Why does life insurance is not an indemnity contract?
How can you assess the death of a young breadwinner with 3-4 dependents? Do you find me? Can you calculate the cost of replacement? But for some material things, it can be calculated or at least found. And the financial cost of living may increase or decrease over time.
My income goes up, so my economic value goes up, for example. The number of dependents is increasing, so the value of emotions is increasing.
My stepfather is sick, and the cost of regular medicine is rising. So, it is very difficult to assess the value of life for “Recovery” purposes. You can replace a stolen TV with another TV with similar features. But can you say the same about human life? The health policy is for a period of more than one year.
This makes it very difficult to test/produce the value of life, say 10 years, and then set it as a guaranteed amount and charge your premium. What if this is not the case?
Having said that, pl compare the award given to MACT. This is based on the estimated economic losses in the family that year. This motor policy is taken.
So you can count Sum Insured after the accident has happened. The insurance Amount is not specified in advance. But it is an annual premium.
The motor policy is a one-year contract. Health policy is a very long-term contract. In health insurance Sum Assured is pre-defined.
This unexplained Sum Insured of MACT actually bleeds Motor Insurance portfolio. OD claims are within limits, but TP claims are large. That is why the Government is trying to close the TP Claim.
Yes, if enough data is available and permitted, such a penalty product can be designed for life insurance. In other words, in insurance, everything can be insured, as long as, there is enough information to get past information about the occurrence of an insured event and also the law if so, the Regulator allows it.
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