Income Insurance Protection (IPI) Essay Example | Topics and Well Written Essays - 750 words

Income Insurance Protection (IPI) - Essay ExampleFor example, Mr. Farid in his application failed to be honest by giving false study. attached information provided by the party seeking damages cover provides the basis upon which sum assured and premiums be based, information asymmetry will most apparent result in an adverse selection. In Mr. Farids case, the information he gave during application showed that he is not involved in manual or exterior duties implying that his bump profile was low. The information contradicts the one given in the claims form which actually showed that he was doing manual duties that exposed him to higher risks than that of a company handler he purported to be. Based on the information provided during application, that is, Mr. Farid was involved in inspecting construction sites and training workers on health and safety awareness, it is therefore easier to understand why the insurance company ignored his heart disorder problem and granted him the c over. Had the insurance known that Mr. Farid did manual jobs with the heart valve disorder, it would have taken him as high risk client, and therefore choose a higher sum assured (Claassen, 2008). Question 2. Whether one would approve Mr.Farid application for income protection insurance Based on the information provided by Mr. ... Question 3. Should Prudent Insurance Inc. pay or deny it? The insurance company should use its underwriter or appointed claims adjuster to look into and verify the claims with the help of a medical practitioner to establish whether the poor health fix was work related or not. Based on the information generated, then the company can choose to compensate him in full, adjust the stipend accordingly or deny it all together. Where the poor health condition is not related the work done by Mr. Farid, the company should compensate him in full and if its work related they can adjust the compensation or deny with factual explanation. Part II Household items insur ance. Mr Green v Sun Insurance Inc. Question 1. How would the information about Mr. Greens primarily convictions affect the insurers underwriting decision on Mr. Greens application? The earlier convictions of three offences on Mr. Green would certainly have modify his application. First, he was convicted of a domestic violence which raises the possibility of a loss occurrence on household goods arising from his conduct. Secondly, his conviction for causing actual bodily disablement to the police officers confirms he is a violent person increasing the propensity of a definite loss given his temperament. These two cases in point followers each other would have force a company underwriter to consider Mr. Greens application critically. Where household items to be insured are very valuable, then the underwriter can choose to abandon the application given that the probability that the company will pay a higher compensation within the cover is high. In the event that the underwriter ch ooses to accept Mr.