Question 1

Under IRDAI regulations, what is the maximum period within which a lapsed life insurance policy can be revived?

Accepted Answer

Source: IRDAI Life Insurance Regulations and Insurance Act, 1938, Section 45. A lapsed policy can be revived within 5 years from the date of lapse, provided the policyholder pays all outstanding premiums with interest. Revival after 5 years is not permitted under standard IRDAI guidelines.

Question 2

Which of the following is NOT a basic type of life insurance product offered by LIC?

Accepted Answer

Source: LIC Product Portfolio (IRDAI-approved). LIC offers Term Insurance, Whole Life, Endowment, Money-back, ULIPs, and Annuities. General Insurance products (like motor or health) are NOT life insurance products and are regulated separately under IRDAI guidelines for general insurance.

Question 3

What is the minimum tenure for a Term Insurance policy offered by LIC?

Accepted Answer

Source: IRDAI Life Insurance Regulations and LIC Product Guidelines. Term Insurance policies offered by LIC have a minimum tenure of 5 years. This ensures adequate protection period and aligns with IRDAI's minimum coverage standards for term products.

Question 4

Which of the following best describes the 'Sum Assured' in a life insurance policy?

Accepted Answer

Source: Insurance Act, 1938 and IRDAI Life Insurance Regulations. Sum Assured is the guaranteed amount payable by the insurer to the beneficiary upon the death of the policyholder or at maturity of the policy. It is the core benefit amount and is fixed at the time of policy issuance.

Question 5

LIC was established under the Life Insurance Corporation Act, 1956. Which of the following correctly identifies LIC's statutory status and primary regulatory oversight?

Accepted Answer

Source: Life Insurance Corporation Act, 1956 & IRDA Act, 1999. LIC was incorporated on 1 September 1956 under the Life Insurance Corporation Act, 1956, as a statutory body. LIC is a state-owned enterprise and operates under the regulatory oversight of the Insurance Regulatory and Development Authority (IRDAI), established under the IRDA Act, 1999. LIC's headquarters is in Mumbai. While LIC has a special statutory status under the LIC Act 1956, it is subject to IRDAI regulations for all insurance business.

Question 6

Under IRDAI regulations, what is the maximum period within which a lapsed life insurance policy can be revived, and what is the condition for revival?

Accepted Answer

Source: IRDAI Master Circular on Life Insurance Products & Insurance Act 1938, Section 45. A life insurance policy lapses if premium is not paid within the grace period (typically 30 days for monthly premiums, 45 days for quarterly/half-yearly, and 60 days for annual premiums). A lapsed policy can be revived within 5 years from the date of lapse, provided the policyholder pays all outstanding premiums with interest (as prescribed by the insurer) and satisfies the insurer's underwriting requirements (which may include a medical examination). Revival is at the insurer's discretion, but if the policyholder meets the conditions, the insurer must revive the policy.

Question 7

In a life insurance policy, the 'paid-up value' is a key concept. Which statement correctly defines paid-up value and the condition under which it is applicable?

Accepted Answer

Source: IRDAI Master Circular on Life Insurance Products & Insurance Act 1938, Section 45. Paid-up value is the reduced sum assured that a policyholder becomes entitled to if premium payment is discontinued after a minimum period (typically 3 years for most products). The policy does not lapse; instead, it continues with a reduced sum assured equal to the proportion of premiums paid relative to the total premiums due over the policy term. Paid-up value is calculated as: (Premiums Paid / Total Premiums Due) × Original Sum Assured. The policyholder retains all policy rights (including maturity and death benefits) but on the reduced sum assured.

Question 8

Under IRDAI regulations, what is the minimum period after which a life insurance policy can be surrendered without forfeiture of the entire surrender value?

Accepted Answer

Source: IRDAI Master Circular on Life Insurance Products & Insurance Act 1938, Section 45. A life insurance policy can be surrendered after completion of 3 full years of premium payment. Upon surrender after 3 years, the policyholder is entitled to the guaranteed surrender value (GSV), which is a percentage of the premiums paid (typically 30% of premiums for years 1–3, and higher percentages for subsequent years, depending on the product). Surrender before 3 years may result in forfeiture or minimal value.

