True or False
Insurance does not provide a sense of security to the insured.
False
Insurance is a means of shifting risk to another party called the ________.
Insurer
What is the written form of a life insurance contract called?
Policy
An insurance company collects premiums from many people and uses the money to invest in securities issued by companies and the Government.
Which importance of insurance is shown in this example?
Mobilises Savings
The person whose risk is shifted to the insurance company is called the insurer.
The person whose risk is shifted to the insurance company is called the insured.
Life insurance is a contract of indemnity.
False.
Indemnity applies to fire and marine insurance, not life insurance.
The amount paid by the insured to the insurer is called the ________.
Premium
What is the person or organisation that agrees to provide insurance cover called?
Insurer
A shopkeeper's goods worth ₹15,000 are destroyed in an accidental fire. His fire insurance policy is for ₹20,000.
How much can he claim?
₹15,000
A whole-life policy runs only for a limited period.
A whole-life policy runs for the whole life of the insured.
A voyage policy is mainly used for cargo insurance.
TRUE
The principle under which an insured person cannot make a profit from an insurance claim is called ________.
Indemnity
What is the type of risk connected with the financial transactions of a business called?
Financial Risk
A customer slips and gets injured while visiting a supermarket. The supermarket has an insurance policy that covers its responsibility for injuries to people visiting its premises.
Which type of insurance is this?
Public Liability Insurance
Marine insurance covers only the life of the ship's owner.
Marine insurance covers risks related to ships, cargo and freight.
Under the principle of mitigation, the insured can become careless because the property is insured.
FALSE
The insured must take reasonable steps to reduce or mitigate the loss.
In marine insurance, insurable interest must exist at the time of ________ or damage.
Loss
What type of insurance protects a business against loss caused by employee fraud or theft?
Fidelity
A ship is insured for a specific journey from Mumbai to Colombo, and the insurance also covers a specified period of 6 months.
Which marine insurance policy is this?
Mixed Policy
The principle of indemnity allows the insured to make a profit from insurance.
The principle of indemnity ensures that the insured cannot make a profit from insurance.
In fire insurance, insurable interest must exist only when the policy is purchased.
FALSE
It must exist both when the policy is taken and when the loss occurs. Notes Lesson 10 Insurance Servi…
Insurance companies invest the funds they receive in ________ issued by companies and the Government.
Securities
What principle gives the insurer the rights of the insured after compensation has been paid?
Subrogation
A person takes life insurance but deliberately hides the fact that they have a serious life-threatening disease. Later, the person dies because of that disease.
Which principle has been violated?
Utmost Good Faith
Both parties must disclose relevant information. Intentionally withholding important information can make the contract invalid.
Under subrogation, the insured gets all the rights of the insurer after receiving compensation.
Under subrogation, the insurer gets the rights of the insured after paying compensation.