Insurance Policies and Claims

Risk decreases as the number of exposures increases. This is the most important foundation of insurance. This is called the law of large numbers. This law is critical to understand the nature of risk and how it is managed. 

Insurers inspect the property before acceptance of a risk to assess the risk for rating purposes. Before acceptance of a risk, insurers arrange survey and inspection of the property to be insured, by qualified engineers and other experts. They not only assess the risk for rating purposes, but also suggest and recommend to the insured, various improvements in the risk, which will attract lower rates of premium. 

ROP plan offers premium refund at maturity if the policyholder survives the tenure.

A prospectus should contain the facts that an investor needs to make an informed investment decision.

Alterations can be done by both of the methods. Alterations may not be permitted in the first year, but in the subsequent years, alterations can be done by placing a suitable endorsement on the policy or on a separate paper. Other alterations which require material change in the policy conditions may require cancellation of existing policy and issuance of new policy.

The most common underwriting decision is to accept at an ordinary rate.

Acceptance at ordinary rates (OR) is the most common decision. This rating indicates that the risk is accepted at the same rate of premium as would apply to an ordinary or standard life. 

Adhesion contract is a legally binding agreement between two parties to do a certain thing, in which one side has all the bargaining power and uses it to write the contract primarily to his or her advantage.

An agent arranges for a customer to get the necessary insurance.

A rider is a provision of an insurance policy that is purchased separately from the basic policy and that provides additional benefits at additional costs. So, term insurance cannot be taken as a rider.

The statement in option 2 is wrong as many of the private sectors have come under this and have taken the share from LIC. Therefore, a consumer friendly insurance sector is needed for economic development of the country.

As per IRDA norms, both products are permitted in India.

In endowment plan of insurance, medical examination is never required, whatever be the amount of sum insured.

The most common type of plans available in the market with guaranteed returns are called endowment plans. These plans are actually called endowment assurance plans. These are a combination of pure term plan and pure endowment plan. Pure term plan has only death benefit with no maturity benefit, whereas pure endowment plan has only maturity benefit with no death benefit. However, endowment assurance plans have death benefit if the life assured dies within the policy term as well as maturity benefit if he survives till the policy matures. Hence, it is a complete win-win situation for the policyholder. 

Correct Answer: Only I Policy decisions in an insurance organization mean decisions relating to different kind of plans of insurance to be offered to the public. 

Term insurance is mainly suitable for income replacement.

Under regular term plans, the amount is paid as lump sum in the event of death of the policyholder. Under income replacement term plans, the sum assured is not paid in lump sum, but as monthly payout for a fixed number of years. This monthly payout takes away the pressure to generate income from your investment. 

A keyman life insurance policy is a policy that a company purchases on a key executive's life. The company is the beneficiary of the plan and pays the insurance policy premiums. It is also known as "key man insurance", "key woman insurance" or "business life insurance."