Insurance MCQ Questions and Solutions with Explanations | Commerce

Insurance is legitimate when an adverse happening is likely toh happen.

Insurance benefits replace the monetary losses, but only to some extent.

Risk pooling refers to the spreading of financial risks evenly among a large number of contributors. It diversify risks among people who make contributions in investment policies. Investment made by people are invested in other profitable ventures and returns are raised from the profitable ventures which are distributed to insurance policies holders in order to idemnify them in case of any loss occured to them. Therefore, risk of one person is shared among all by idemnifying the person in case of loss from the amount invested in insurance policies by other large number of people. Insurance is neither gambling, nor charity. It is not a kind of investment either. In investment, only returns are given to investment holder but in insurance , property or person is saved against any mishaps. At the time of loss occured, policy amount is reimbursed to risk holder.

Health insurance provides people with a much needed financial backup at times of medical emergencies. Health risks and uncertainties are a part of life. Health insurance can reimburse the insured for expenses incurred from illness or injury, or pay the care provider directly. Increased income, health consciousness, price liberalization and the introduction of private healthcare financing is bringing the change.

Tax planning is not illegal in India. When tax planning is done inside the frameworks defined by the respective authorities, it is fully legal and in fact a smart decision. However, using shady techniques to avoid tax payments is illegal.

Insurability of women is governed by need for insurance and capacity to pay premiums. Thus, insurance companies may decide to grant full insurance only to those who have earned income of their own and may impose limits on other categories of women. Similarly, some conditions may be levied on pregnant women.

Friends taking out insurance on one another is not correct with regards to insurable interest.

Section 80D of the Income Tax Act deals with rebates. Tax Benefits of Health Insurance Under Section 80D. Health insurance premium paid for self, spouse, dependent children or parents qualifies for tax deduction up to Rs.25,000. This limit has been increased from Rs.15,000 from the previous year to Rs.25,000.

Keyman insurance helps a business recover from the loss of its valuable assets viz. the persons who run it and/or own it. Individual talents are becoming critical to the success of many companies and employees are also becoming an important factor in investors' valuation of the entities. Every business has at least a few very valuable employees who contribute significantly to the running and growth of the company.

The higher the premium paid by you towards your life insurance, the higher will be the compensation paid to the beneficiary in the event of your death.