III IC-22 flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Insurable interest

A legally recognised relationship in which the policyholder gains from the continuance of the insured and loses financially from the insured event.

Utmost good faith

The mutual duty on proposer and insurer to disclose every material fact relevant to the risk, without which the contract can be avoided.

Principle of indemnity

The insured is restored to the same financial position as before the loss, never better off; it applies to property, liability and health costs.

Subrogation

After settling an indemnity claim, the insurer steps into the insured's shoes to recover the loss from the negligent third party, limited to the amount paid.

Contribution

When two or more indemnity policies cover the same loss, each insurer pays its rateable proportion so total recovery never exceeds the actual loss.

Proximate cause

The dominant and effective cause of a loss, which determines whether the peril is covered when several causes operate in sequence.

Moral hazard

Risk arising from the insured's dishonest intent, such as deliberately causing or exaggerating a loss; controlled by checks and claim investigation.

Law of large numbers

As the number of independent, similar exposure units increases, actual loss experience converges on the expected value, making premiums more predictable.

Term assurance

Pure protection cover paying the sum assured only if death occurs within the chosen term; no maturity benefit and no cash value.

Whole life assurance

Cover for the whole of the life assured's lifetime with a guaranteed death benefit and accumulating surrender value; there is no fixed expiry date.

Endowment assurance

A policy paying the sum assured on death within the term or on survival to maturity, combining protection with a guaranteed savings element.

Unit-linked insurance plan

A policy where premiums are invested in segregated funds, investment risk rests with the policyholder, and charges are disclosed separately.

Money-back policy

A life policy returning a stated percentage of the sum assured at fixed survival intervals, with the death benefit reduced by amounts already paid.

Annuity

A contract converting a lump sum into periodic income for a chosen period or lifetime; the payout depends on age and the annuity rate.

Grace period

The interval after a premium due date, usually 15 to 30 days, during which the policy remains in force without lapsing.

Policy revival

Restoring a lapsed life policy within the permitted period by paying arrears with interest and usually providing fresh evidence of health.

Suicide clause

A condition limiting or excluding death benefit for suicide within a stated period, commonly twelve months, from commencement or revival.

Free-look period

A prescribed window after receiving the policy document in which the policyholder may return it and receive a refund of premium less charges.

Fire standard cover

The basic fire policy covers fire, lightning and explosion; allied perils such as riot, storm, flood and impact need separate endorsement.

General average

A deliberate sacrifice of part of a ship or cargo for the common safety of the voyage, with the loss shared proportionately by all parties.

Particular average

An accidental partial loss of or damage to cargo or ship borne by the owner of the affected property, not shared across the venture.

Average clause

An underinsurance condition reducing a claim in the proportion that the sum insured bears to the value of the property at risk.

Reinstatement value basis

Settlement of a property claim at the cost of replacing the damaged asset with a new one, subject to the sum insured.

Excess or deductible

The first stated amount of every loss that the insured bears; the insurer pays only the amount above it.

Franchise

A threshold amount below which no claim is payable but above which the entire loss is paid without deduction.

Quota share treaty

A proportional reinsurance arrangement in which the reinsurer accepts a fixed percentage of every risk, premium and loss.

Excess of loss reinsurance

A non-proportional cover in which the reinsurer pays losses above the insurer's retention up to a stated limit per risk or event.

No-claim bonus

A premium discount granted at renewal in motor and similar covers when no claim was made in the preceding claim-free years.

Solvency margin

The excess of admitted assets over liabilities, which must reach the prescribed percentage of the required solvency level at all times.

Certificate of registration

The licence issued by the insurance regulator that authorises an insurer to carry on specified classes of insurance business.

File and use procedure

A product approval route in which the insurer files policy terms and premium with the regulator before launching the product.

Know your customer

Identity verification and risk profiling of policyholders and beneficiaries, required to detect and report money-laundering and suspicious transactions.