Question

Liabilities of insurance companies may include all but which of the following?

1. Policy claims.

2. Contract loans.

3. Net policy reserves.

4. Deposit-type contracts.

5. Separate account business.

Answer 1

A. Policy claim , B. Contract Loans , C. Net policy reserves

Reasons

A.) Policy claim - is the amount which the insured person is asking at the time of the occurance of the event which was contacted by the insurance company and the individual insured and hence it is the liability of the company to pay on the happening of the event.

B.) Contract Loans - are the amounts which the company may receive advances of the work which have to be be performed later and until the services is not rendered the advances are known as liability as unearned income for the company.

C.) Net Policy reserves - These are the funds which an insurance company have to maintain as per law of the companies act and these funds are recorded as liability under reserve fund in balancesheet of company.

D) Deposit Type contracts - These are the deposits used for the dividend,annuities, settlement and premium and not used for the uncertainties linked with the insurance and hence not liability for the company.

E.) Separate account business - This account is an investment account and the Big investors invest in the company and company have their investment products which are variable annuities and company may kept separate from general insurance and hence not related to the liability.