Multiple choice

Choose the correct statement(s).

  1. Policy is an evidence of contract between the life assured and the insurer.

  2. FPR signifies the commencement of the contract.

  3. A life insurance policy is subject to Indian Stamp Act.

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

All the above statements are correct. According to Indian Stamp Act, "Policy of insurance" includes (a) any instrument by which one person, in consideration of a premium, engages to indemnify another against loss, damage or liability arising from an unknown or contingent event (b) a life policy and any policy insuring any person against accident or sickness, and any other personal insurance

Life insurance is a contract for payment of a sum of money to the person assured (or failing him/her, to the person entitled to receive the same) on the happening of the event insured against. Usually, the insurance contract provides for the payment of an amount on the date of maturity or at specified dates at periodic intervals or at unfortunate death if it occurs earlier. Obviously, there is a price to be paid for this benefit. Among other things, the contract also provides for the payment of premiums by the assured. First Premium Receipt marks the beginning of the contract. 

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