1)Mr Rajan 28 years is a software engineer engaged

in a M N C ,his annual income is Rs 8,40,000/- ,

expenses towards the maintenance of the family is
around Rs 28,000/- a month. He has a daughter of
4 years old & wife is a home maker. He has
purchased a residential flat & paying an EMI of
22,000/- apart from the usual monthly expenses.
In case of the premature demise Mr Rajan, the family
would lose the entire income, since he is only bread
earner of the family.
Based on the principles (H L V) of Insurance, arrive at
the Insurance cover/protection that you would suggest.
Answer:
Annual Income Rs 8, 40,000/Monthly Income Rs 70,000/Expenses including E M I /month Rs 50,000/Lose in Net Income Rs 2, 40,000/H L V = 2, 40,000/0.08= Rs 30, 00,000
Assuming rate of interest as 8% , (expressed as 0.08)
2)Ravi proposed his life for an Insurance policy, aged
48 years & is central government employee, last 2
years frequently availed leaves on different spells
on medical grounds. He was suffering from
diabetes, hypertension, & was a smoker.
At the time of proposal he had not furnished the details
of his treatment & habits, within 2 years of taking up of

the policy, unfortunately died. The Insurance Company

REPUDIATED the claim preferred by the nominee.
1)What are the material facts related undisclosed by
him at the time of proposal?
2)The process of disclosing material facts, is called
as?
3) The premature death within 2 years of
commencement is known as?
Answers:
1)Diabetes, Hypertension, Habit of smoking, leaves
on medical grounds.
2)UTMOST GOOD FAITH (UBERRIMA FIDES)
3)An Early claim
4)Mr Mohan has 3 brothers & 2 sisters in the family,
married & living separately. Mohan is married, has
a daughter & a daughter, his wife is also employed
having her own earned income.
Mr Mohan would like to insure his brother who is
physically challenged, by contributing premium from
his income, to provide security for his brothers family.
Can he propose?
He also would like have a policy on his life & the on the
life of his daughter who is minor.
1)What is the essential ingredient required for
Insurance?
2)Can he propose his brother for Insurance?
3)Can he propose his daughter who is a minor?
Answers:
1)Insurable Interest is the essential ingredient
2)No- since no insurable interest exists between
brothers

3)Yes-Insurable interest exists on his daughter.

Mr Chandrasekhar owns a house for which he has taken
a mortgage loan of Rs 20, 00,000/- from a bank. His
family consisting wife ,two kids & old parents.
Analyse & Answer the following questions;
1)Does he have an insurable interest in the house?
2)Does the bank have an insurable interest in the
house?
3)What about his neighbour?
4)Does he have an insurable interest in their wellbeing?
5)Does he stand to financially lose if any of them are
hospitalised?
6)What about his neighbours kids? Would he have
an insurable interest in them?
Answers:
1)Yes- unbound insurable interest on his life
2)Yes- to the extent of outstanding loan
3)No4)Yes-on his life & on the life of kids
5)No
6)No.
Mr Bhaskar 36 years is in a joint family of 3 brothers
living with his parents aged father 62 & mother 58
years, brothers Ramesh 32, Raju 28,& Lokesh 24 years
respectively. His brother Raju (28) is of unsound mind &
suffering from mental illness, Lokesh (24) is physically
challenged with loss of limbs, no income. Ramesh ( 32)
is an engineer, having own income & good health.
Mr Bhaskar is an officer in a nationalised bank.

1)Name the persons who can enter into a valid

insurance contract?
2)What are essential conditions required for an
insurance contract?
3)Mention why Raju is not eligible to enter in to a
contract?
4)Mention why Lokesh disqualifies for the contract?
Answers:
1)Mr Bhaskar &Ramesh
2)Person to enter into a contract should be a MAJOR,
have SOUND MIND, & No CRIMINAL antecedents.
3)Raju is suffering from MENTAL ILLNESS & is of
unsound mind
4)Lokesh is PHYSICALLY CHALLENGED & has no
INCOME