WAEC Insurance Past Questions & Answers - Page 13

Term life insurance or term assurance is life insurance that provides coverage at a fixed rate of payments for a limited period of time, the relevant term. After that period expires, coverage at the previous rate of premiums is no longer guaranteed and the client must either forgo coverage or potentially obtain further coverage with different payments or conditions. If the life insured dies during the term, the death benefit will be paid to the beneficiary.

Methods Of Providing Indemnity To Insurance Contract :

There are various ways through which indemnity may be provided. These are :

1. Cash Payment: This is the usual way of making payment of a claim. This method is simpler, easier and less cumbersome.
2. Repair: This is also another way of providing compensation. Rather than making cash payment, the insurers will get the loss repaired to pre-loss condition as far as practicable.
3. Replacement: Usually in case of total loss the insurers may replace the subject-matter by another one of the same standard, age and quality. A glass would normally be replaced than repaired.

1. Reinstatement: The insurers may also reinstate the property by option. This is usually considered with regard to buildings damaged or destroyed by fire. Usually it is the option of the insurers to decide any one of the above four methods.

Reinsurance is also known as insurance for insurers or stop-loss insurance.Reinsurance is the practice whereby insurers transfer portions of their risk portfolios to other parties by some form of agreement to reduce the likelihood of paying a large obligation resulting from an insurance claim.

A grace period allows a borrower or insurance customer to delay payment for a short period of time beyond the due date. 

insurers allow policyholders a period of grace of at least 15 days, during which arrear premiums can be rectified. In the life insuranceindustry, the norm is to allow policyholders a grace period of 30 days.

Subrogation is a term describing a legal right held by most insurance carriers to legally pursue a third party that caused an insurance loss to the insured. This is done in order to recover the amount of the claim paid by the insurance carrier to the insured for the loss.