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NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course: Insurance & Risk Management
Internal Assignment Applicable for June 2024 Examination
Assignment Marks: 30
1 Anita is self employed. She is thirty one years old, and is a fitness freak. She looks upon health insurance policies as useless annual drain on people’s monetary resources. Confident that she will remain fit and healthy in the foreseeable future, she has decided not to spend yearly sums on buying a health insurance policy. Do you feel that she is doing the right thing? If not, suggest suitable types of health insurance policies that she can consider. (10 Marks)
Answer: While Anita’s confidence in her current health and fitness is understandable, it’s important to recognize that unforeseen medical emergencies or health issues can arise unexpectedly, regardless of age or lifestyle. Therefore, opting out of health insurance entirely may not be the most prudent decision. Here’s why Anita should reconsider her stance:
- Protection against Financial Risk: Health insurance provides financial protection against the high costs of medical treatment, hospitalization, and other healthcare expenses. Without insurance, Anita may face significant financial strain if she encounters a serious illness or injury that requires medical intervention.
- Preventive Care and Regular Check-ups: Even for someone who prioritizes fitness and wellness, preventive care and regular health check-ups are essential for early detection and management of potential health issues. Health insurance can cover the costs of preventive services, screenings, and consultations, encouraging proactive healthcare management.
Top of Form
- Insurance is provided on the trust basis and the facts mentioned in the proposal form. What is your understanding on the above statement with reference to the basic principles of Insurance? (10 Marks)
Answer: The statement “Insurance is provided on the trust basis and the facts mentioned in the proposal form” encapsulates several fundamental principles of insurance. Let’s break down the understanding of this statement in reference to the basic principles of insurance:
- Utmost Good Faith (Uberrimae Fidei): Insurance contracts are based on the principle of utmost good faith, wherein both the insurer and the insured are expected to act honestly and disclose all material facts relevant to the insurance contract. The insured is required to provide accurate and complete information about the risk being insured, typically through a proposal form or application. By disclosing all relevant facts honestly, the insured places trust in the insurer, and the insurer relies on the information provided to assess and underwrite the risk.
- Jatin has recently started working with a renowned MNC after passing out of a premier BSchool. A senior colleague has suggested him to take a life insurance policy. However, Jatin is not convinced with the idea of taking a life insurance policy and is unaware of the various life insurance products which are available in the market. As a friend of Jatin You need to make Jatin understand the following:
- Explain the concept of life insurance to Mr. Jatin and highlight the importance of a having life insurance policy (5 Marks)
Answer: Jatin’s hesitation regarding life insurance is understandable, especially if he’s unfamiliar with its concept and benefits. Let me explain the concept of life insurance and why it’s important for him to consider having a policy:
Life insurance is a financial product designed to provide a lump sum payment to beneficiaries upon the insured individual’s death or sometimes upon certain events like critical illness or disability, in exchange for regular premium payments. The main purpose of life insurance is to provide financial protection and support to the insured’s dependents or beneficiaries in the event of their untimely demise.
- Help Jatin in explaining the various types of life insurance policies (any 4) which are available in the market. (5 Marks)
Answer:
1. Term Life Insurance:
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- Term life insurance provides coverage for a specific period, typically ranging from 5 to 30 years.
- It offers a death benefit to beneficiaries if the insured dies within the term of the policy.
- Term life insurance is usually more affordable compared to other types of life insurance, making it an attractive option for individuals seeking temporary coverage or looking to meet specific financial obligations within a defined timeframe.
- Policyholders have the option to renew their coverage at the end of the term or convert it into a permanent life insurance policy.
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