(a) What is non-indemnity insurance? (b) List and explain three types of life assurance policies. (c) Explain the term surrender value.

(a) What is non-indemnity insurance?

Non-indemnity insurance is a type of insurance in which the insurer pays a fixed sum of money agreed in advance on the happening of the insured event, without trying to measure the actual loss suffered. It applies where the loss cannot be valued in money terms, such as loss of life or limb. Life assurance and personal accident insurance are examples.

(b) Three types of life assurance policies

1. Whole life policy: premiums are paid throughout the life of the insured, and the sum assured is paid to the named beneficiaries only when the insured dies.
2. Endowment policy: premiums are paid for a fixed number of years, and the sum assured is paid to the insured at the end of that period, or to the beneficiaries earlier if he dies before it matures.
3. Term (temporary) policy: covers the insured for a fixed period only; the sum assured is paid only if the insured dies within that period, and nothing is paid if he survives it.

(c) Surrender value

Surrender value is the amount of money the insurance company pays back to a policyholder who decides to cancel (surrender) a life policy before it matures. It is usually less than the total premiums paid.