Question

Which of the following reasons explains why life insurance policies are not cancellable by the insurer, although property insurance policies are? Property insurance policies are subject to some problems with intentional losses since destroyed property can be converted to cash and spent by the insured O B Life insurance policies represent policies with a long life and heavy early year expenses that must be paid by the insured Society feels that people need to be able to depend on their life insurance being available when they get sick and die O D Moral hazard on life insurance is less because one must die to collect O E All of the above [] Fullscr

Answer 1

The answer to the above question is E) All of the above. This is because, in case of property insurance policies, the owner of the property may intentionally destroy the property using various ways to claim the insurance amount use and cheat the insurer. In case of life insurance policies, the premium has to be paid by the insured regularly and only when none of the premiums are missed to be paid, will the insurer pay the insured's family the sum assured in the event of the insured's death. The insured will pay the premiums on time to ensure his/her family gets the sum assured. In the times of rising medical costs, insured's policy will be what the family falls back on in times of medical emergencies/hospitalization. The insured must die to collect the sum assured, because there's no other way around it. Hence, life insurance policies are more safer for insurers than property insurance policies and life insurance policies are not cancellable by the insurer, although property insurance policies are.