Insurance Module (Intermediate) Interview Questions
One of the most important exams is the Insurance Module (Intermediate) offered by NSE. In today’s fast-paced and globalised financial markets, qualified individuals with the necessary skills and knowledge in insurance are in high demand. Insurance, out of all economic functions, is a valuable part of the economy that is largely distinct from others. The insurance market has undergone significant changes, including the presence of a relatively large number of insurers in both the life and non-life segments. Furthermore, the insurance market is a better option for candidates seeking a career in the corporate world.
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1. What are the various kinds of insurance coverage?
There are two types of insurance policies.
- Non-life or general insurance
- Life Insurance Policy
2. What exactly do you mean by “insurance coverage”?
The term ‘insurance coverage’ refers to the fact that when an individual purchases an insurance policy, the insured is covered by the insurance company for a specific amount for themselves or the items for which he purchased the insurance policy, for which he pays premiums to the insurance company. In the event of damage or claims made by the insured, the insurance company will pay the insured according to their ‘insurance coverage.’
3. Define premium.
It is the sum to be paid to the insurance company for a contract of insurance. It is the amount that a person pays monthly, quarterly, or annually, depending on their plan, in exchange for the insurance company’s coverage.
4. What do the terms ‘Insurer’ and ‘Insured’ mean?
The insured is the person who owns the policy, and the insurer is the company that protects the insured.
5. Who is the recipient?
The beneficiary is the person you have designated to receive the insured amount in the event of your death.
6. What is the insurance policy’s contestable period?
The ‘contestable period’ is usually one or two years during which the insurance company has complete authority to investigate the policy and decide whether or not to pay the insured.
7. Define no-claim bonus.
A no-claim bonus is a benefit available to those who have not claimed insurance during the previous year of coverage. This will result in a lower premium the following year.
8. What exactly is a ‘declaration page’ in an insurance policy?
The ‘declaration page’ in an insurance policy contains all of the policy holder’s information, such as name, address, vehicle information, type of coverage, and loss payee information.
9. What do you mean by “Loss Payee”?
The loss payee is the person or institution (bank) who receives the insurance payment in the event of the loss of your property or vehicle. It is a legal term that refers to your ownership of other parties’ or a bank’s investment. For example, suppose you have a car on loan and insurance on it. You were in an accident, and your car was totaled (meaning completely damaged beyond repair). In such a case, your bank still owes you money; when you claim the insurance, the insurance company will pay money directly to the bank or person you owe money to. The bank is the loss payee in this case.
10. Explain co-insurance.
Health insurance companies are commonly referred to as co-insurers. After paying the deductible or co-payment, you share the coverage with the insurance company in a percentage of the policy value. It is the split of insurance coverage between you and the insurance company; typically, the split is 80/20 percent, with you liable to pay 20% and the insurance company paying the remaining amount. For example, suppose you have a $200 health insurance claim, and the policy requires you to pay a deductible of $100. After you pay the deductible, the remaining amount is $100, and you have a co-insurance of 80/20. So you will pay $20 out of $100 out of pocket, while co-insurance will pay the remaining $80. (meaning the insurance company).
11. What exactly do you mean by the term “Annuity”?
An annuity is a term used to describe the regular payment made by the company to the insured after a set period of time. Payments can be made monthly or quarterly, and are frequently used to supplement income after retirement.
12. What is the value of surrender?
Surrender Value is the amount you receive when you stop paying the premium and withdraw the full amount. When you withdraw the money, the policy expires, and the insured loses all of the money’s returns.
13. Define Paid Value.
When the insured stops paying the premium but do not withdraw the amount, the paid value is something. The company’s sum assured is reduced proportionally based on when the insured stopped paying the premium. You will be paid at the end of the term.
14. Is it wise to replace the policy with a different policy?
If you have purchased the policy for a short period of time, you can replace it. In the other case, it is not recommended because you will lose all of the previous policy’s benefits and the premium will rise as you get older. In addition, the two-year period of contestability will be restarted.
