Tag: organization of commerce and management

Questions Related to organization of commerce and management

An assessee has paid life insurance premium of Rs. 25, 000 during the previous year for a policy of Rs. 1, 00, 000. He shall __________________________.

organization of commerce and management business risks and insurance meaning, importance and principles of insurance features and principles of insurance meaning and definition of insurance

  1. Not be allowed deduction u/s 80C

  2. Be allowed Deduction u/s 80C to the extent of 20% of the capital sum assured i.e.Rs. 20, 000

  3. Be allowed Deduction for the entire premium as per the provisions of section 80C

  4. None of the above

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Correct Option: B

'Salvage Charges' is related to ________________.

organization of commerce and management business risks and insurance meaning, importance and principles of insurance features and principles of insurance meaning and definition of insurance

  1. Life Insurance

  2. Marine Insurance

  3. Fire Insurance

  4. None of the above

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Correct Option: B

In order to reduce the risk of heavy insurance the insurer passes on some business to the other company, it is called _______________.

organization of commerce and management business risks and insurance meaning, importance and principles of insurance features and principles of insurance meaning and definition of insurance

  1. Reinsurance

  2. Double Insurance

  3. Joint Insurance Policy

  4. Separate Insurance

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Correct Option: A

State the following statement is True or False:
All insurance contracts are contracts of indemnity, except the contract of life insurance.

organization of commerce and management business risks and insurance meaning, importance and principles of insurance features and principles of insurance meaning and definition of insurance

  1. True

  2. False

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Correct Option: A
Explanation:

Uncertainties have led to the formation of the concept of insurance. Insurance is a contract where one party agrees to indemnify the loss of other party at the time of loss, for a consideration. The principle of indemnity in an insurance contract safeguards the insured to put him in the same position that he/she would have been in if the loss had not occurred. However, the principle of indemnity does not apply to life insurance contracts.

Thus it can be said that all contracts of insurance, except that of life insurance, are contracts of indemnity.

State the following statement is True or False:
Insurance means protection against possible risk of loss.

organization of commerce and management business risks and insurance meaning, importance and principles of insurance features and principles of insurance meaning and definition of insurance

  1. True

  2. False

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Correct Option: A
Explanation:

Uncertainties have led to the formation of the concept of insurance. Insurance is a contract where one party agrees to indemnify the loss of other party at the time of loss, for a consideration. The principle of indemnity in an insurance contract safeguards the insured to put him in the same position that he/she would have been in if the loss had not occurred. However, the principle of indemnity does not apply to life insurance contracts. Thus insurance is a protection against possible risk of loss.

Insurance is a form of risk management.

organization of commerce and management business risks and insurance meaning, importance and principles of insurance features and principles of insurance meaning and definition of insurance

  1. True

  2. False

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Correct Option: A
Explanation:

Insurance is a form of risk management. It is a substitution of the premium for a risk of large possible loss. Such loss is spread over a large number of policyholders exposed to the same risk.

The fee charged by insurance companies is commonly known as 'premium'.

organization of commerce and management business risks and insurance meaning, importance and principles of insurance features and principles of insurance meaning and definition of insurance

  1. True

  2. False

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Correct Option: A
Explanation:

Uncertainties have led to the formation of the concept of insurance. Insurance is a contract where one party agrees to indemnify the loss of other party at the time of loss, for a consideration. Such consideration is generally called as 'premium'. It is the fee charged by insurance companies on the value insured.

State the following statement is True or False:
Policy is the document which contains the terms and conditions of contract.

organization of commerce and management business risks and insurance meaning, importance and principles of insurance features and principles of insurance meaning and definition of insurance

  1. True

  2. False

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Correct Option: A
Explanation:

Contract of insurance is represented by the Policy document. A policy document includes details of premium, policy limit, and other particulars of the policy. In other words, a policy issued by the insurance company contains details of the terms and conditions of the contract.

State the following statement is True or False:
Premium is a regular payment made by he insured to insurer.

organization of commerce and management business risks and insurance meaning, importance and principles of insurance features and principles of insurance meaning and definition of insurance

  1. True

  2. False

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Correct Option: A
Explanation:

Insurance is a contract where one party agrees to indemnify the loss of other party at the time of loss, for a consideration. Such consideration is generally called as 'premium'. It is the fee charged by insurance companies on the value insured. Premium is paid to the insurer at regular intervals.

State the following statement is True or False:
The amount payable by the insured to the insurer in installments for protection against risk is premium.

organization of commerce and management business risks and insurance meaning, importance and principles of insurance features and principles of insurance meaning and definition of insurance

  1. True

  2. False

Show answer
Correct Option: A
Explanation:

Insurance is a contract where one party agrees to indemnify the loss of other party at the time of loss, for a consideration. Such consideration is generally called as 'premium'. It is the fee charged by insurance companies on the value insured. Premium is paid in installments to the insurer at regular intervals.