Question 9

LIC's Jeevan Bima Yojana is a traditional life insurance product. Which of the following correctly describes the nature and key feature of this endowment plan?

Accepted Answer

Source: LIC Product Portfolio & IRDAI Regulations on Life Insurance Products. Jeevan Bima Yojana is a non-participating endowment assurance plan offered by LIC. It provides both death benefit (sum assured) and maturity benefit (sum assured plus declared bonuses, if any). The plan combines protection and savings, with a fixed policy term (typically 10, 15, 20, or 25 years). Maturity benefit is payable only if the policyholder survives to the end of the term.

Question 10

In LIC's Money-Back policy, what is the defining characteristic regarding the payment of survival benefits, and how does it differ from a traditional Endowment plan?

Accepted Answer

Source: LIC Product Guidelines and IRDAI Regulations on Life Insurance Products. In a Money-Back policy, the insurer returns a portion of the sum assured (typically 20% or 25%) at fixed intervals (e.g., every 5 or 10 years) during the policy term, provided the insured survives. At maturity, the remaining sum assured plus bonuses are paid. In contrast, a traditional Endowment plan pays the entire sum assured plus bonuses only at maturity; no survival benefits are paid during the term. Money-Back policies provide periodic liquidity while maintaining life cover.

Question 11

Under the Insurance Act 1938 and IRDAI guidelines, what is the definition of 'paid-up value' in a life insurance policy, and under what circumstances does a policy acquire paid-up status?

Accepted Answer

Source: Insurance Act 1938 and IRDAI Regulations on Life Insurance Policies. Paid-up value is the reduced sum assured that a policyholder becomes entitled to if the policy lapses due to non-payment of premiums after a certain period. A policy acquires paid-up status when the policyholder has paid premiums for a minimum period (typically 3 years or as specified in the policy document) and then stops paying further premiums. The paid-up sum assured is calculated as a proportion of the original sum assured, based on the number of premiums paid. The policyholder retains life cover at the reduced sum assured without paying further premiums.

Question 12

Under Section 45 of the Insurance Act 1938, within what period can an insurer repudiate a life insurance policy on the ground of misstatement or non-disclosure, and what is the consequence after this period expires?

Accepted Answer

Source: Insurance Act 1938, Section 45. An insurer can repudiate a life insurance policy within 3 years from the date of issuance if there is material misstatement, non-disclosure, or fraud by the policyholder. After 3 years, the insurer loses the right to repudiate the policy, and the policy becomes incontestable. This 3-year contestation period is absolute and cannot be extended.

Question 13

Under IRDAI regulations, what is the minimum lock-in period for a Unit-Linked Insurance Plan (ULIP) before the policyholder can surrender the policy without penalty, and what is the surrender value calculation basis?

Accepted Answer

Source: IRDAI Regulations on Unit-Linked Insurance Products (as amended). The minimum lock-in period for a ULIP is 5 years from the date of policy issuance. After 5 years, the policyholder can surrender the policy. The surrender value is calculated as the Net Asset Value (NAV) of the units allocated to the policyholder's account, less any applicable surrender charges (if any). Before 5 years, surrender is permitted but the insurer may deduct a surrender charge, which is typically a percentage of the fund value.

Question 14

Under Section 38 of the Insurance Act 1938, what is the key difference between assignment and nomination of a life insurance policy, and what is the legal consequence of assignment?

Accepted Answer

Source: Insurance Act 1938, Section 38. Assignment is the transfer of all rights, title, and interest in a life insurance policy from the policyholder (assignor) to another person (assignee). Unlike nomination, which only directs proceeds to a named beneficiary without transferring ownership, assignment transfers complete ownership. The assignee becomes the new owner and has all rights over the policy, including the right to surrender, pledge, or receive the maturity benefit.

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