Insurance

Question 1

How it works:

Answer 1

is financial protection that covers any loss that might happen e.g. Burglary, Car Accident

Question 2

Principles of Insurance:

Answer 2

Utmost Good Faith, Insurable Interest, Indemnity, Subrogation, Contribution

Question 3

Utmost Good Faith

Answer 3

Utmost Good Faith: A person is obliged to answer all questions truthfully when completing the proposal form and disclose all relevant facts

Question 4

Insurable Interest

Answer 4

Insurable Interest: You must gain (financially) by its existence and suffer (financially) by its loss

Question 5

Indemnity

Answer 5

Indemnity: You cannot make a profit from a loss. The compensation you receive will only be equal to the current value of the item.

Question 6

Subrogation

Answer 6

The insurance company has the right to seek compensation from the party that caused the loss/damage and take the damaged item for scrap value

Question 7

Contribution

Answer 7

If you insure an item with more than one insurance company, each insurance company will contribute/divide the compensation.

Question 8

Name Types of Personal Insurance

Answer 8

Life Assurance, Motor insurance, Home Insurance, Home Contents Insurance, Health Insurance, Travel Insurance, Mobile Insurance, Mortgage Protection Insurance

Question 9

What is Life insurance

Answer 9

Assurance is protection against a risk that will happen e.g. death

Question 10

Life Assurance: What is Whole Life Assurance

Answer 10

an agreed amount of money is paid to the person’s dependants when the individual dies

Question 11

Life Assurance: What is Endowment Assurance

Answer 11

an agreed amount of money is paid when the insured reaches a certain age or on the death of the person – whichever comes first.

Question 12

Life Assurance: What is Term Policy

Answer 12

An agreed amount is paid if you die within a certain period of time. This might be appropriate if you want to protect your family while they are young

Question 13

Motor Insurace

Answer 13

It is required by law

Question 14

Motor Insurance: What is Third Party

Answer 14

Third Party provides compensation to owners of property damaged by your car – it does not compensate for any damage to your car.

Question 15

Motor insurance: What is Third Party Fire and Theft?

Answer 15

Third Party Fire and Theft: provides compensation to owners of property damaged by your car – it does not compensate for any damage to your car.
Car is also covered in case of Fire or Stolen

Question 16

Motor insurance: Fully Comprehensive

Answer 16

Fully Comprehensive: provides compensation to all injured parties by your car AND also compensation for any damage to your car.
Due to extra cover – premium is more expensive (but worth it)

Question 17

Motor Insurance: Key Terms- No Claims Bonus:

Answer 17

No Claims Bonus: is a discount on an insurance premium. It is a reward for not making any claims

Question 18

Motor insurance: Key terms - Loading

Answer 18

Loading: is an extra amount added to your premium due to added risk

Question 19

Home Insurance

Answer 19

This covers the house building in the case of fire, storm or flood damage

Question 20

Home Contents Insurance

Answer 20

This covers the house contents in the case of fire, theft or flood damage

Question 21

Health Insurance

Answer 21

This covers the cost of hospital care and medical bills in case of accident or illness.

Question 22

Travel Insurance

Answer 22

This covers the person on holiday in case of missing luggage, passports, cancelled flights

Question 23

Mobile Insurance

Answer 23

This covers the person in case their phone is lost or stolen.

Question 24

Mortgage Protection Insurance

Answer 24

This is a type of life insurance policy that repays your mortgage if you die during the repayment term.

Question 25

What are the Steps to taking out Insurance

Answer 25

Seek Quote, Complete Proposal Form, Pay Premium, Issue Policy.

Question 26

Actuary

Answer 26

A person who calculates a Premium

Question 27

What is compensation?

Answer 27

Compensation is a reward (usually money) awarded to someone in recognition of loss, suffering or injury.

Question 28

What is Fully Insured

Answer 28

this means that you will be compensated for the full amount of the damage/loss caused.

Question 29

What does Over Insured mean

Answer 29

this means that you will only be compensated for the value of the damage/loss caused. You will not get extra.

Question 30

Under- Insured

Answer 30

this means that you will only be compensated for a proportion of the damage/loss caused

Question 31

What is Average Clause

Answer 31

is a condition included in insurance policies that limits the value of a claim if you are under-insured

Question 32

What is Insurable Risk?

Answer 32

it must be possible to calculate the risk involved and there must be a likelihood of the risk not happening for example burglary

Question 33

What is Non-Insurable Risk

Answer 33

chances of the risk/loss happening are impossible to estimate Example: End of the World

Question 34

How to reduce the risk of Insurance

Answer 34

Install a Sprinkler System to reduce the risk of fire Install an alarm to reduce the risk of burglary Avoid smoking to reduce the risk of illness