Insurance Awareness Quiz – Set 34

Insurance Awareness Quiz: We have created quiz questions on Insurance Awareness which are most important for insurance exams. These questions and answers will guide you in all insurance exams like LIC (AAO/ADO), NIACL assistant and AO, UIIC, IRDA and other Bank PO exams and all competitive exams. So attempt these multiple choice questions now based on the exam pattern syllabus. The topic of this quiz is Insurance Ombudsman

1. The Premium paid for term insurance plan is applicable for a tax benefit and the policy holder can claim a deduction upto Rs _______ lakh per financial year
   A) Rs 1 lakh
   B) Rs 2.5 lakh
   C) Rs 1.5 lakh
   D) Rs 2 lakh
   
   View answer

   Option C
   Explanation: Premiums paid towards a term insurance plan qualify for a tax benefit under section 80C of the Income- tax Act, 1961. You can claim a deduction up to Rs 1.5 lakh a financial year for the premium paid for yourself, your spouse, and your children. 
2. What is the maximum tenure of single premium life insurance (SPLI) policies?
   A) 5 years
   B) 10 years
   C) 7 years
   D) 12 years
   
   View answer

   Option B
   Explanation: There are single premium life insurance (SPLI) policies as well, which provide similar benefits of protection and savings as the regular premium ones. The term of SPLI policies is usually 10 years, but one can exit after five years.
3. A type of term insurance where the premiums payable throughout the selected term remains the same for a pre-fixed sum assured is known as___________
   A) Decreasing term insurance
   B) Term insurance with return of premiums
   C) Convertible term insurance
   D) Level premium term insurance
   
   View answer

   Option D
   
4. The pre-decided amount that the insurance company pays to the policyholder when the insured event takes place is known as_______
   A) Sum assured
   B) Policy proceeds
   C) Sum insured
   D) Policy profitability
   
   View answer

   Option A
   
5. For the life insurance policies issued on or before March 31, 2012, if the premium payable in any year exceeds ________% of the actual sum assured, then the policy proceeds would be taxable.
   A) 10%
   B) 20%
   C) 15%
   D) 5%
   
   View answer

   Option B
   
6. For the life insurance policies issued on or after April 1, 2012, if the premium payable in any year exceeds ________% of the actual sum assured, then the policy proceeds would be taxable.
   A) 15%
   B) 10%
   C) 20%
   D) 25%
   
   View answer

   Option B
   
7. What is the TDS applicable towards the life insurance policy proceeds which are taxable?
   A) 7%
   B) 5%
   C) 2%
   D) 4%
   
   View answer

   Option C
   Explanation: As per section 194DA of the Income Tax Act, 1961, any sum received by an insured Indian resident from an insurer under a life insurance policy shall be subject to TDS @ 2% if the said sum is not exempted under section 10(10D). 
8. In case the life insurance policy proceeds are taxable but does not increase Rs __________, then no TDS is deducted by the insurer
   A) Rs 2 lakh
   B) Rs 1.5 lakh
   C) Rs 2.5 lakh
   D) Rs 1 lakh
   
   View answer

   Option D
   Explanation: Even if these proceeds are taxable as per section 10(10D) but do not exceed Rs 100,000, then also no TDS is to be deducted by the insurer when making the payment to the insured.
9. If the policyholder do not provide its PAN number to the insurer at the time of receiving policy proceeds, then the TDS deducted would be __________ percent
   A) 20%
   B) 15%
   C) 10%
   D) 12%
   
   View answer

   Option A
   Explanation: It is important for you to know that you have to submit you PAN to your insurer or else the rate of TDS would be 20% instead of 2% in cases where TDS is applicable.
   
10. In case of a life insurance policy issued on or after April 1, 2013, the insured suffers from severe disability/disease as specified by the Income Tax Act and rules, then the policy proceeds would be taxable if the premium payable in any year exceeds ________% of the actual sum assured
    A) 10%
    B) 15%
    C) 20%
    D) 5%
    
    View answer

    Option B
    

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