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State Whether the Following Statement Are True Or False (Give Reason) the Principle of Indemnity is Applicable to Life Insurance. - Organisation of Commerce and Management

MCQ

State Whether the Following Statement Are True Or False (Give Reason)

The principle of indemnity is applicable to life insurance.

Options

  • True

  • False

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Solution

This Statement is False.

  1. Indemnity means a guarantee or assurance to put the insured in the same position in which he was immediately prior to the happening of the uncertain event.
  1. The insurer undertakes to make payment of actual loss incurred by the insured.
  1. An insurance contract is signed only for getting protection against unpredicted financial losses arising to the future uncertainties. Compensation is paid in proportion to the losses incurred.
  1. All the above quality of indemnity is not applicable to Life insurance as human life cannot be valued in terms of money for calculating the actual loss.
  1. Thus, the principle of indemnity is applicable to life insurance.
  Is there an error in this question or solution?
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