(a) Give five reasons why a life assurance policy may be taken (b) Describe any five insurance policies which a large department shop owner may take.

Answer Details

(a) Reasons why a life assurance policy may be taken

• To provide for dependants: It gives financial security to the family of the assured in the event of his death.
• As a form of saving: An endowment policy enables the assured to save regularly and receive a lump sum at maturity.
• To provide for old age: It can serve as a source of income or pension after retirement.
• To meet future obligations: The proceeds can be used to pay for children's education, marriage or to settle debts.
• As security for a loan: A life policy can be assigned or used as collateral to obtain a loan from a bank.

(b) Insurance policies a large department shop owner may take

• Fire insurance: It covers loss or damage to the building, stock and fittings caused by fire and allied perils.
• Burglary and theft insurance: It covers loss of goods, cash and property arising from burglary or theft by outsiders.
• Fidelity guarantee insurance: It covers the shop against loss caused by the dishonesty or embezzlement of its employees.
• Employer's liability (workmen's compensation) insurance: It covers claims by employees who are injured, disabled or killed in the course of their work.
• Public liability insurance: It covers claims by customers or members of the public who suffer injury or damage on the shop's premises.