15. How do I make a claim on my policy?
To claim the policy, you must complete the claim form and contact the financial advisor from whom you purchased the policy. You must submit all required documents, such as the original payment receipt, to your company. If everything goes well, you will be paid within seven days of claiming the policy.
16. What happens if you don’t pay your premiums on time?
However, if your policy has been in force for a longer period of time, say more than two to three years, and you fail to pay a premium, the company will deduct the premium amount from your accumulated funds, especially if you have permanent life insurance. This will continue until there is an available fund, at which point your policy will be canceled.
It is safe to pay the premium through your agent as long as you make the payment with checks made out to the Company and receive all payment receipts.
18. Is it possible to receive the full payment if you cancel the new policy during the free look period?
The ‘Free Look Period’ is a time period during which the insured can cancel their newly purchased policy within a specific time period from the date of issuing the policy without incurring any penalties or surrender charges.
19. What is the distinction between participating and non-participating policies?
A participating policy is one in which the company’s profit or benefits are shared with the insured in the form of a dividend or reversionary bonuses. The non-participating policy, on the other hand, does not share its profits with the insured.
20. Is it possible to limit premium payments for a shorter period of time than the policy’s duration?
Certain companies offer a Limited Premium Payment option, which allows you to pay the premium over a period of three, five, seven, or ten years, depending on your income, while still receiving coverage for the duration of the policy.
21. What do you mean by “Additional Insured?”
The status of ‘Additional Insured’ is primarily associated with property and liability. The additional insured will be covered by the primary policyholder. For example, a vehicle policy that covers all family members rather than just the owner.
22. What does the term ‘Indemnity’ mean?
The term ‘Indemnity’ is used in to cover the loss or damage claimed by another person. For example, the gym owner has indemnity to compensate customers in the event of injury or accident and to avoid financial loss as a result of a lawsuit.
23. What exactly do you mean by the term “Double Indemnity”?
‘Double Indemnity is a provision provided by certain companies under which they are obligated to pay double the face amount in the event of accidental death or murder. This type of policy does not cover suicide or death caused by the insured person’s gross negligence. For example, a person who dies as a result of natural causes such as heart disease or cancer, murder or conspiracy by a beneficiary, or death as a result of an injury caused by gross negligence.
24. Define subrogation.
The process of seeking reimbursement from the responsible party for a claim that they have already paid is referred to as subrogation.’ For example, if your car is damaged in an accident and you have car insurance, the company will pay you the money. However, if the company discovers that the accident was caused by the fault of the other party, they will seek compensation from the other party, a process known as subrogation.’
25. What do you mean when you say ‘cash value’?
The ‘Cash Value’ is the cash amount offered to the policyholder upon cancellation of the policy, with a portion of the premium paid going into a savings plan. It is also known as surrender value. This term is typically applied to a contract.
26. What is an insurance elimination period?
The elimination period in disability income insurance or loss of income insurance is the amount of time you must wait before benefits are paid. In other words, it is the time between the onset of the injury and the payment of benefits. The lower the premium, the longer the Elimination period, and vice versa.
27. Define “Endowment Policy”.
An endowment policy combines savings with risk protection. This type of policy is specifically designed to accumulate wealth while also protecting your life. In this type of policy, the insured will pay a regular premium for a set period of time. In the event of death, the money will be paid to the beneficiary; however, if you outlive the policy term, you will receive the sum assured as well as any accumulated bonus.
28. What does the company mean when it says “no physical exam”?
Such a company that states, “No physical exam,” allows the policyholder to take the policy and avoid the physical exam that is required by certain life insurance companies. Such companies are typically more expensive, and the insured must pay a higher premium on their policy.
29. What exactly is “group life” insurance?
A single policy that covers an entire group is referred to as ‘group life insurance.’ Such a policy is obtained by an employer in order for the larger organization to cover their employees; however, as an individual policyholder, it may be more expensive than a group policy.
30. Is the beneficiary required to pay taxes on the proceeds of a life insurance policy?
In general, the benefits of a life policy are tax-free, and the beneficiary is not required to pay any tax after the policyholder’s death. However, if you change your beneficiary for monetary gain or other reasons, the beneficiary must pay tax on it.
