Synonyms
More meanings
Tip: select a single word for meaning & synonyms.
Select multiple words normally to copy text.
Insurance: NBSE Class 10 Financial Literacy notes (MCQs)
Here, you will find summaries, questions, answers, textbook solutions, pdf, extras etc. of (Nagaland Board) NBSE Class 10 Financial Literacy Chapter 4: Insurance. These solutions, however, should be only treated as references and can be modified/changed.
Summary
Insurance is a contract between two parties – the insurer and the insured – that aims to protect the value of an insured asset against potential loss or damage. It helps to reduce the effects of adverse situations by spreading the loss caused by a particular risk among a group of policyholders. The concept of insurance is based on the principles of cooperation and the theory of probability.
Insurance began in India in 1818, and the industry has evolved significantly over time. In 1956, life insurance business in India was nationalized, and the Life Insurance Corporation was established. To regulate and develop the insurance industry in India, the Insurance Regulatory and Development Authority (IRDA) was constituted in April 2000. With the opening of the market to private companies, competition increased, which led to enhanced customer satisfaction through increased consumer choice and lower premiums.
Insurance can be broadly classified into life insurance, general insurance, and social insurance based on the type of business. Life insurance covers risks related to human lives, while general insurance includes property insurance, liability insurance, and other forms such as errors and omissions insurance for professionals, credit insurance, etc. Social insurance refers to government-sponsored insurance programs, which offer pension plans, disability benefits, unemployment benefits, sickness insurance, and industrial insurance.
On the basis of risk, insurance can be further categorized into property insurance, liability insurance, and other forms of insurance. Property insurance covers the risk of loss or damage to property due to specified risks, such as fire or theft. Liability insurance transfers the responsibility of paying compensation to the insurance company when the insured causes loss or damage to another person. Other forms of insurance include export-credit insurance, state employee insurance, and more.
Insurance functions by providing certainty, protection, and risk-sharing among policyholders. The certainty of payment is ensured when a loss occurs, and protection is provided against the probable chances of loss. The risk-sharing mechanism is based on collecting adequate funds (premiums) from the members of a group to compensate for the loss experienced by any member when the insured risk occurs.
Textual questions and answers
Choose the correct answer.
1. Insurance protects the
Answer: (b) Value
2. Insurance helps to ____ of any insured asset.
Answer: (b) Reduce
3. Insurance is a contract between ____ Parties.
Answer: (a) Two
4. The year in which insurance business was started in India is
Answer: (c) 1818
5. The person who takes the insurance is called as
Answer: (b) Insured
Fill in the blanks (can be included in exams as MCQs).
1. Any item of economic value can also be known as ______.
Answer: an asset
2. An asset is valuable to the owner, because he expects to get ______ from it.
Answer: benefits
3. Insurance tries to spread the loss caused by a particular risk ______ the group.
Answer: among
4. Mr. Raj takes an insurance policy on his two wheeler for an amount of ₹50,000 and his vehicle got damaged. The actual value of damage is 4,000. Now, Mr. Raj can claim ______ from the insurance company.
Answer: ₹4,000
5. Funds collected from the persons who take insurance is known as ______.
Answer: premium
Extra/additional questions and answers (MCQs)
1. Insurance is defined as a co-operative device to spread the loss caused by a particular _____ over a number of persons who are exposed to it and who agree to ensure themselves against that risk.
A. Asset B. Risk C. Benefit D. Contract
Answer: B. Risk
2. In an insurance contract, the party called the insurer undertakes to pay the other party, the insured, in exchange for a fixed sum called _____.
A. Benefit B. Payment C. Premiums D. Compensation
Answer: C. Premiums
Q. In case of life insurance, only the fixed amount of money with _____, if any, is paid to the beneficiary (Insured).
A. Interest B. Bonus C. Tax D. Deduction
Answer: B. Bonus
Q. The first fire insurance company, called the Fire Office, was started in the year _____.
A. 1666 B. 1680 C. 1818 D. 1870
Answer: B. 1680
Q. The Life Insurance Corporation of India was established in the year _____.
A. 1950 B. 1956 C. 1965 D. 1972
Answer: B. 1956
Q. The first insurance company in India was the Bombay Mutual Assurance Society Ltd., formed in _____.
A. 1818 B. 1850 C. 1870 D. 1896
Answer: C. 1870
Q. The General Insurance Business was nationalized in India in the year _____.
A. 1956 B. 1960 C. 1972 D. 2000
Answer: C. 1972
Q. In the year 2000, the four nationalized general insurance companies were _____ from General Insurance Corporation of India.
A. Merged B. De-linked C. Acquired D. Expanded
Answer: B. De-linked
Q. The inhabitants of Rhodes adopted the principle of ‘General _____’, whereby, if goods are shipped together, the owners would bear the losses in proportion, if loss occurs, due to jettisoning during distress.
A. Benefit B. Average C. Risk D. Loss
Answer: B. Average
Q. Insurance began in India in the year _____.
A. 1666 B. 1818 C. 1870 D. 1956
Answer: B. 1818
Q. The Oriental Life Insurance Co. Ltd. was an _____ company that started life insurance in India.
A. Indian B. Chinese C. English D. American
Answer: C. English
Q. The General Insurance Corporation of India was grouped into four companies, one of which is the _____ Insurance Company Ltd.
