Insurance - Study Mode
[#501] Ajay pays insurance premium for his employees. Which of the following insurance premiums will not be treated deductible as compensation paid to an employee? I. Health insurance with benefits payable to an employee II. Keyman life insurance with benefits payable to Ajay
Correct Answer
(B) Only II
Explanation
Solution: A keyman life insurance policy is a policy that a company purchases on a key executive's life. The company is the beneficiary of the plan and pays the insurance policy premiums. It is also known as "key man insurance", "key woman insurance" or "business life insurance."
[#502] Which of the following statements are false? I. Policy decisions in an insurance organization mean decisions relating to issue of specific insurance policies. II. Policy decisions in an insurance organization mean decisions relating to different kind of plans of insurance to be offered to the public.
Correct Answer
(A) Only I
Explanation
Solution: Policy decisions in an insurance organization doesnt mean decisions relating to issue of specific insurance policies. A policy is a deliberate system of principles to guide decisions and achieve rational outcomes. A policy is a statement of intent, and is implemented as a procedure or protocol.
[#503] If there is any delay in settlement of claim within 30 days, other than an early claim, the insurer has to pay _________ rate of interest.
Correct Answer
(B) Bank interest + 2%
Explanation
Solution: If there is any delay in settlement of claim within 30 days, other than an early claim, the insurer has to pay Bank interest + 2% rate of interest.
[#504] Which of the following are true? I. Insurance is necessary to cover the risk of living too long. II. Insurance helps one to be less dependent on others.
Correct Answer
(A) Only I
Explanation
Solution: Most people buy life insurance to protect against the risks of dying too soon. Now, there are new products offering the same protection if you live too long.
[#505] When would special reports be necessary?
Correct Answer
(C) Both A & B
Explanation
Solution: In both cases, special reports are necessary. If the insurance is being proposed for the first time after 50 years of age, there is a need to suspect moral hazard and enquire about why such insurance was not taken earlier. We must also note that chances of occurrence of degenerative diseases, like diseases of the heart and kidney failure, increase with age and become high at older ages. Life insurers may also seek for some special reports when proposals are submitted for high sums assured/advanced ages or a combination of both.