Insurance & FM Awareness Quiz For LIC ADO Mains 2023-30th March

Q1. What is bancassurance?
(a) The selling of insurance through a bank’s established distribution channels
(b) The selling of banking products through an insurance company’s channels
(c) The selling of insurance through an insurance company’s channels
(d) The selling of banking products through a bank’s established distribution channels
(e) None of the above

Q2. Which country originated the concept of bancassurance?
(a) India
(b) USA
(c) France
(d) UK
(e) Germany

Q3. What is the advantage of bancassurance for banks?
(a) Opportunities for sophisticated product offerings
(b) Diversify risks by tapping another area of profitability
(c) A desire to provide one-stop customer service
(d) Bank aims to increase the percentage of non-interest fee income
(e) All of the above

Q4. What is the advantage of bancassurance for insurance companies?
(a) Greater customer lifecycle management
(b) Diversify and grow revenue base from existing relationships
(c) Realization that insurance is a necessary consumer need
(d) Cost-effective use of premises
(e) All of the above

Q5. When was insurance recognized as a permissible form of business that could be undertaken by banks in India?
(a) 1949
(b) 1980
(c) 1991
(d) 2000
(e) 2010

Q6. Which act legalized bancassurance in the USA?
(a) Glass Steagall Act
(b) Gramm Leach Bililey Act
(c) Dodd-Frank Wall Street Reform and Consumer Protection Act
(d) Sarbanes-Oxley Act
(e) None of the above

Q7. Which of the following factors has not led to the success of bancassurance?
(a) Diversification of risks
(b) Increase in non-interest fee income for banks
(c) Limited capital outlay for banks
(d) Higher premiums for insurance products sold through banks
(e) Prohibition of bancassurance in many countries
Q8. How many insurance companies can a bank use in bancassurance?
(a) 1
(b) 2
(c) 3
(d) 4
(e) 5
Q9. Are commissions earned through bancassurance documented in the annual financial report?
(a) Yes, they are always documented
(b) No, they are not documented
(c) It depends on the bank’s policy
(d) It depends on the insurance company’s policy
(e) None of the above
Q10. What is the Referral – Database Sharing model in bancassurance?
(a) The bank acts as a corporate agent and distributes insurance products to its customers.
(b) Trained executives from the insurance company sit in bank branches to sell products to potential customers.
(c) Banks set up a separate counter in their office space to sell insurance products.
(d) The bank and insurance company form a complex relationship to sell insurance products.
(e) None of the above.

Solution

S1. Ans. (a)
Sol. The term bancassurance refers to the selling of insurance through a bank’s established distribution channels.
S2. Ans. (c)
Sol. The concept of bancassurance originated in France.
S3. Ans. (e)
Sol. All of the above advantages are benefits of bancassurance for banks.
S4. Ans. (e)
Sol. All of the above advantages are benefits of bancassurance for insurance companies.
S5. Ans. (d)
Sol. The Government of India Notification dated 03rd August 2000 recognized insurance as a permissible form of business that could be undertaken by banks under Section 6(1)(o) of the Banking Regulation Act, 1949.
S6. Ans. (b)
Sol. The Gramm Leach Bililey Act legalized bancassurance in the USA by repealing the Glass Steagall Act.
S7. Ans. (e)
Sol. It is a barrier to the success of bancassurance, as it limits the availability of bancassurance in many countries.
S8. Ans. (b)
Sol. According to the features of bancassurance, a bank can only use two insurance companies in a single bank.
S9. Ans. (a)
Sol. Yes, they are always documented. According to the features of bancassurance, all commissions earned through selling insurance products are documented in the annual financial report.
S10. Ans. (b)
Sol. Under the Referral – Database Sharing model, the bank provides office space to the insurance company in all of its branches, and trained executives from the insurance company sit in the branches to sell products to potential customers. The bank only shares the client’s database for the purpose of generating business leads, earning commissions, or referring customers. The actual transaction occurs between the executives of the insurance company and the client, with no bank employees involved in the sale of insurance products.