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Samacheer Kalvi 11th Commerce Solutions Chapter 15 Insurance
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Samacheer Kalvi 11th Commerce Insurance Textbook Exercise Questions and Answers
I. Choose the Correct Answer
Question 1.
The basic principle of insurance is …………….
(a) Insurable Interest
(b) Co – operation
(c) Subrogation
(d) Proximate cause
Answer:
(a) Insurable Interest
Question 2.
……………. is not a type of general insurance.
(a) Marine Insurance
(b) Life Insurance
(c) Fidelity Insurance
(d) Fire Insurance
Answer:
(b) Life Insurance
Question 3.
Which of the following is not a function of insurance?
(a) Lending Funds
(b) Risk sharing
(c) Assist in capital formation
(d) Protection of life
Answer:
(d) Protection of life
Question 4.
Which of the following in not applicable in insurance contract?
(a) Unilateral contract
(b) Conditional contract
(c) Indemnity contract
(d) Inter – personal contract
Answer:
(c) Indemnity contract
Question 5.
Which one of the following is a type of marine insurance?
(a) Money back
(b) Mediclaim
(c) Hull insurance
(d) Cargo insurance
Answer:
(d) Cargo insurance
II. Very Short Answer Questions
Question 1.
List any five important type of policies.
Answer:
- Life Insurance
- General Insurance
- Fire Insurance
- Marine Insurance
- Health Insurance
Question 2.
What is health insurance?
Answer:
In mid 80’s, most of the hospitals in India were government owned and treatment was free of cost. With the advent of Private Medical Care, the need for Health Insurance was felt and various Insurance Companies introduced Health Insurance as a Product. Presently the health insurance exists primarily in the form of ‘Mediclaim policy’.
III. Short Answer Questions
Question 1.
Define Insurance.
Answer:
“Insurance is a plan by themselves which large number of people associate and transfer to the shoulders of all, risk that attacks to individuals” – According to John Merge.
Question 2.
Give the meaning of crop insurance.
This policy is to provide financial support to farmers in case of a crop failure due to drought or flood. It generally covers all risks of loss or damages relating to production of rice, wheat, millets, oil seeds and pulses etc.
Question 3.
Write a note on IRDAI.
IRDAI – Insurance Regulatory Development and Authority is the statutory, independent and apex body that govern and supervise the Insurance Industry in India. It was constituted in 2000 by Parliament of India Act called IRDAI Act, 1999. Presently IRDAI headquarters is in Hyderabad.
IV. Long Answer Questions
Question 1.
Explain the various types of Insurance.
Answer:
Insurance covers various types of risks. All. contract of insurance can be broadly classified as follows:
- Life Insurance (or) Life Assurance
- Non – life Insurance (or) General Insurance
It can be further classified into:
- Fire Insurance
- Marine Insurance
- Health Insurance and
- Miscellaneous Insurance.
1. Life Insurance:
Life Insurance may be defined as a contract in which the insurance company called insurer undertakes to insure the life of a person called assured in exchange of a sum of money called premium which may be paid in one lump sum or monthly, quarterly, half yearly or yearly and * promises to pay a certain sum of money either on the death of the assured or on expiry of certain period.
2. Non – Life Insurance or General insurance:
It refers as the insurance not related to human but related to properties.
3. Fire Insurance:
Fire insurance is a contract whereby the insurer, in consideration of the premium paid, undertakes to make good any loss or damage caused by a fire during a specified period upto the amount specified in the policy.
4. Marine Insurance:
Marine insurance is a contract of insurance under which the insurer undertakes to indemnify the insured in the manner and to the extent thereby agreed against marine losses. The insured . pays the premium in consideration of the insurer’s (underwriter’s) guarantee to make good the losses arising from marine perils or perils of the sea.