A. Bharat B. New India C. Bombay Mutual D. Oriental
Answer: D. Oriental
Q. The Babylonian traders used to agree to pay additional sums to lenders as the price for _____ the loans, in case of the shipment being stolen.
A. Increasing B. Writing off C. Reimbursing D. Reducing
Answer: B. Writing off
Q. The ‘Great Fire of London’ in 1666 started in a _____ shop.
A. Butcher’s B. Baker’s C. Blacksmith’s D. Tailor’s
Answer: B. Baker’s
Q. The insurance company will compensate only the loss of ₹20,000 and not ₹5,00,000 in a car insurance for ₹5,00,000 if the actual damage is _____.
A. ₹10,000 B. ₹15,000 C. ₹20,000 D. ₹25,000
Answer: C. ₹20,000
Q. The Greeks had started benevolent societies in the late _____ century AD, to take care of the funeral and families of members who died.
A. 5th B. 6th C. 7th D. 8th
Answer: C. 7th
Q. Insurance Regulatory and Development Authority (IRDA) was constituted in which year?
A. 1998 B. 1999 C. 2000 D. 2001
Answer: C. 2000
Q. What does IRDA aim to promote through competition?
A. Customer satisfaction B. Higher premiums C. Asset protection D. Risk reduction
Answer: A. Customer satisfaction
Q. Insurance cannot protect the assets from damage, but instead, it tries to _____.
A. Prevent damage B. Compensate loss C. Reduce risk D. Repair damage
Answer: B. Compensate loss
Q. Which principle states that the chances of loss are estimated in advance to calculate the premium amount?
A. Co-operation B. Probability C. Indemnity D. Utmost good faith
Answer: B. Probability
Q. What is the term used for insurance where the event is certain to happen, but the time of happening is uncertain?
A. Insurance B. Assurance C. Indemnity D. Protection
Answer: B. Assurance
Q. Which function of insurance ensures the sharing of risk?
A. Providing certainty B. Providing protection C. Risk-sharing D. Reducing risk
Answer: C. Risk-sharing
Q. Insurance business in India is classified primarily as life and _____.
A. Property B. General C. Health D. Liability
Answer: B. General
Q. What type of insurance provides protection against loss of marine perils?
A. Property insurance B. Liability insurance C. Marine insurance D. Fire insurance
Answer: C. Marine insurance
Q. In which type of insurance does the insurance company pay the compensation to the third party?
A. Property insurance B. Liability insurance C. Marine insurance D. Fire insurance
Answer: B. Liability insurance
Q. What is the term for the funds collected from the members to compensate for the loss?
A. Compensation B. Premium C. Deductible D. Contribution
Answer: B. Premium
Q. In life insurance, the insurer will pay the fixed amount of insurance at the time of death or at the expiry of a certain _____.
A. Premium B. Term C. Policy D. Benefit
Answer: B. Term
Q. What type of insurance covers the risk of loss of property against fire, burglary, etc?
A. Life insurance B. General insurance C. Social insurance D. Property insurance
Answer: D. Property insurance
Q. What type of insurance offers pension plans, disability benefits, unemployment benefits, sickness insurance, and industrial insurance?
A. Life insurance B. General insurance C. Social insurance D. Property insurance
Answer: C. Social insurance
Q. The Tamil Nadu State government introduced the ‘New Insurance Scheme for Life Saving Treatments’ in which year?
A. 2007 B. 2008 C. 2009 D. 2010
Answer: C. 2009
Q. What is the annual income limit for beneficiaries of the ‘New Insurance Scheme for Life Saving Treatments’?
A. ₹50,000 B. ₹60,000 C. ₹72,000 D. ₹80,000
Answer: C. ₹72,000
Q. What is the maximum benefit amount under the ‘New Insurance Scheme for Life Saving Treatments’?
A. ₹50,000 B. ₹75,000 C. ₹1,00,000 D. ₹1,50,000
Answer: C. ₹1,00,000
Q. Life insurance business in India was nationalized in which year?
A. 1954 B. 1955 C. 1956 D. 1957
Answer: C. 1956
Q. Which corporation was started in 1956 for life insurance business in India?
A. General Insurance Corporation B. Life Insurance Corporation C. Oriental Insurance Corporation D. United India Insurance Corporation
Answer: B. Life Insurance Corporation
Q. What type of insurance covers the risk of loss or damage to property due to accidents and theft? A. Property insurance B. Liability insurance C. Marine insurance D. Miscellaneous insurance
Answer: D. Miscellaneous insurance
Q. What type of insurance covers the risk of loss or damage to property due to fire?
A. Property insurance B. Liability insurance C. Fire insurance D. Marine insurance
Answer: C. Fire insurance
Q. Export-credit insurance and state employees insurance are examples of which type of insurance?
A. Property insurance B. Liability insurance C. Marine insurance D. Other forms of insurance
Answer: D. Other forms of insurance
Q. Insurance can be classified on the basis of business and on the basis of _____.
A. Risk B. Premium C. Coverage D. Payout
Answer: A. Risk
36. Which of these is not a function of insurance?
A. Providing certainty B. Providing protection C. Risk-sharing D. Risk elimination
Answer: D. Risk elimination
