Test on Introduction to Insurance and Assurance

Introduction to Insurance & Assurance: A Student's Guide

SummaryKnowledge testFlashcardsPodcastMindmap
Question 1 of 50%

A disadvantage of assurance is that premiums are costly, and the money paid on these premiums could otherwise be used for investments.

Test: Insurance and Assurance, Contract Formation Requirements

20 questions

Question 1: A disadvantage of assurance is that premiums are costly, and the money paid on these premiums could otherwise be used for investments.

A. Ano

B. Ne

Explanation: The study materials state that 'premiums are costly' and 'money paid on premiums could be used in investments' as disadvantages of INSURANCE, not assurance. The disadvantages listed for assurance include that the 'policy might not be sufficient to provide for remaining family members', it 'is costly and affects current cash flow for the sake of long-term benefit', and it 'is a complex decision as each individual person has different needs'.

Question 2: Losses caused by war are considered an insurable risk.

A. Ano

B. Ne

Explanation: Losses caused by war are explicitly listed under non-insurable risks.

Question 3: According to the study materials, which of the following are examples of compulsory insurance?

A. Unemployment insurance (UIF)

B. Fidelity insurance

C. Road accident fund (RAF)

D. Compensation for occupational injuries and disease act (COIDA)

Explanation: The study materials list Unemployment insurance (UIF), Road accident fund (RAF), and Compensation for occupational injuries and disease act (COIDA) under the section 'COMPULSORY INSURANCE'. Fidelity insurance is listed under 'INSURABLE RISKS' and is not compulsory.

Question 4: Which of the following is a disadvantage of insurance, according to the study materials?

A. Insurance policies might not be sufficient to provide for remaining family members.

B. Items that are normally stolen, such as laptops and phones, are often excluded from the policy.

C. The decision is complex as each individual person has different needs.

D. It affects current cash flow for the sake of long-term benefit.

Explanation: According to the study materials, a disadvantage of insurance is that 'Items that are normally stolen – laptops, phones are often excluded from policy'. The other options refer to disadvantages of assurance.

Question 5: Is the intention to bind a necessary component for an agreement to be legally binding?

A. Ano

B. Ne

Explanation: An intention to bind is required for an agreement to be considered legally binding.