Insurance Concepts and Policyholders

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Questions and Answers

What is the status of Vimal's application for life assurance given his profile?

Risk will be Accepted at Ordinary Rates. (correct)

Risk will be Declined.

Risk will be Accepted with an Extra. (correct)

Risk will be Accepted with a Lien on Sum Assured. (correct)

Which of the following best describes the implications for insurance if an individual is considered a 'Sub-Standard Risk'?

Risk will be Accepted with an Extra. (correct)

Insurance will be automatically declined.

Ordinary rates are applicable.

Lower rates are typically offered.

If Vimal were to take up a risky hobby, how would it likely affect his life assurance?

Higher premiums would be applied. (correct)

The application process would remain unchanged.

The insurance could be outright declined.

It would still be accepted at Ordinary Rates.

What could happen if Mr. Brijesh applies for insurance as a 'Sub-Standard Risk'?

Risk may be Accepted with additional conditions. Signup and view all the answers

What does a 'Lien on Sum Assured' imply for an insurance policy?

The insured cannot claim the full amount immediately. Signup and view all the answers

What is a typical outcome for a healthy, non-smoking individual applying for life assurance?

Automatically accepted with favorable terms. Signup and view all the answers

In insurance terms, what does 'Risk will be Accepted with an Extra' mean?

Higher premiums will be charged due to perceived risks. Signup and view all the answers

Which of the following statements about life assurance and individual risk levels is true?

Individuals with higher perceived risks face varying premiums. Signup and view all the answers

Which individuals are most likely to be considered high-risk by insurance companies?

Individuals who consume Paan Masala Signup and view all the answers

Which individual is likely to be exposed to significant health hazards in their occupation?

Film-Stunt Artist Signup and view all the answers

Which occupation is most likely to involve accidental hazards?

Demolition Expert Signup and view all the answers

Which of the following individuals should insurance companies assess for high-risk factors?

Regular smokers Signup and view all the answers

Who among the following is most likely to encounter physical hazards due to their job?

Construction Worker Signup and view all the answers

Identify the occupation that poses a higher risk of exposure to environmental hazards.

Miner Signup and view all the answers

Which group of individuals would insurance companies most likely evaluate based on potential high-risk lifestyle choices?

Substance Abusers Signup and view all the answers

Which of the following professions is likely to involve a mix of health and accident risks?

Firefighter Signup and view all the answers

What does a decreased amount of death benefit indicate in underwriting?

The Life-Assured dies from a specified cause within a given period. Signup and view all the answers

Which statement about the Numerical Rating Method of Underwriting is incorrect?

Negative factors result in no rating adjustment. Signup and view all the answers

What is the role of the underwriter in relation to the Extra-Mortality-Rating (E.M.R.)?

May decline insurance if E.M.R. is excessively high. Signup and view all the answers

In the Judgement Method of Underwriting, what becomes important for complex cases?

Subjective judgement and expert opinion. Signup and view all the answers

What might influence the decision to assign positive rating points?

The opinion of a medical doctor for adverse factors. Signup and view all the answers

How are extra mortality ratings applied in underwriting decisions?

They may lead to a reassessment of the applicant's risk profile. Signup and view all the answers

Why might a company seek positive or negative rating points?

To establish a clear risk management strategy. Signup and view all the answers

Which of these factors is NOT considered in numerical rating under underwriting?

Personal preferences of the underwriter. Signup and view all the answers

What is the primary purpose of risk-classification?

To categorize individuals based on potential loss Signup and view all the answers

Which of the following best describes risk-classes?

Levels of risk based on the potential for loss Signup and view all the answers

Which factor influences the categorization of risk-classes?

The degree of risks posed Signup and view all the answers

How do individuals who perceive high risk typically respond regarding insurance?

They are eager to seek insurance Signup and view all the answers

What is a potential outcome of risk-classification for applicants?

They are placed in a specific premium class Signup and view all the answers

What should be evaluated when deciding on an insurance grant?

The degree of risk they pose Signup and view all the answers

Which aspect does risk-classification NOT directly address?

Financial stability of applicants Signup and view all the answers

What drives the tendency of individuals to seek out insurance?

Their awareness of potential risks Signup and view all the answers

What is an essential requirement for life insurance contracts?

Insurable interest must be present at the time of taking the policy. Signup and view all the answers

In property insurance contracts, when is insurable interest required?

Only at the time of taking the policy. Signup and view all the answers

What is a characteristic of insurance contracts compared to general legal contracts?

Insurance contracts involve principles of uberrima fides. Signup and view all the answers

Why is insurable interest important in insurance contracts?

It ensures fair and valid claims. Signup and view all the answers

Which statement is true regarding insurable interest in life assurance?

No insurable interest is required for life assurance. Signup and view all the answers

What governs the relationship of utmost good faith in insurance contracts?

The principle of uberrima fides. Signup and view all the answers

When does insurable interest have to be present in property insurance contracts?

At the time of taking the policy. Signup and view all the answers

What is a common misconception about insurable interest in life insurance?

Insurable interest is irrelevant to life insurance altogether. Signup and view all the answers

Study Notes

High-Risk Individuals and Insurance

Individuals consuming 'Paan Masala', sedatives, or stimulants are considered high-risk by insurance companies.
Occupations like mining, stunt artistry, and nightclub dancing expose individuals to health hazards.

Occupational Hazards

Film-stunt artists and dancers in nightclubs are more likely to face health risks due to occupational demands.
Demolition experts face significant accidental hazards in their work environment.

Underwriting Methods

Mortality-rate concepts may lead to a reduced death benefit if cause-specific within a limited timeframe.
Underwriters assign positive or negative rating points based on health evaluations to determine risk acceptance.

Judgement Methods in Underwriting

Subjective judgement involves expert opinions for complex risk cases, rather than rigid criteria.

Risk Acceptance for Applicants

Non-smokers, teetotalers, and individuals seeking life assurance may still face varying rules for risk acceptance.
Extra premiums may be imposed or liens placed on policies for certain health evaluations.

Risk Classification

Individuals are categorized based on their potential risks, impacting insurance terms and premium classifications.
Similar risk classes are grouped to streamline evaluations and facilitate decisions on granting insurance.

Distinction of Insurance Contracts

Unlike general legal contracts, insurance contracts rely on the principle of Uberrima Fidei, or utmost good faith, emphasizing the need for full disclosure.

Insurable Interest

For life insurance, insurable interest must be present at the time of policy initiation, not required during claims.
For property insurance, insurable interest also needs to be established at the policy's inception, fulfilling essential legal criteria.

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Description

This quiz dives into the fundamental concepts of insurance, focusing on the roles and responsibilities of policyholders. Test your knowledge on premiums, individuals involved, and the insurance process. Ideal for anyone interested in understanding the insurance industry.