Preparing for a life insurance interview can be quite challenging. Insurance is a broad field covering many diverse topics and concepts. Anyone working in this sector must be a subject matter expert who is well-versed with the nitty-gritty of life insurance.
We’ve created a detailed list of some of the most common life insurance interview questions that will not only help you understand the fundamental concepts of the field but also give you a glimpse of what to expect during a life insurance interview.
If you have an interview lined up, make sure to give this article a good read to enhance your chances of bagging the role!
Easy Life Insurance Interview Questions
1. What is “Insurance Coverage?”
Ans: Insurance coverage is the amount of liability covered for an entity or an individual through insurance services, Insurance coverage such as life insurance or auto insurance is issued by the insurer in case of unforeseen incidents.
2. What are the Various Kinds of Insurance Coverage?
Ans: Insurance policies are of two kinds:
- General or non-life insurance
- Life insurance
3. What is Meant by Beneficiary?
Ans: The beneficiary is the person who gets nominated for the insured amount in case the policyholder dies.
4. What do you Mean by ‘Insured’ and ‘Insurer’?
Ans: The insurer is the party in the insurance contract undertaking to pay compensation. The insured is the one who holds the policy and the insurer covers the same.
5. What is the Difference Between ‘Irrevocable Beneficiary’ and ‘Revocable Beneficiary’?
Ans: ‘Irrevocable beneficiary’ is a designation in which the policyholder must take the beneficiary’s consent before changing the beneficiary’s name. On the other hand, a revocable beneficiary allows the policyholder to change the beneficiary name without getting the named beneficiary’s consent.
6. What do you Mean by the Contestable Period in an Insurance Policy?
Ans: Contestable period refers to the duration in which the insurance company holds all the right to investigate the required policy and determine whether they should pay or not pay the insured. This period usually lasts for a year or two.
Challenging Life Insurance Interview Questions
7. What is a ‘Deductible’?
Ans: Deductible is among the clauses an insurance company uses as a threshold for the policy payment for travel or health insurance. It is a decided amount that you must pay from your pocket when you claim the insurance. For example, if the deductible is INR 25,000 and you have insurance coverage of INR 1,00,000, you would have to pay INR 25,000 out of your pocket and the insurance company will cover the rest of the INR 75,000.
8. What is a No-Claim Bonus?
Ans: No-claim bonus refers to a benefit insurance companies offer to those who haven’t claimed insurance during the preceding year of cover. It lowers the premium for the following year.
9. What do you Mean by Co-Insurance?
Ans: Co-insurance is a policy usually offered by health insurance companies. In this policy, you share the coverage with the insurance policy in a percentage of the policy value after the deductible. Usually, the split is 80%/20% where the policyholder has to pay 20% while the insurance company pays the 80% of the covered amount.
Suppose you have claimed health insurance for INR 20,000 and it requires a deductible of INR 10,000. After paying the deduction, the remaining amount is INR 10,000 and the co-insurance is 80/20. Now you’d have to pay INR 2,000 out of your pocket and insurance will pay INR 8,000.
10. What is a Loss Payee?
Ans: Loss payee is an institution or person that receives the insurance payment for the loss of a vehicle or property you own. In the event of payment being made under the policy in relation to the insured, it would go to the third party rather than to the beneficiary of the same. For example, if you had auto insurance of a car you bought on loan and the car crashed within the loan’s payment duration, the money would go to the lender rather than you.
11. What do you Mean by Surrender Value?
Ans: Surrender value, also known as cash value or cash surrender value is the monetary amount the policyholder gets from the life insurance company if they decide to exit the same before it reaches the maturity date. A common premium policy would acquire surrender value if the policyholder has paid its premium for three years continually. The policy ceases as soon as the policyholder withdraws the amount and they might lose all the returns on the policy.
12. How do you Claim an Insurance Policy?
Ans: To claim an insurance policy, you first have to fill up the claim form and contact the financial advisor from whom you purchased the policy. After completing these steps, you have to provide the required documents such as the payment receipt. When everything is verified and deemed fine, you would get your insurance claim within seven days of your claiming date.
Also Read: Banking Job in India
13. What do you Mean by Paid Value?
Ans: The paid value is the reduced assured amount the insurance company pays if the policyholder stops paying premiums after a specific duration. In simple terms, when a person stops paying premiums after a specific duration, the policy remains but with a lower assured amount, this low amount is called paid value or paid-up value.
The amount the insurance company assures to pay reduces if the person claims the paid-up value. The reduction depends on how soon before the maturity period has the person requested the paid value.
14. What Happens If a Person Doesn’t Pay Premium Payments?
Ans: In normal cases, if a person stops paying premiums, the insurance company gives them 10-15 days as a grace period after the due date. However, if the person doesn’t pay even in the grace period, their policy lapses. After that duration, the person would have to pay the due premium along with interest charged on the premium since the due date to revive the policy.
On the other hand, if the person paid premium payments for a substantial duration (2-3 years minimum) and then they stop paying the premium, the Insurance company will deduct the premium from the accumulated sum. This is particularly common with permanent life insurance policies. It continues until the accumulated funds deplete after which the company terminates the policy.
Advanced Life Insurance Interview Questions
15. Can you Differentiate Between a Participating Policy and a Non-Participating Policy?
Ans: In a participating policy, the insurance company shares its generating profit with the policyholder and gives them dividends while in a non-participating policy, the company doesn’t give any profits to the policyholder.
16. Can a Beneficiary Claim the Policy if the Policyholder has been Missing for Multiple Years?
Ans: Yes, a beneficiary can claim the policy but there are a few conditions they must meet. First, they must have a court declaration stating that the policyholder has been missing or announced legally dead. Second, the person must have been missing for more than seven years.
17. Can a Person Limit the Premium Payments for a Smaller Amount of Years than the Policy’s Duration?
Ans: Some insurance companies offer the option where the person has to pay premium payments in three, five, seven, or ten years according to their income and receive the whole coverage they would have received with the usual duration.
18. Can a Person Pay the Premium Through an Insurance Agent? If so, is it Safe to do So?
Ans: Yes, a person can pay the premium through their agent if they make the payment through cheques to their Insurance company and receive all the receipts for such payments.
19. What is a General Insurance Policy and What Does it Cover?
Ans: General insurance policies are also known as non-life insurance policies and offer payments based on the loss from a specific financial event. They are generally defined as any insurance that is not a life insurance policy. Some of the things it covers are legal liabilities, travel, personal property (house or car), accident, health, machinery breakdown, theft, etc.
20. Can a Person Take Two Life Insurance Policies and Claim For Both?
Ans: Yes, a person can take two life insurance policies and claim for both of them.
How to Prepare Life Insurance Interview Questions and Answers
The best way to prepare life insurance interview questions and answers would be through learning about the field. With a deep understanding of the various sections of life insurance, you can easily bag a lucrative role in this sector.
If you’re interested in learning more about this field, we recommend taking a life insurance course. It would teach you the necessary skills required to become a life insurance professional through exclusive training and mentorship.
At upGrad, we offer the following three courses:
- Job Guaranteed PG Program in Life Insurance with HDFC Life
- Job Guaranteed PG Program in Life Insurance with Tata AIA Life
- Post Graduate Program in Life Insurance with PNB MetLife
You can pick any one of these courses and kick start your insurance career.
We hope that you found our article on life insurance interview questions and answers useful.
We know how challenging it can be to prepare for an interview, however, remember that it’s not a herculean task. Stay confident and give direct answers to any questions. Although many people get nervous during interviews, remember that it’s very common and recruiters know that.
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