Expert Responses to Frequently Asked Questions
Question 1. What is the average condition?
Answer: Applies when sums insured does not represent full replacement values and settlement will be reduced proportionately to the amount of under-insurance.
Question 2. What is the role of a broker?
Answer : Transacting insurance business on behalf of the client.
Question 3. What is indemnity?
Answer : Bringing back the client to the same position that they were in before the loss.
Question 4. Why do I have to comply with warranties?
Answer : These are conditions that are set on the policy and must be strictly complied with as non-compliance gives the Insurer absolute right to repudiate liability.
Question 5. What are the effects of over and under insurance?
Answer : In the event of over insurance Insurers will pay for the reinstatement or replacement of the property with new property of the same kind or type but not superior to the property the insured had before the loss. In the event of underinsurance claims will be paid proportionately to the amount of under-insurance.
Question 6. What is no claims bonus?
Answer : A reward offered as a discount by Insurers for not claiming against a policy over a specified period of time
Question 7. What is an insured fund?
Answer : Insured Fund is a fund administered by life assurance company.
Question 8. What is a self-administered fund?
Answer : Self Administered Fund is a stand alone Pension Fund mainly administered in-house or by a consultant/broker.
Question 9. What is the difference between a defined contribution and a defined benefit fund?
Answer : A defined benefit pension plan is a type of pension plan in which an employer promises a specified monthly benefit on retirement that is predetermined by a formula based on the employee’s earnings history, tenure of service and age, rather than depending on investment returns. It is ‘defined’ in the sense that the formula for computing the employer’s contribution is known in advance. A defined contribution plan is a type of retirement plan in which employer and employee contributions amount are specified. Individual accounts are set up for participants and benefits are based on the amounts credited to these accounts plus any investment earnings on the money in the account. In defined contribution plans, future benefits fluctuate on the basis of investment earnings.