5. Health Insurance:
In mid 80’s, most of the hospitals in India were government owned and treatment was free of cost. With the advent of Private Medical Care, the need for Health Insurance was felt and various Insurance Companies introduced Health Insurance as a Product. Presently the health insurance exists primarily in the form of ‘Mediclaim policy’.
Question 2.
Explain the principles of insurance.
Answer:
1. Utmost Good Faith:
According to this principle, both insurer and insured should enter into contract in good faith. Insured should provide all the information that impacts the subject matter. Insurer should provide all the details regarding insurance contract.
2. Insurable Interest:
The insured must have an insurable interest in the subject matter of insurance. Insurable interest means some pecuniary interest in the subject matter of the insurance contract.
3. Indemnity:
Indemnity means security or compensation against loss or damages. In insurance, the insured would be compensated with the amount equivalent to the actual loss and not the amount exceeding the loss. This principle ensures that the insured does not make any profit out of the insurance. This principle of indemnity is applicable to property insurance alone.
4. Causa Proxima:
The word ‘Causa proxima’ means ‘nearest cause’. According to this principle, when the loss is the result of two or more cause, the proximate cause, i.e. the direct. The direct, the most dominant and most effective cause of loss should be taken into consideration. The insurance company is not liable for the remote cause.
5. Contribution:
The same subject matter may be insured with more than one insurer then it is known as ‘Double Insurance’. In such a case, the insurance claim to be paid to the insured must be shared on contributed by all insurers in proportion to the sum assured by each one of them.
6. Subrogation:
Subrogation means ‘stepping the shoes on others’. According to this principle, once the claim of the insured has been settled, the ownership right of the subject matter of insurance passes on to the insurer.
7. Mitigation:
In case of a mishap, the insured must take off all possible steps to reduce or mitigate the loss or damage to the subject matter of insurance.
Question 3.
Discuss the causes of risk.
Answer:
Business risk arises due to a variety of causes which are classified as follows:
1. Natural Causes:
Human beings have little control over natural calamities like floods, earthquakes, lightning, heavy rains, famine, etc. These result in heavy loss of life, property, and income in the business.
2. Human Causes:
Human causes include such unexpected events as dishonesty, carelessness or negligence of employees, stoppage of work due to power failure, strikes, riots, management inefficiency, etc.
3. Economic Causes:
These include uncertainties relating to demand for goods, competition, price, collection of dues from customers, change of technology or method of production, etc. Financial problems like rise in interest rate for borrowing, levy of higher taxes, etc., also come under this type of causes as they result in higher unexpected cost of operation of business.
4. Other Causes:
These are unforeseen events like political disturbances, mechanical failures such as the bursting of boiler, fluctuations in exchange rates, etc. which lead to the possibility of business risks.
Samacheer Kalvi 12th Commerce Insurance Additional Questions and Answers
I. Choose the Correct Answer:
Question 1.
The person who agrees to compensate the loss arising from the risk is called…………………….
a) insurer
b) assurer
c) underwriter
d) all the above
Answer:
a) insurer
Question 2.
‘Stepping the shoes on others’ means ……………..
(a) Subrogation
(b) Contribution
(c) Nearest cause
(d) Indemnity
Answer:
(b) Contribution
Question 3.
The word ‘Causa Proxima’ means ………………….
a) Nearest cause
b) Nearby cause
c) two causes
d) None of the above
Answer:
d) None of the above
II. Very Short Answer Questions
Question 1.
What is Double Insurance?
Answer:
When more than one insurance policy is taken to cover the same subject matter, it is known as double insurance.
Question 2.
What is Hull or ship insurance?
Answer:
When a ship is insured against any type of danger, it is known as hull insurance. This policy is taken to indemnify the insured for losses caused by damage to the ship.
III. Short Answer Questions
Question 1.
What is JLP?
Answer:
The policy which is taken up jointly on the lives of two or more persons is known as Joint Life Policy. On the death of the person, the assured sum or policy money is paid to the other survivor or survivors. The premium is paid jointly or by either of them in installments of Lumpsum.
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