how to understand coverage of insurance policy?

[Smith]

has a confusing point, especially in the questions in the Mock Exam paper purchased from ActEd, that, regarding area of cover / coverage of insurance policy, what it actually indicates to? my understanding is that the coverage of an insurance policy is the financial losses or consequences suffered by the insured according to the terms and conditions of the policy, not the risks it insures, am i right? or other understanding would be?

there are two questions refer to this point, i.e. Q3 of the Mock Exam P2, and Q8 of the Mock Exam 2 P2. the solutions of the two questions seem not so consistent, in terms of what the area of cover / coverage mean.

besides, does the concept or definition means the same for life and non-life policy?

thanks for advise!

 

[Lindsay Smitherman]

Hi - both questions are basically asking what would be covered by the insurance policies in question, ie what events would they pay out on.

I'm not sure what you mean when you say the solutions are inconsistent, other than that they differ in terms of the amount of detail included (which reflects the different command verbs used)?

 

[Smith]

Q3 of the Mock Exam P2, the solution indicates, "medical expense, death benefit, ransom money, rescue costs....." these are not events but financial losses suffered, from my understanding.
Q8 of the Mock Exam 2 P2, the solution indicates, "product liability, business interruption, employer's liability, cyber insurance, term assurance......" these may be understand as risks or equivalent, am i right?
i think the solutions to the two question are different angles, aren't they?
and my question is how to understand this?
thanks!

 

[Lindsay Smitherman]

For the first question the points could have been expressed as 'amounts might be paid out: on death, for any medical care needed, for any ransom payment made, ...' and still shown the same basic underlying ideas. If you wrote a list of all the events under which benefits would be paid, you would get the marks. So I don't feel they are as different as you suggest?

For Mock Exam 2 the question is asking about a new product that is basically a 'wrapper' around a number of general and life insurance products. The points that you indicate for Mock Exam 2 are the sub-headings to the solution, indicating the types of product (which can also be referred to as 'the types of cover') that would be included in such a wrapper. The solution for each sub-heading goes on to 'outline' the cover provided under each sub-product, particularly what would cause each benefit to be paid out. [There are a lot of marks available here and the command verb is 'outline' so you had to do a little bit more than just a list of events.]

The questions both want you to come up with suggestions for what sorts of things will be covered under the policy: what will trigger benefits to be paid out / what benefits are payable under them?