of making both of his children Sonia (11) and Tejas (6)

professional doctors. He estimates that it would cost about Rs.18 Lakh per child in todays

cost. Both the children shall join the medicine course after completing 17 years of age. Totalrequired money is to be provided at the beginning of the education. What amount would

Rakesh need to save at the beginning of every month from today till the remaining period

for Sonia and Tejas respectively? Assume Rakesh has Rs.500,000 currently available in

education fund of each children and wanted to use it for the child's education only. & getsan investment return of 10% p.a. Education cost is increasing 8% every year. Allcalculations have to be done on a monthly compounding basis).

Choose one answer.

a. Rs. 21,026and Rs. 30,895

b. Rs. 19,687and Rs. 11,217

c. Rs. 20,445and Rs. 30,895

d. Rs. 21,026and Rs. 30,639

Incorrect


Question 70Marks: 4Vijay bought an endowment plan for 35 years on 20 Dec 2002 for a sum assured of Rs. 3

lakh, wherein quarterly premium is Rs. 2,500. Quarterly premium due in December 2008 for

this policy was paid on 06/01/2009. Vijay wants to know what amount of claim would bepayable to his nominee under the policy in case he dies today? Vested bonus under the

policy is Rs. 1,20,000 including bonus declared after valuation on 31/03/2008. For

calculation purposes assume interim bonus paid to Vijay till his death shall be Rs. 40 per

thousand sum assured.Choose one answer.

a. Rs. 4,32,000

b. Rs. 4,24,500

c. Rs. 4,37,000

d. Rs. 4,34,500


24/25

Incorrect


Question 71Marks: 4Abhishek wants to create a reasonable financial security of Rs. 6 Lakh per annum (subjectto inflation @ 5% p.a.) for his wife Chhaya & son Mohan, in case he meets any eventuality

due to any unforeseen event. What should be his life insurance cover to get this amount forChhaya & Mohan's financial security till the remaining expected life of Chhaya? Chhaya'scurrent age 35 years and life expectancy to be 75 years and life insurance policy proceeds

of Abhishek are invested in risk / tax free instruments having interest rate 6% p.a. by her.

(Indicate nearest figure without considering any existing asset)Choose one answer.

a. Rs. 90.27 lakh

b. Rs. 95.69 lakh

c. Rs.198.80 lakh

d. Rs. 200.69 lakhIncorrectMarks for this submission: 0/4.

Question 72

Marks: 4Sundar invests a sum of Rs. 72,000 at 5% p.a. After 7 years the rate of interest was

changed to 5% p.a, compounded half yearly. After a further period of 3 years the rate wasagain changed to 6% p.a, compounded quarterly. What will Sundar get at the end of 15years of commencement?

Choose one answer.

a. Rs. 1,40,000

b. Rs. 1,48,251

c. Rs. 1,58,242

d. Rs. 1,55,000

Incorrect


Marks: 4

For the term insurance plan which you have suggested to Abhishek, a life insurance

company is offering two different plans as follows:

1) Pure risk plan without return of premium, term 20 years, SA Rs.l00 lakh, premium Rs.2.18 per thousand SA per annum.

2) Risk/Return Plan (Total original premium paid to be returned on maturity), term 20years, SA Rs. 100 Lakh, premium Rs. 4.36 per thousand SA per annum.

According to you which plan is advisable for Abhishek if Risk / Tax free rate of return istaken in


25/25

Choose one answer.

a. Plan 1

b. Plan 2 is advisable due to its premium return feature.

c. Plan 2 is advisable due to its IRR.

d. Plan 2 is advisable due to its tax free accumulation advantage over other investments.


Question 74

Marks: 4

Abhishek is considering investing in a recently launched Mutual Fund scheme. This fund

charges an entry load of 2.25% and an annual recurring charge of 2% p.a. Abhishek wants

to know the minimum return which must be generated by this fund in the first year if hewants 15% rate of return. (Assume initial issue expenditure is Nil and annual recurringcharge is levied on year end NAV).

Choose one answer.

a. 23.18%

b. 19.56%

c. 18.00%

d. 20.05%

Incorrect


Question 75

Marks: 4A "Money Back" life insurance policy in which Satish is the life assured for a basic sum

assured of Rs. 5 lakh. Date of commencement is 15-03-1989, term 20 years, maturing on15-03-2009, has a 30 days grace period for paying the renewal premium, the survivalbenefits payable are 20% at the end of every 5,10,15 years and 40% at the end of 20

years. A fixed bonus of Rs. 24 per thousand is also payable at the end of the policy term.

Assume all due survival benefits have been received on their respective due dates and willcontinue in future. What is maturity amount from his life insurance policy?Choose one answer.

a. Rs. 4.40 Lakhs.

b. Rs. 7.40 Lakhs

c. Rs. 2.96 Lakhs.



Documents

Risk and Insurance Planning Mock Test CFP