Insurance

Insurance involves paying regular sums called premiums in exchange for protection against losses.

• True

• False

What is the main purpose of insurance?

• To increase profit for businesses

• To eliminate all risks completely

• To manage financial risks

• To avoid paying money

Who receives the premiums?

• The government

• The insurer

• The insured

• The bank

Insurance protects against which of the following?

• Only planned events

• Only business losses

• Unforeseen events like accidents or damage

• Guaranteed profits

Insurance is based on the principle of pooling risk, which makes it affordable.

• True

• False

Utmost Good Faith requires all parties to disclose important information.

• True

• False

Utmost Good Faith requires a standard of honesty that is:

• Lower than normal business standards

• Equal to normal business standards

• Higher than normal business standards

• Not required

Indemnity refers to compensation given to the insured after a loss.

• True

• False

Which principle ensures that the insured is compensated for losses?

• Utmost Good Faith

• Indemnity

• Insurable Interest

• Premium

Insurable interest means having a concern or stake in something being insured.

• True

• False