Which of the following is not a basic principle of insurance?
Asked by: Prof. Krystal Ledner MD | Last update: July 16, 2025Score: 4.2/5 (26 votes)
What are the basic principles of insurance?
Basic Principles of Insurance
In the insurance world there are six basic principles that must be met, ie insurable interest, Utmost good faith, proximate cause, indemnity, subrogation and contribution.
Which of the following are the basic principles of insurance?
In insurance, there are 7 basic principles that should be upheld, ie Insurable interest, Utmost good faith, proximate cause, indemnity, subrogation, contribution and loss of minimization.
Which main principle is not applicable in life insurance?
The principle of indemnity is not applicable to life insurance because the insurer may pay any amount but the insured cannot be brought back to the same state. Also, the loss of a life is not measurable and no money can indemnify the loss of a life.
What is the basic concept of insurance?
The concept of insurance is that the losses of Page 3 a few are made good by contribution from many. It is based on the law of large numbers. It stemmed from the need of man to find a solution for mitigation of losses. It also reflects the nature of man to find a solution collectively.
Insurance principles l principles of insurance l what are the 7 principles of insurance?
What is the basis of insurance?
1 Introduction 1.1 Nature of the issues The basis of insurance refers to the purpose of a contract of insurance as expressed in the terms of the contract (in other words, the reason for entering into a contract of insurance). The basis of insurance permeates and influences the entire law of insurance.
Which of the following is not a function of insurance?
The functions of insurance are risk sharing, assisting in capital formation, economic progress, etc. Lending of funds is not a function of insurance. It is a function of banks.
Which is not a principle of insurance?
Maximization of Profit is not the principle of insurance. There are seven basic principles that create an insurance contract between the insured and the insurer: Utmost Good Faith, Insurable Interest, Proximate Cause, Indemnity, Subrogation, Contribution and Loss Minimization.
Which of the following is not a feature of basic whole life insurance?
Final answer: The feature that is NOT characteristic of whole life insurance is the return of all premiums if the policyholder survives to the end of the policy.
Which of the following is not the main element of a life insurance contract?
(c) Indemnity contract.
What is the basic principle behind health insurance?
Health insurance provides important financial protection in case you have an accident or sickness. For example, health insurance may help to pay for doctors' services, medications, hospital care, and special equipment when someone is sick or injured, often in exchange for a monthly premium.
What is a non-participating plan?
A non-participating plan does not provide profit-sharing and does not pay dividends to policyholders. It is also known as without-profit or non-par policies. Payments made. In most cases, bonuses and dividends are paid out annually. Because there is no profit sharing in non-participating policies, there is no payment.
What is the principle of insurance best defined as?
Utmost good faith, or “uberrima fides” in Latin, is the primary principle of insurance. In fact, many would argue that utmost good faith is the most important insurance principle. Essentially, this principle states that both parties involved in an insurance contract should act in good faith towards one another.
Which of the following is not an element involved in the insurance process?
Explanation: The element that is NOT considered to be part of an insurance contract is c. Negotiating. An insurance contract typically consists of four elements: offer, acceptance, consideration, and legal purpose.
What is the principle of indemnity?
The Principle of Indemnity
Indemnity is a guarantee to restore the insured to the position he or she was in before the uncertain incident that caused a loss for the insured. The insurer (provider) compensates the insured (policyholder).
What is a claim in insurance?
An insurance claim is a formal request to your insurance provider for reimbursement against losses covered under your insurance policy. Insurance is a financial agreement between you and your insurer. You have to pay a fixed premium.
Which of the following is not part of an insurance policy?
Final answer:
Among the provided options, the Certificate of Authority is not a part of an insurance contract. It refers to a document given to an insurance company to permit them to operate within a specific state. The Application, Policy, and Riders however, are all integral parts of an insurance contract.
What is included in basic life insurance?
Basic life insurance is commonly offered by employers, providing coverage for a specific period of the policyholder's lifetime. Coverage amount is based on the policyholder's salary; beneficiaries receive the death benefit if the policyholder passes away.
Which of the following is a basic characteristic of insurance?
Basic Characteristics of Insurance
Based on the preceding definition, an insurance plan or arrangement typically includes the following characteristics: Pooling of losses. Payment of fortuitous losses. Risk transfer.
Which is the basic principles of insurance?
Basic Principles of Insurance
In the insurance world there are six basic principles that must be met, ie insurable interest, Utmost good faith, proximate cause, indemnity, subrogation and contribution.
Which of the principle does not exist in life insurance?
Principle of Indemnity does not apply to Life insurance.
Which of the following is the basis of an insurance contract?
All insurance contracts are based on the concept of uberrima fides, or the doctrine of utmost good faith. This doctrine emphasizes the presence of mutual faith between the insured and the insurer.
What is the basic function of insurance?
Provide protection : The primary purpose of insurance is to provide protection against future risk, accidents and uncertainty. Insurance cannot check the happending of the risk, but can certainly provide for the losses of risk.
Which of the following is not true about insurance?
Explanation: The statement that is not true about insurance is that, 'It eliminates risk'. Insurance, in actuality, does not eliminate risk entirely.
Which of the following is not a type of insurance?
Final answer: The correct answer for which option is NOT a type of insurance is c) Deductible, as it refers to the out-of-pocket payment required before insurance coverage applies, not an actual insurance type.