Question

Define those definition

1. Insurance Policy 6. Risk Sharing

2. Insurance Premium 7. Requirements for a Valid Will

3. Indemnification 8. Testamentary Capacity

4. Insurance Application 9. Will

5. Insurable Interest 10. Trust

6. Risk Sharing

7. Requirements for a Valid Will

8. Testamentary Capacity

9. Will

10. Trust

Answer 1

Insurance Policy

In insurance, an insurance policy is referred to as a contract between the insurer and the insured (known as policyholder), under which the insurer is obliged to pay the insured when certain events occur. These events and terms and conditions of the contract are discussed by both the parties before finalizing the contract.

Insurance Premium

Insurance Premium is referred to as the payment the insured pays for the insurance policy. This is an income for the insurance company as the insured needs to pay this at regular intervals in order to claim the insurance. In other words, insurance premiums provide coverage for insurance policy.

Indemnification

Indemnification is referred to as a clause under the insurance contract, where the bearer is obliged to pay for losses incurred or sustained by the insured. This does not require formal consent as it is a basic requirement in each insurance contract.

Insurance Application

Insurance Application is a form that is filled out by an potential policyholder. The potential party states the facts and other important information that is required by the insurance company. The insurance company then takes the decision on whether or not to take the risk, or modify it or reduce it. The policyholder is expected to disclose all material information so that the insurance company takes appropriate decision.

Insurable Interest

A person or any other individual is said to have insurable interest in an object or an individual when the damage or loss of the same causes financial loss or hardship to that party. For instance, a company may have insurable interest in its CEO rather than an average employee.

Risk Sharing

Risk Sharing is referred to as a method of risk management wherein the risk is distributed among the participants of the policy. It reduces the exposure to risk and the burden of loss as multiple entities are involved who are liable to cover the loss.

Requirements for a Valid Will

• The person's age must be more than 16 years.
• The Will must be in writing (either typed or handwritten).
• Each page of the Will must be signed by the testator along with two witnesses. Further, the witness must be older than 14 years of age to qualify.

Testamentary Capacity

Testamentary Capacity is referred to as a person's mental and legal ability to alter or sign a valid Will. A person needs to be in sound mind and good memory in order to sign or alter the Will.

Will

Will is a document (written) where the writer (testator) directs how his/her assets will be distributed upon death. This is normally distributed to the legal heirs of the testator or distributed as charity. This is in discretion of the writer in regards to distribution.

Trust

Trust is an entity wherein they hold the property for the benefit of another party. This is created by the owner of the asset who decides to transfer the property to the trustee. Here, the trustee holds the owner's property for the beneficiaries of the trust.