State Whether the Following Statement Are True Or False (Give Reason)
The principle of indemnity is applicable to life insurance.
This Statement is False.
- 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.
- The insurer undertakes to make payment of actual loss incurred by the insured.
- 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.
- 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.
- Thus, the principle of indemnity is applicable to life insurance.
Concept: Concept of Insurance
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