CH 3: Forms of Ownership
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Questions and Answers

What is the main difference between compulsory and non-compulsory insurance?

  • Compulsory insurance is voluntary, while non-compulsory insurance is mandated by law.
  • Compulsory insurance covers property damage, while non-compulsory insurance covers workplace injuries.
  • Compulsory insurance is mandated by law, while non-compulsory insurance is chosen based on individual or business needs. (correct)
  • Compulsory insurance is chosen based on individual needs, while non-compulsory insurance is mandated by law.

    • Which of the following is an example of compulsory insurance mentioned in the text?

  • Car insurance
  • Life insurance
  • Home insurance
  • Unemployment Insurance Fund (UIF) (correct)

    • What does life insurance provide in the context of financial planning?

  • A financial payout upon the insured's death (correct)
  • Legal liabilities for businesses
  • Coverage for property damage
  • Protection against workplace injuries

    • Which fund provides protection against road-related injuries or accidents?

    <p>Road Accident Fund (RAF)</p> Signup and view all the answers

    What is the primary purpose of retirement annuities?

    <p>Post-retirement steady income</p> Signup and view all the answers

    Which type of insurance is intended to protect assets and operations outside the scope of legal mandates?

    <p>Non-compulsory insurance</p> Signup and view all the answers

    In what situation is life insurance beneficial to beneficiaries?

    <p>Post-retirement</p> Signup and view all the answers

    Which insurance type is described as being underpinned by laws?

    <p>Compulsory insurance</p> Signup and view all the answers

    What type of insurance offers protection against unforeseen employment injuries?

    <p>Unemployment Insurance Fund (UIF)</p> Signup and view all the answers

    What does non-compulsory insurance primarily provide?

    <p>Coverage based on individual or business needs</p> Signup and view all the answers

    What is the primary role of insurance of goods?

    <p>To mitigate financial risks related to property loss</p> Signup and view all the answers

    Why is accurate valuation important in insurance claims?

    <p>To avoid significant financial loss when claiming</p> Signup and view all the answers

    What do UIF, RAF, and COIDA aim to protect individuals against?

    <p>Financial impacts of road accidents, unemployment, and occupational injuries or diseases</p> Signup and view all the answers

    What is the purpose of different forms of ownership for businesses?

    <p>To align with business goals and risk management strategies</p> Signup and view all the answers

    Why is it important for businesses to stay informed about legislative changes?

    <p>To ensure compliance and strategic planning adaptability</p> Signup and view all the answers

    Which aspect does under-insurance address in insurance contracts?

    <p>Adjusting claim payouts proportionally to lower coverage</p> Signup and view all the answers

    What does the concept of under-insurance lead to when claiming?

    <p>Significant financial loss</p> Signup and view all the answers

    What role does legislative adaptability play in business operations?

    <p>It ensures businesses can respond effectively to legal changes</p> Signup and view all the answers

    What do the legal frameworks UIF, RAF, and COIDA provide protection against?

    <p>Financial impacts related to unemployment, road accidents, and occupational injuries or diseases</p> Signup and view all the answers

    How do forms of ownership help businesses in making decisions?

    <p>By aligning structures with business goals and risk management strategies</p> Signup and view all the answers

    What is the primary purpose of the average clause in insurance contracts?

    <p>To adjust claim payouts based on under-insurance</p> Signup and view all the answers

    How do forms of ownership impact businesses' liability?

    <p>They increase potential liabilities</p> Signup and view all the answers

    Which legal framework provides protection against unemployment impacts?

    <p>UIF</p> Signup and view all the answers

    What is the significance of legal adaptability in the context of legislative changes?

    <p>It demands a proactive approach to compliance and planning</p> Signup and view all the answers

    How does insurance of goods contribute to operational continuity?

    <p>By safeguarding investments</p> Signup and view all the answers

    What is the primary role of protective legal frameworks like RAF and COIDA?

    <p>To protect against financial impacts of injuries or diseases</p> Signup and view all the answers

    How do different forms of ownership contribute to risk management strategies?

    <p>By aligning with business goals and needs</p> Signup and view all the answers

    Why is adequate coverage important in insurance policies?

    <p>To avoid financial losses during claiming</p> Signup and view all the answers

    What does the transition from RAF to RABS underscore about legislation?

    <p>The dynamic nature and need for adaptation.</p> Signup and view all the answers

    How do protective mechanisms for businesses and individuals impact decision-making processes?

    <p>By providing a safety net for unforeseen adversities.</p> Signup and view all the answers

    What is the primary distinction between compulsory and non-compulsory insurance?

    <p>Compulsory insurance is mandated by law, while non-compulsory insurance is voluntary.</p> Signup and view all the answers

    Which of the following is NOT mentioned as an example of compulsory insurance in the text?

