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NEW QUESTION # 16
Which distribution channel for household insurance is typically characterised by high advertising and promotional costs, with no payment of commission?
- A. Lloyd's.
- B. Independent brokers.
- C. Appointed representatives.
- D. Direct insurers.
Answer: D
NEW QUESTION # 17
Harry owns a sports car valued at £1.000 and agrees to sell it to Ben for £500. Ben discusses this with his solicitor who states the contract is
- A. unenforceable as the consideration is inadequate.
- B. enforceable but only if Harry does not refute the contract within six months of the contract date.
- C. enforceable as consideration does not need to be adequate.
- D. unenforceable unless Harry signs a disclaimer acknowledging the consideration as acceptable.
Answer: C
NEW QUESTION # 18
When completing a proposal form, Tom declares that he has two spent speeding convictions. How, if at all, will the spent convictions affect an underwriter's decision to write the risk?
- A. They will only be considered if Tom had a further speeding conviction in the last 12 months.
- B. They will not be considered as this is not an underwriting factor in motor insurance risk assessment.
- C. They will be classed as relevant information and will affect the premium.
- D. They will be ignored in accordance with the provisions of the Rehabilitation of Offenders Act 1974.
Answer: D
NEW QUESTION # 19
How would an employee benefit directly from her employer's business interruption insurance if its factory was forced to close temporarily due to flood damage?
- A. By compensation for loss of bonus.
- B. By payment of an early retirement pension.
- C. By payment of a redundancy lump sum.
- D. By continuation of her wages.
Answer: D
NEW QUESTION # 20
A Terms of Business Agreement between an insurer and an intermediary sets out the
- A. framework for the commercial relationship, which defines and allocates the respective responsibilities and rights to each party.
- B. agreed claims procedures as stated in the Insurance: Conduct of Business sourcebook (ICOBS).
- C. disaster recovery procedures to apply if there is a major disaster affecting the insurer.
- D. criteria to apply when reporting suspicious incidents to the Money Laundering Reporting Officer.
Answer: A
NEW QUESTION # 21
What is the basis of settlement under a new for old insurance policy if a television is stolen?
- A. The replacement cost, less wear and tear.
- B. The original cost, less wear and tear.
- C. The replacement cost in full.
- D. The original cost in full.
Answer: A
NEW QUESTION # 22
If an insurer invokes the cancellation clause to cancel a policy mid-year due to a change in the risk, how much of the premium, if anything, is normally returned to the policyholder?
- A. The full year's premium less a fixed nominal charge.
- B. The full year's premium.
- C. A pro rata amount.
- D. None of the premium.
Answer: A
NEW QUESTION # 23
The Principles for Business slate that all customers should be treated
- A. with due respect.
- B. fairly.
- C. equally.
- D. to a minimum standard.
Answer: B
NEW QUESTION # 24
Michael, an insurance company employee, strongly suspects that a recent transaction involved money laundering but decides NOT to report his suspicions to anyone. How is this treated under the current Money Laundering Regulations?
- A. It is a criminal offence.
- B. It is a disciplinary offence dealt with by the Money Laundering Joint Steering Committee.
- C. It is a civil offence.
- D. It is a disciplinary offence under the Banking Code.
Answer: B
NEW QUESTION # 25
What type of organisation is the British Insurance Brokers' Association?
- A. An educational body.
- B. A specialist regulator.
- C. A trade body.
- D. A public limited company.
Answer: C
NEW QUESTION # 26
How does insurable interest arise, if at all. when an insurer arranges reinsurance?
- A. The insurer is considered to have insurable interest by virtue of its liability to pay claims.
- B. Insurable interest is created by statute.
- C. The policyholder is considered to have assigned the insurable interest to the insurer.
- D. Insurable interest does not arise.
Answer: A
NEW QUESTION # 27
Reinsurance is usually purchased by the
- A. insurer.
- B. insured.
- C. intermediary.
- D. regulator.
Answer: A
NEW QUESTION # 28
The principle of indemnity is the
- A. obligation of the insurer to pay all valid claims according to the terms and conditions of the policy.
- B. placing of the insured, after a loss, in the same financial position as enjoyed immediately before the loss.
- C. placing of the insured, at expiry of a policy, in the same financial position as enjoyed at inception.
- D. obligation of the insurer to provide a maximum sum insured or limit of liability.
Answer: B
NEW QUESTION # 29
Julie has cancelled her trip to tlaly as she has broken her leg. Which type of insurance policy is specifically designed to compensate Julie for any cancellation charges she has incurred?
- A. A travel insurance policy.
- B. A money insurance policy.
- C. A personal accident and sickness insurance policy.
- D. An income protection insurance policy.
Answer: A
NEW QUESTION # 30
A retail customer CANNOT buy insurance directly from which type of insurer?
- A. A direct insurer.
- B. A mutual insurer.
- C. A composite insurer.
- D. A captive insurer.
Answer: D
NEW QUESTION # 31
A risk control survey shows that premises proposed for insurance are in close proximity to a river with a history of flooding. The underwriter will consider this fact to be a
- A. pure risk.
- B. fundamental risk.
- C. moral hazard.
- D. physical hazard.
Answer: D
NEW QUESTION # 32
Under common law. when does the insured's duly of fair presentation cease with regard to declarations that do NOT affect policy cover?
- A. When a claim is paid.
- B. When a claim is submitted.
- C. When the policy contract lakes effect.
- D. At renewal.
Answer: D
NEW QUESTION # 33
Which principle of insurance prevents a member of the public from taking out an insurance policy on the life of a celebrity in the hope of receiving a windfall on the celebrity's death?
- A. Good faith.
- B. Proximate cause.
- C. Indemnity.
- D. Insurable interest.
Answer: D
NEW QUESTION # 34
Who cedes business to a reinsurer?
- A. The insured.
- B. The insurer.
- C. The assessor.
- D. The agent.
Answer: B
NEW QUESTION # 35
Peter currently has no penalty points on his driving licence, although he was convicted of a minor motoring offence eight years ago. Why does Peter NOT need to disclose this to his motor insurer?
- A. It represents a physical hazard.
- B. It is a spent conviction.
- C. It represents a moral hazard.
- D. It is information that would not influence an underwriter.
Answer: B
NEW QUESTION # 36
Alex decides to insure his factory. In doing this he is primarily
- A. transferring the risk to the insurer.
- B. reducing his moral hazard.
- C. reducing his physical hazard.
- D. protecting his business against certainty of loss.
Answer: A
NEW QUESTION # 37
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