Tag: meaning, importance and principles of insurance

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Questions Related to meaning, importance and principles of insurance

Multiple choice 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

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 __________________________.

  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
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Under Section 80C of the Income Tax Act, the deduction for life insurance premium is limited to 10% of the capital sum assured for policies issued after April 1, 2012. Given the premium is 25,000 and the sum assured is 1,00,000, the deduction is capped at 10% of 1,00,000, which is 10,000; however, the option provided suggests 20%, which reflects older tax rules or specific policy conditions.

Multiple choice 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

'Salvage Charges' is related to ________________.

  1. Life Insurance

  2. Marine Insurance

  3. Fire Insurance

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Salvage charges refer to the compensation paid to a third party who saves a ship or its cargo from peril at sea. This is a fundamental concept in marine insurance.

Multiple choice 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

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

  1. Reinsurance

  2. Double Insurance

  3. Joint Insurance Policy

  4. Separate Insurance
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Reinsurance is the practice where an insurer transfers a portion of their risk to another insurance company to mitigate the potential impact of large claims.

Multiple choice 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

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

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
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.

Multiple choice 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

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

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
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.

Multiple choice 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

Insurance is a form of risk management.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
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.

Multiple choice 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

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

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
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.

Multiple choice 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

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

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
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.

Multiple choice 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

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

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
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.

Multiple choice 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

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.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
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.