    <p>Health Insurance Fund (HIF)</p> Signup and view all the answers

    What is the primary purpose of life insurance, according to the text?

    <p>To provide a financial payout to beneficiaries upon the insured's death.</p> Signup and view all the answers

    What is the primary role of retirement annuities?

    <p>To offer a steady income stream during retirement.</p> Signup and view all the answers

    Which of the following is NOT a characteristic of non-compulsory insurance mentioned in the text?

    <p>It is mandatory by law.</p> Signup and view all the answers

    What is the primary purpose of the Unemployment Insurance Fund (UIF)?

    <p>To provide protection against unforeseen employment-related risks.</p> Signup and view all the answers

    Which of the following statements about insurance is NOT true, according to the text?

    <p>Compulsory insurance is more expensive than non-compulsory insurance.</p> Signup and view all the answers

    What is the primary role of the Road Accident Fund (RAF)?

    <p>To provide protection against road-related injuries or accidents.</p> Signup and view all the answers

    Which of the following statements about insurance is true, according to the text?

    <p>Both compulsory and non-compulsory insurance are underpinned by laws or voluntary participation.</p> Signup and view all the answers

    What is the primary role of the Compensation for Occupational Injuries and Diseases (COIDA)?

    <p>To provide protection against unforeseen employment-related risks, specifically workplace injuries or diseases.</p> Signup and view all the answers

    Which of the following statements accurately describes the primary function of the average clause in insurance contracts?

    <p>It ensures that claim payouts are proportional to the level of under-insurance.</p> Signup and view all the answers

    What is the primary reason for businesses to accurately value their assets and maintain adequate insurance coverage?

    <p>To avoid significant financial loss due to under-insurance when claiming.</p> Signup and view all the answers

    Which of the following statements accurately describes the purpose of different forms of ownership for businesses?

    <p>To provide a spectrum of legal and operational frameworks tailored to business goals and needs.</p> Signup and view all the answers

    Which of the following statements accurately describes the significance of legislative changes in the business realm?

    <p>They underscore the importance of staying informed and adapting to compliance and strategic planning.</p> Signup and view all the answers

    Which of the following statements accurately describes the role of the UIF, RAF, and COIDA in the context of the text?

    <p>They are legal frameworks established to protect individuals against financial impacts of specific events.</p> Signup and view all the answers

    What is the primary role of non-compulsory insurance, as implied in the text?

    <p>To mitigate financial risks associated with the loss, damage, or theft of property.</p> Signup and view all the answers

    Which of the following statements accurately represents the concept of under-insurance?

    <p>It represents the situation where insurance coverage is less than the value of the insured item.</p> Signup and view all the answers

    What is the primary purpose of the Road Accident Fund (RAF), as mentioned in the text?

    <p>To protect individuals against the financial impacts of road accidents.</p> Signup and view all the answers

    Which of the following statements accurately describes the role of insurance in maintaining operational continuity?

    <p>It allows businesses and individuals to safeguard their investments and maintain operations amidst potential adversities.</p> Signup and view all the answers

    Which of the following statements accurately describes the impact of forms of ownership on businesses' liability?

    <p>They provide a spectrum of legal and operational frameworks with unique implications for liability.</p> Signup and view all the answers

    What distinguishes compulsory insurance from non-compulsory insurance?

    <p>Compulsory insurance is required by law while non-compulsory insurance is chosen based on individual or business needs.</p> Signup and view all the answers

    How do life insurance and retirement annuities contribute to financial stability?

    <p>Life insurance provides steady income post-retirement, while retirement annuities offer a financial payout upon the insured's death.</p> Signup and view all the answers

    Which statement best describes the purpose of retirement annuities?

    <p>Offering a steady income post-retirement</p> Signup and view all the answers

    What is the primary role of the Compensation for Occupational Injuries and Diseases (COIDA)?

    <p>Ensuring protection against workplace injuries or diseases</p> Signup and view all the answers

    What does non-compulsory insurance primarily provide?

    <p>Security for assets and operations beyond legal mandates</p> Signup and view all the answers

    How does retirement annuities differ from life insurance?

    <p>Retirement annuities provide a steady income post-retirement, while life insurance offers a financial payout upon the insured's death.</p> Signup and view all the answers

    What kind of financial planning tools are life insurance and retirement annuities considered to be?

    <p>Long-term financial planning tools</p> Signup and view all the answers

    What concept do retirement annuities reflect in financial planning?

    <p>Commitment to long-term security</p> Signup and view all the answers

    How does non-compulsory insurance differ from compulsory insurance in terms of selection?

    <p>Compulsory insurance is required by law, while non-compulsory insurance is based on individual or business needs.</p> Signup and view all the answers

    What protection does compulsory insurance primarily offer?

    <p>Ensures protection against unforeseen employment injuries</p> Signup and view all the answers

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