UIIC AO key terms

A legal right to insure a person or property because the policyholder would suffer genuine financial loss if the insured event occurred. It must exist at the time of taking out the policy.

The rule that an insurance payout should restore the policyholder to roughly the financial position held before the loss, no better and no worse, so profit cannot be made from a claim.

The mutual duty on both insurer and proposer to disclose all material facts honestly when a contract is formed, without either side hiding information that would affect the other's decision.

Any detail that would influence a prudent insurer's decision to accept a risk, set the premium, or attach conditions. Examples include prior claims, occupation, health history and hazardous activities.

Failure by a proposer to reveal a material fact the insurer needed, whether deliberate or accidental. It can allow the insurer to avoid the contract or reduce a claim settlement.

The risk that a person behaves less carefully, or even engineers a loss, because insurance will cover the consequences. Insurers counter it with deductibles, exclusions and claim investigation.

The tendency for higher-risk people to buy or retain cover more eagerly than low-risk people, which distorts the pooled premium. Underwriting and risk classification help control it.

The process of assessing a proposed risk, deciding whether to accept it, and fixing the terms and premium. It uses proposal forms, medical reports and past claims data.

The amount a policyholder pays, usually yearly or monthly, in exchange for insurance cover. It reflects expected claims, expenses, and a margin for profit and contingencies.

The first portion of any loss that the policyholder must bear before the insurer pays. A higher deductible normally lowers the premium and discourages small, costly claims.

A policy provision that lists risks or situations the insurer will not cover, such as war, intentional self-injury, or pre-existing conditions. Reading it prevents surprise claim rejections.

A fixed time after the policy starts, or after a specified event, before certain benefits become payable. Health policies commonly apply it to pre-existing conditions and maternity cover.

A disease or injury the insured already had, or had symptoms of, before buying the policy. Insurers usually declare a waiting period or exclude it from cover.

The maximum amount the insurer promises to pay under a life policy, fixed when the contract is issued. It is the basis for calculating premiums and many claim payouts.

The cash amount an insurer returns to a policyholder who ends a savings-linked life policy early, before maturity. It is usually lower than total premiums paid in the early years.

The payment made when a life insurance policy runs its full term and the insured survives, provided all premiums were paid. It includes the sum assured plus any declared bonuses.

A share of surplus that a participating life policy receives, declared periodically by the insurer. It is added to the sum assured and paid at maturity or on a claim.

The mathematical assessment of an insurer's assets and liabilities, especially future claim obligations, to check solvency and decide surplus or bonus. It is done by a qualified actuary.

The extra capital an insurer must hold above its estimated liabilities so it can still meet claims during unexpected losses. Regulators prescribe a minimum ratio that must be maintained.

Insurance bought by an insurer to shift part of its risk to another company. It protects the insurer from very large or catastrophic claims and frees capacity to write more business.

The portion of a risk that a primary insurer passes to a reinsurer under a reinsurance arrangement. The amount may be fixed by treaty or negotiated case by case.

The part of a risk an insurer keeps on its own books instead of ceding it to a reinsurer. Higher retention earns more premium but increases exposure to large claims.

Legal responsibility for injury or damage caused to someone else, not to the insured. Motor and public liability policies pay such claims up to the policy limit.

The insurer's right, after paying a claim, to step into the policyholder's shoes and recover the loss from the party who caused it. It supports the indemnity principle.

The principle that when several policies cover the same loss, each insurer pays its share in proportion to the sums insured, so the policyholder cannot recover twice.

Cover that is less than the true value of the insured property. In a partial loss, the insurer may apply average and pay only the same proportion of the claim.

The sale of insurance products through bank branches and bank channels. Banks gain fee income while insurers gain access to a large, already-screened customer base.

A regulated entity that holds insurance policies in electronic form on behalf of policyholders, allowing a single e-insurance account to manage multiple policies and reduce paperwork.

A reasoning question giving two or more statements that must be accepted as true, followed by conclusions. You decide which conclusions follow logically from the statements alone.

A puzzle where people are placed in a row or around a circle and you deduce positions from clues about who sits next to, opposite, or between whom. Directions and facing matter.

A reasoning item that describes family ties through statements or a diagram, then asks how two named persons are related. Drawing a quick family tree usually solves it fastest.

A quantitative set presenting data in tables, bar charts, pie charts or line graphs, followed by questions requiring calculation of ratios, averages, percentages or growth rates from that data.

A quantitative topic on comparing quantities and solving for unknowns when two ratios are equal. It underpins partnership, mixture, and many data interpretation questions.

A way of expressing a number as a fraction of one hundred, used constantly in profit and loss, interest, discount and data interpretation questions. Converting to fractions speeds up calculation.

An English section where a passage is followed by questions on its main idea, specific details, vocabulary in context and the author's tone or inference.

A passage with words or phrases removed, each blank numbered, and options offered for each. Choosing correctly demands both grammar sense and understanding of the surrounding context.

A set of sentences given out of order that must be rearranged into a coherent paragraph. Look for opening sentences, pronoun links, and connectors to fix the sequence.

Actions by a central bank, such as changing the repo rate or reserve ratios, to influence money supply, credit and inflation. It directly affects bank lending and insurance investment returns.

The interest rate at which banks borrow short-term funds from the central bank against government securities. Raising it usually makes loans costlier and cools demand.

The share of a bank's net demand and time liabilities that must be kept as cash with the central bank, earning no interest. A higher ratio reduces funds available for lending.

A loan on which the borrower has stopped paying interest or principal for a specified period, commonly ninety days. High NPA levels weaken a bank's profitability and lending capacity.

Indian law that provides a time-bound process to resolve insolvency of companies and individuals, with a committee of creditors deciding on revival or liquidation proposals.