Insurance Policies and Claims

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.

Policy Allocation Charge would be high in the initial years.

This is deducted from the premium upfront. It is a percentage of the premium appropriated towards charges before allocating the units under the policy. This charge is levied to recover the initial expense incurred towards issuing the policy such as the distributor fee and the cost of underwriting. The balance is the investable amount used to purchase units of the funds chosen by the policyholder. Though the Insurance and Regulatory and Development Authority, or IRDA, has set guidelines that ensure a cap on these charges from the fifth year onwards, the premium allocation charges in the first few years continue to remain significantly high. 

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."

If there is any delay in settlement of claim within 30 days other than an early claim, the insurer has to pay bank interest + 2% rate of interest.

In both the cases, special reports are necessary. If the insurance is being proposed for the first time after 50 years of age, there is a need to suspect moral hazard and enquire about why such insurance was not taken earlier. We must also note that chances of occurrence of degenerative diseases, like diseases of the heart and kidney failure, increase with age and become high at older ages. Life insurers may also seek for some special reports when proposals are submitted for high sums assured/advanced ages or a combination of both.

Insurance is necessary to cover the risk of living too long. To guard against unpredictable events that may have serious financial repercussions, one must buy insurance. The 2^nd statement is not correct because the insurance does not pay you any premium on monthly basis or pensions which would make one less dependent on others. It provides you with risk coverage. 

Insurable interest should be present at both the times, i.e. at the time of taking policy as well as at the time of claim.

An agent today is not allowed to work for more than one life insurance company.