38 Questions
What is the primary purpose of Personal Accident insurance?
To provide compensation for injuries, disability or death caused by violent, accidental, external and visible events
What type of events are covered under Personal Accident insurance policy?
Violent, accidental, external and visible events
What is the benefit of repatriation coverage in Personal Accident insurance?
It transports the mortal remains back to the place of residence in the event of death
What is the term used to describe the comprehensive form of insurance compensation for damages or loss?
Indemnity
What is not a type of coverage provided under Personal Accident insurance policy?
Life insurance coverage
How often is Personal Accident insurance policy renewed?
Annually
What is the primary purpose of insurance?
To provide peace of mind against possible financial loss
What is the term for the amount of money paid periodically by the insured policyholder to the insurer?
Premium
What is the concept that describes the process of pooling premiums from a large group of people to provide financial assistance in case of a loss?
Insurance pool
What is the principle that requires the insured to disclose all material facts about the subject matter of the insurance to the insurer?
Utmost good faith
What is the term that describes the financial loss that a person would suffer if the subject matter of the insurance is lost or damaged?
Insurable interest
What is the role of an insurance company or insurer?
To assume financial responsibility for losses from an insured risk
What is the purpose of an insurance policy?
To reimburse the insured for any losses suffered
What is the term that describes the process of transferring risk from the insured to the insurer?
Risk transfer
What is the main purpose of a rider in an insurance policy?
To provide additional coverage
What happens to premium payments under the waiver of premium rider?
Premium payments are waived
What type of insurance is designed to cover the cost of private medical treatment?
Health insurance
What is one of the benefits of having medical insurance?
It provides an income stream during treatment
What type of insurance is designed to provide an income stream during treatment?
Medical insurance
What is one of the benefits of having medical insurance during emergencies?
We would not have to worry about the cost of seeking treatment
What type of insurance is designed to cover the cost of seeking treatment during emergencies?
Medical insurance
What is the main purpose of medical insurance?
To ensure financial security during emergencies
What is the primary purpose of the House Owner Policy?
To provide additional coverage for residential properties
What is the importance of ensuring adequate insurance coverage for a property?
To cover the cost of rebuilding the property in the event of loss or damage
Why is it recommended to take up a separate insurance cover if the property is under financing?
To extend the coverage taken by the financier
What is the basis of compensation under the reinstatement basis?
The value of a brand new item
What is the primary difference between the House Owner Policy and the Householder Policy?
The coverage of household contents
What is the recommended approach to determining the sum insured for a property?
Based on the cost of rebuilding the property
What is the purpose of the financier's coverage for a property?
To secure the loan amount
What is the significance of the insured value in the House Owner Policy?
It is used to calculate the sum insured
What is reimbursed if a journey is cancelled or curtailed?
Expenses incurred due to loss of travel or accommodation
What is the duration of daily payments in case of hijacking?
Up to a specified maximum number of days
What is excluded from travel insurance cover?
Losses caused by certain events, such as war risks and suicide
What is the basis of Takaful insurance concept?
Islamic banking transactions (muammalat)
How do policyholders contribute to Takaful insurance?
Through a certain sum of money contributed to a common pool
What is the principle behind Takaful insurance?
Cooperative or mutual insurance
How are losses distributed in Takaful insurance?
According to the community pooling system
What is eliminated in Takaful insurance?
Uncertainty in respect of subscription and compensation
Study Notes
Insurance Basics
- Insurance is a protection against possible financial loss, giving peace of mind
- An insurance company is a risk-sharing firm that assumes financial responsibility for losses from an insured risk
- People purchase a policy and the firm assumes a risk for a fee called the premium, which the insured policyholder pays periodically
- A large group of people who want to insure against a particular loss pay their premiums into a fund that is called an insurance pool
Principles of Insurance
- Insurable interest: The person who purchases the insurance has an 'insurable interest' in the subject matter of the insurance if the loss or damage of it would result in a financial loss to the person
- Utmost good faith: The insured is to disclose to the insurer all material facts regarding the subject matter of the insurance and the circumstances pertaining to it which would influence the judgement of a prudent insurer
Annuity/Pension Plans
- A rider is an insurance policy provision that adds benefits to or amends the terms of a basic insurance policy
- Riders provide insured parties with options such as additional coverage, or they may even restrict or limit coverage
- Waiver of Premium Riders: Under the waiver of premium rider, the insured party is alleviated of making premium payments should the policyholder become critically ill, disabled, or seriously injured
General Insurance
- Medical & Health Insurance: Provides financial protection against medical expenses
- Personal Accident Insurance: Provides compensation in the event of injuries, disability, or death caused solely by violent, accidental, external, and visible events
- Fire/Houseowner Insurance: Provides additional coverage compared to the basic fire policy for residential properties
- Householder Policy: Covers household contents and includes coverage for fatal injury to the insured
- Travel Insurance: Reimburses expenses incurred due to loss of travel or accommodation expenses paid due to cancellation or curtailment of the journey
- Takaful: An Islamic insurance concept based on Islamic banking transactions, observing the rules and regulations of Islamic law
Exclusive Clauses
- Losses caused by certain events are excluded from the cover, including war risks, suicide and insanity, AIDS, provoked murder or assault, childbirth or miscarriage, hazardous sports, baggage delay and loss of baggage and personal effects due to seizure or destruction under quarantine or custom regulation
Get familiar with the basics of insurance, including the concept of risk transfer and the role of insurance companies in protecting against financial losses.
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