Question

Chapter 35:

1.What is the purpose of insurance?

2.How does a rider become part of an insurance policy?

3.When can an estoppel arise?

Chapter 36:

1.Why does an insured normally obtain life insurance?

2.What is a double indemnity rider?

3.What does an 80 percent coinsurance clause in an insurance policy mean?

4.May a beneficiary assign a life insurance policy? Explain.

 

Answer 1

Chapter 35:

1.What is the purpose of insurance?

The insurance is an essential part of the healthy financial plan. The purpose of insurance is to have the possibility of transferring risk from you to the insurance company. Without any insurance , you may go bankrupt by certain losses. Insurance shares the losses of few among many.

2.How does a rider become part of an insurance policy?

A rider is an addition to the main policy, there will be an additional charge.A rider becomes the part of an insurance policy by being added on to a basic policy at an additional cost.

3.When can an estoppel arise?

An estoppel can arise from the deed of the party, matter of record or from the matters in pays. When one individual acts in a way to lead the third party to believe another individual is authorized to act on behalf of the rules

• a representation by the principle
• reliance by the third party
• altering the third parties position

Chapter 36:

1.Why does an insured normally obtain life insurance?

An insured normally obtains life insurance in order to safeguard the beneficiary from financial hardships resulting from the death of insured. It will help to look after your loved ones even after you are gone.

2.What is a double indemnity rider?

double indemnity rider is attached to any life insurance policy by paying extra cost. It pays double only during the time of accidental death. The death should our within 90 days of the accident if not it is considered as natural case and the company will pay only single indemnity.

3.What does an 80 percent coinsurance clause in an insurance policy mean?

coinsurance is the clause used by the insurance companies on policies covering the properties like stock, contents, buildings, industrial equipment etc. This will ensure that policy holders insure their property with proper value and that the insurer receives a fair premium for the risk, wether on a replacement cost basis or actual ash value basis. For the small business policy according to the coinsurance policy it is commonly a property insurance provision needs you to insure your business property to 80% of its value. If the building is worth at $1,000,000 replacement value with the coinsurance of 80%, then the clause must be insured for no less than $800,000.