How to Prepare for Insurance and Financial Market Awareness for LIC AAO

LIC AAO Mains is scheduled on 8th November, so it’s time to start your preparation without wasting a single moment. One important section is Insurance and Financial Market Awareness, which has 30 questions for 60 marks. The minimum qualifying marks are 27 for SC/ST/PWBD and 30 for others. You get only 20 minutes, but don’t worry, this section is not very difficult. With one month left, if you study daily and follow a smart strategy, you can easily cover this section and score well. The best way to prepare is to make charts and diagrams for insurance types, financial markets, and key regulations. Focus on current affairs related to insurance, RBI policies, SEBI updates, and government schemes. Solve previous year questions to understand the exam pattern. Read this blog to get a complete guide on how to prepare for this section and maximize your score in LIC AAO Mains.

Why This Section is Important

Many students ignore the Insurance and Financial Market Awareness section because they think it is difficult or confusing. This section is high-scoring and scoring if you focus on the right topics. You don’t need to overthink or memorize unnecessarily. The key areas are insurance principles and concepts, life and general insurance products, government schemes and LIC policies, financial markets and instruments, and regulatory bodies like IRDAI, RBI, and SEBI.

One of the best things about this exam is that there are no negative marks, which means if you know the concepts, you can attempt all questions without fear. With just daily focused preparation, even 2 hours a day, you can cover the syllabus in a month and score full marks in this section. Making charts, tables, and diagrams while studying can help you remember things quickly and revise faster before the exam.

Think of it as a smart and easy section where concepts are clear, and answers mostly come from your preparation notes and current affairs. If you stay consistent, revise regularly, and focus on recent LIC schemes, government insurance programs, and financial market updates, you can confidently turn this section into a full-mark scoring area in LIC AAO Mains.

Study Resources for Insurance & Financial Awareness

Study resources for the Insurance & Financial Market Awareness section, along with monthly current affairs PDFs from May to October 2025, which students can use for LIC AAO or similar exams:

Important Topics for Insurance Awareness

Insurance Awareness forms the backbone of this section. Here’s what you must cover:

• Insurance Principles & Contract Elements: Understand risk management, underwriting, grievance redressal, and how insurance contracts work.
  
• Life & General Insurance Products: Focus on LIC schemes, traditional products like term and endowment plans, ULIPs, annuities, and non-traditional products.
  
• Regulatory Bodies: IRDAI, SEBI, RBI, PFRDA. Know their roles and functions.
  
• Claim Processes & Latest Laws: Be aware of amendments in insurance laws, claim procedures, grievance redressal mechanisms, and InsurTech innovations.
  
• Government Schemes: PM Fasal Bima Yojana, PM Suraksha Bima Yojana, Rashtriya Swasthya Bima Yojana, Aam Aadmi Bima Yojana, Universal Health Insurance Scheme.
  

Core Topics to Cover

History of Banking and Insurance

• Evolution of banking and insurance in India
  
• Nationalisation, major milestones, and important developments in insurance
  
• Key life and general insurance companies: LIC, GIC, New India Assurance, United India Insurance, Oriental Insurance, National Insurance, and private insurers
  

Financial Institutions & Terms

• Regulatory bodies: IRDAI, SEBI, RBI, PFRDA, SIDBI, EXIM, NABARD, IDFC
  
• Key financial terms: CRR, SLR, NPA, CAR, Basel norms
  
• Insurance-specific terms: Social security, human life value, mutuality, diversification, underwriting
  

Current Affairs

• Recent government schemes, mergers, financial reforms
  
• Updates on RBI policies, SEBI regulations, IRDAI notifications
  
• Economic survey and union budget highlights
  

Financial Market Awareness

Understanding financial markets is crucial for LIC AAO 2025. Students should focus on:

Financial Markets & Instruments

• Money Markets: T-Bills, Commercial Papers, Certificates of Deposit, Call/Notice Money Market, CBLO
  
• Capital Markets: Primary Market (Book Building, ASBA, IPOs, FPOs, IDRs, GDRs, QIP, ECBs, FCCBs, Euro Issue), Secondary Market (Listing & Delisting, SEBI Regulations)
  
• Derivatives: Forwards, Futures, Options, Exchange-traded vs OTC
  
• Government Securities & Debt Market: Government Bonds, Treasury Bills
  
• Forex Market: Currency trading and management basics
  

Banking in India

• Structure: Public, private, foreign banks, cooperative banks, NBFCs
  
• Key Terms: CRR, SLR, NPA, CAR, Basel norms, SARFAESI Act
  
• Policies: Monetary & fiscal policy, disinvestment, financial inclusion milestones
  
• Technology & FinTech: Digital banking, innovations, alternative finance (Bitcoin, crowdfunding)
  
• Corporate Governance & Compliance: KYC, Anti-Money Laundering laws, regulatory frameworks
  

Insurance Knowledge / Awareness

This is the most important part of the section. Students should cover:

• Insurance Basics: Features, working, and types of insurance (life, general, health, motor, property)
  
• Life Insurance Products: Term, whole life, endowment plans, ULIPs, variable insurance, annuities
  
• General Insurance Products: Motor, health, property, crop, and group insurance
  
• Underwriting & Claims: Types, procedures, documentation
  
• Sales & Customer Service: Selling process, grievance redressal mechanisms, IRDAI Ombudsman
  
• Regulatory Acts & Committees: IRDA Act 1999, Insurance Laws (Amendment) Act 2015, key advisory and regulatory committees
  
• Government Insurance Schemes: PM Fasal Bima Yojana, PM Suraksha Bima Yojana, Rashtriya Swasthya Bima Yojana, ESI, CGHS, Aam Aadmi Bima Yojana, Janashree Bima Yojana, Universal Health Insurance Scheme
  
• Recent Developments & InsurTech: Study last 6 months current affairs and technological innovations

How to prepare for this Section?

To prepare effectively, start with the basic insurance concepts, types of life and general insurance, LIC schemes, and important government insurance programs. Don’t just read—make quick notes, tables, and charts for each topic; this makes revision faster and easier. For the financial market part, focus on money and capital markets, including primary and secondary markets, government securities, derivatives, and forex basics. You don’t need to memorize every detail; just understand the key points and their uses. Keep yourself updated with recent schemes, RBI and SEBI notifications, and insurance current affairs. The best part? There are no negative marks, so if you know the answer, attempt confidently. By spending 30–40 minutes daily, revising your notes, and practicing a few previous year questions, you can easily cover the syllabus in a month and turn this section into a high-scoring, full-mark opportunity. Consistency and smart study are the keys here.

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