LIC AAO Insurance and Financial Market Awareness (Mains Specialist) Syllabus

Insurance and Financial Market Awareness (Mains Specialist) syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Insurance and Financial Market Awareness (Mains Specialist) in LIC AAO, not a summary of it.

1. 1

   Indian Financial System

   4 topics

   • Banking Structure in India
     • Commercial and cooperative banks
     • RBI and monetary policy
   • Financial Markets
     • Money market and capital market
     • Primary and secondary markets
   • Financial Instruments
     • Bonds, debentures and shares
     • Mutual funds and derivatives
   • Financial Inclusion and Digital Payments
2. 2

   Insurance Sector Deep Dive

   4 topics

   • Principles of Insurance
     • Utmost good faith and insurable interest
     • Indemnity and subrogation
   • Life Insurance Products
     • Endowment, whole life and money-back plans
     • Pension and annuity plans
   • Claims and Policy Servicing
     • Death and maturity claims
     • Grace period and lapsation
   • Reinsurance and Bancassurance
3. 3

   Regulatory and Legal Framework

   4 topics

   • IRDAI Act and Functions
   • Insurance Act and Amendments
     • FDI in insurance
   • LIC Act and Recent Developments
     • LIC IPO and listing
   • Consumer Protection and Grievance Redressal
     • Insurance Ombudsman
4. 4

   Economic and Government Schemes

   4 topics

   • Social Security Insurance Schemes
     • PMJJBY and PMSBY
     • Atal Pension Yojana
   • Budget and Economic Survey Highlights
   • Key Economic Indicators
     • GDP, inflation and fiscal deficit
   • International Financial Institutions
     • IMF, World Bank and ADB

Insurance and Financial Market Awareness (Mains Specialist) flashcards for LIC AAO

25 of 53 cards from the Insurance and Financial Market Awareness (Mains Specialist) deck — real questions with worked answers.

1. What is the three-tier structure of scheduled commercial banks in India?

   Public Sector Banks (e.g., SBI, PNB), Private Sector Banks (e.g., HDFC, ICICI), and Foreign Banks. Scheduled banks are those listed in the Second Schedule of the RBI Act, 1934.

2. How are banks broadly classified under the Indian banking structure regulated by the RBI?

   Scheduled banks (Commercial banks - public/private/foreign/RRBs, and Cooperative banks) and Non-scheduled banks. Commercial banks are further split into SCBs and Regional Rural Banks.

3. What is the role and apex regulator of Regional Rural Banks (RRBs) in India?

   RRBs provide credit to rural/agricultural sectors. They are jointly owned by the Central Government (50%), the sponsor bank (35%), and the State Government (15%), and are regulated by RBI and supervised by NABARD.

4. What are the four main functions of the Reserve Bank of India (RBI)?

   Monetary authority (controls money supply via CRR, SLR, repo rate), issuer of currency, banker to government and banks, and regulator/supervisor of the financial system.

5. What is the difference between CRR and SLR?

   CRR (Cash Reserve Ratio) is the share of deposits banks must keep as cash with the RBI (no interest). SLR (Statutory Liquidity Ratio) is the share banks must keep in liquid assets like gold, cash, or approved securities.

6. What is the difference between the money market and the capital market?

   The money market deals in short-term funds (maturity up to 1 year) like T-bills and commercial paper. The capital market deals in long-term funds (over 1 year) through equity and debt instruments like shares and bonds.

7. What is the difference between the primary market and the secondary market?

   The primary market is where new securities are issued for the first time (e.g., IPOs). The secondary market is where existing/issued securities are traded among investors (e.g., on stock exchanges like NSE/BSE).

8. Who is the regulator of the securities market in India and under which Act?

   The Securities and Exchange Board of India (SEBI), established in 1988 and given statutory powers by the SEBI Act, 1992. It protects investors and regulates the securities market.

9. Name the common money market instruments.

   Treasury Bills (T-bills), Commercial Paper (CP), Certificates of Deposit (CD), Call/Notice money, and Commercial Bills. All are short-term, highly liquid, low-risk instruments.

10. What is the difference between equity shares and preference shares?

    Equity shares carry voting rights and variable dividends with last claim on assets. Preference shares get fixed dividends and priority over equity in dividend payment and asset repayment but usually carry no voting rights.

11. What is a debenture and how does it differ from a share?

    A debenture is a debt instrument that acknowledges borrowing by a company and pays fixed interest. Unlike a share (ownership/equity), a debenture holder is a creditor, not an owner.

12. What are derivatives and name their main types?

    Derivatives are financial contracts whose value is derived from an underlying asset. Main types: Forwards, Futures, Options, and Swaps.

13. What is the difference between a mutual fund and an Exchange Traded Fund (ETF)?

    A mutual fund pools investor money to buy securities, priced once daily at NAV. An ETF holds a basket of securities tracking an index but trades on a stock exchange throughout the day at market price.

14. What is financial inclusion?

    Financial inclusion is the process of ensuring affordable access to financial services - banking, credit, insurance, and pensions - for all sections of society, especially weaker and low-income groups.

15. What is the Pradhan Mantri Jan Dhan Yojana (PMJDY)?

    Launched in 2014, PMJDY is a national mission for financial inclusion providing universal access to zero-balance bank accounts, RuPay debit cards, accident insurance, and overdraft facilities.

16. What is UPI and which body operates it?

    Unified Payments Interface (UPI) is a real-time instant payment system enabling inter-bank transactions via mobile. It is developed and operated by the National Payments Corporation of India (NPCI).

17. What is the role of the National Payments Corporation of India (NPCI)?

    NPCI is the umbrella organisation for retail payments and settlement systems in India. It operates UPI, RuPay, IMPS, NACH, BHIM, NETC FASTag, and AePS.

18. What is the difference between RTGS, NEFT, and IMPS?

    RTGS settles high-value transactions in real time (no minimum now, earlier ₹2 lakh). NEFT settles in half-hourly batches. IMPS provides instant 24x7 fund transfer, available round-the-clock.

19. What are the seven basic principles of insurance?

    Utmost good faith (uberrimae fidei), Insurable interest, Indemnity, Subrogation, Contribution, Proximate cause, and Loss minimisation (mitigation).

20. What does the principle of 'utmost good faith' (uberrimae fidei) require in insurance?

    Both parties must disclose all material facts honestly. The insured must reveal facts relevant to risk, and the insurer must disclose policy terms fully. Non-disclosure can void the contract.

21. What is 'insurable interest' and when must it exist in life and general insurance?

    Insurable interest is a financial stake in the subject such that loss causes harm. In life insurance it must exist at the time of taking the policy; in general insurance it must exist both at inception and at the time of claim.

22. What is the principle of indemnity and which type of insurance is exempt from it?

    Indemnity means the insured is compensated only for the actual loss, not to profit. Life insurance and personal accident policies are NOT contracts of indemnity, as human life cannot be valued.

23. What is the difference between subrogation and contribution in insurance?

    Subrogation: after paying a claim, the insurer takes over the insured's right to recover from a third party. Contribution: when multiple insurers cover the same risk, each shares the loss proportionately.

24. What is the difference between a term insurance plan and an endowment plan?

    A term plan provides only death benefit (pure protection, no maturity value if alive). An endowment plan combines insurance with savings, paying a sum assured on death OR a maturity benefit if the insured survives the term.

25. What is a ULIP (Unit Linked Insurance Plan)?

    A ULIP combines life insurance with investment. Part of the premium provides life cover and the rest is invested in market-linked funds (equity/debt), with returns based on Net Asset Value (NAV).

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