This document contains a student's answers to tutorial questions about life insurance policies. It discusses the types of information insurers use to assess risk other than medical reports, such as databases of other insurance policies held. It also outlines six key characteristics of insurance contracts: utmost good faith, contribution, subrogation, proximate cause, insurable interest. Finally, it defines and describes the features of whole life and key-man insurance policies.

1. Mohd safrie bin Abdullah
2008405696
Life insurance (INS535)
TUTORIAL 2 INS 535
1) Apart from the proposal form and doctor's report, what other information is available to
an insurer in the assessment of risk in respect of a proposal for life insurance?
(4 marks)
2) An insurance policy is a contract, and it must, therefore, conform to the general rules
of contract law. State six (6) characteristics that underlie the distinctive judicial
interpretations according to insurance contracts.
(12 marks)
3) Describe the following life insurance policies:
i) whole life policy
(4 marks)
ii) key-man insurance
(4 marks)
Answer
1)
a. Industrial that related with insurance. The parties who provides such information
regards to other insurance company databases such as Persatuan Insurans Am Malaysia,
(PIAM). This will indicate the insured that take more than one insurance cover.
b. Laboratories test report. The insurer will find the more information related with their
insured in this reports such as blood and urine test. This information will help
underwriting process whether to accept or decline the proposal form.
2)

2. a. Utmost of good faith. It is the positive duties to enclose the relevant information by
insured to the insurer that the information may be influence the decision of acceptance,
rates, and terms. If utmost of good faith will be broken, the proposal form will be treats as
voidable. Example, insured must disclose whether he or she is a smoker or not.
b. Contribution. It can be defines as the amount which each insurer has to contribute to
cost of a loss is covered by two and more insurers. According to the principle of
contribution, an insurer who has indemnified the insured, may call upon the other
insurers who are similarly liable for the loss to contribute toward the payment of
indemnity. This principle avoids the insured recovering more than actual loss.
c. subrogation. It can be define as taking the rights belonging to an insured by the insurer
after the latter has indemnified the insured. Those rights will against the third parties who
are liable for the loss that is the subject of the claim and the right of the insured in the
salvage.
d. Proximate cause. This principle provides that the loss affected the insured must causes
by insured perils in order to make sure that insurer will pays for the loss.
e. Insurable interest. It is defined as the right to insure arising out of legally recognized
financial interests that a person has in the subject matter of insurance. Example, everyone
has insurable interest in his own wife.
3)
a. Whole life policy is provides for the payment of sum insured upon the death of the life
insured or upon reaching a certain ages such as 85, 90, or 100. premiums are normally
paid through out of life. However, there are policies that have limited premium payment
period. Some features are protection of life, fixed premium, and growing cash value.
b. Key-man insurance is insurance policy whereby an employer buys an insurance policy
against loss of profits arising from the death, unemployment, and sickness or injury of a

3. key employee. It is a term insurance, covering the life of the employee within the term of
the policy. If the employee survives during the term, the policy will expired. The purpose
of taking out the insurance is to compensate the employer for the loss of trading income
that may result from the loss of the service of the key employee in case of death, sickness
or injury.