Category: Insurance Interview question

In the context of insurance, the deductible is a decided amount that a policyholder has to pay from his pocket before the insurance company starts paying to the policyholder. In other words, we can say that an insurance company is liable to pay the claim amount only when it exceeds the deductible.

Reasons behind adding deductible in insurance:

• A deductible is one of the several types of clauses added to insurance. It is used by the insurance company as a threshold for policy payment, generally for health insurance and travel insurance.
• It is mainly added as a clause in health insurance plans to prevent frauds or scams and ensures that the customers raise only genuine claims.
• Suppose you have a health insurance plan of 50000 rupees, and the deductible is 10000 rupees. You have to pay 10000 rupees first in the hospital. The remaining amount of 40000 will be paid by the insurance company directly to the hospital only when the deductible amount is paid.

As the name suggests, the “Loss Payee” is a person or the bank that receives the insurance payment after losing the property or vehicle that the insurance policyholder owns. According to the laws, it is a clause in the insurance policy. It is used to cover the investment of other parties or banks from where you have got the loan against your vehicle or your property. For example, if you have a car on loan and have insurance for that car, if you met an accident, and your car is completely damaged beyond repair, your bank still owes money. When you claim the insurance, the insurance company will pay money directly to the bank or person you owe money. Here the bank is a loss payee.

Following is a list of the different types of benefits or coverage normally provided under a personal accident policy:

• Accidental death
• Any accidental permanent disability.
• Temporary disability (partial or complete according to your insurance plan).
• Hospitalization benefits.
• Medical expenses.
• Any type of accidental and corrective surgery.
• Funeral expenses etc.

A declaration page is an official document or copy that contains all the information of the policyholder like name, address, vehicle information, type of coverage, and loss payee information. It is updated when you make changes during your policy term. For example, if you add a new endorsement, your insurance provider company updates the declaration page and sends you a revised copy.

You should keep the following things in your mind while buying an insurance policy:

• First of all, you should check the market value price of your vehicle. If you have purchased a brand new vehicle, the insured value will be the purchase price of your vehicle.
• You should provide all the material facts about your vehicle, including previous accidents, engine modifications, etc. If you have any doubt, you can ask your previous insurance company.
• You should ensure that your vehicle is fully insured, as it will affect the amount you can claim.
• There are many insurance providers for the vehicle. You can compare the premium and purchase according to your choice.

As the name suggests, a “no-claim bonus” or NCB is a benefit or a reward for the insurance policyholders who have not claimed insurance during the preceding year of coverage.

Advantages of no-claim bonus

The biggest advantages of a no-claim bonus are as follows:

• It plays an important role in lowering your annual insurance premium. For example, if you do not make any claim on your car insurance, your insurance provider is not required to pay out any money. It specifies that you are a safe driver and therefore cheaper to cover. It will lower the premium for the following year.
• The no-claim bonus is a reward that stays with you. For example, if you were to sell your car, it becomes applicable to the next car you purchase.
• The no-claim bonus is easily transferable if you shift from one insurance provider to another.

In an insurance policy, the “contestable period” is usually a time of 1 or 2 years. The insurance company holds all the right to investigate the policy and the policyholders and decide whether to pay or not to pay the insured within this period.

The terms “Insured” and “Insurer” are used in the Insurance industry. Here, the insured is the person or organization that holds the policy, and the term Insurer specifies the company that covers the insured and pays the compensation.

The “revocable beneficiary” is a designation in which the policyholder has all the rights to change the beneficiary name without the consent of the named beneficiary. On the other hand, the “irrevocable beneficiary” is a designation in which the policyholder must ask for the beneficiary’s consent before changing the beneficiary’s name. In this condition, the policyholders cannot change the beneficiary’s name without their consent, even if they have purchased the insurance and paid the premiums.

The term “Beneficiary” is used for that person who gets nominated for the insured amount if the policyholder dies.