The Principle of Insurable Interest Is Important Because It

question 37

Multiple Choice

The principle of insurable interest is important because it:

• A) makes insurance companies more profitable
• B) supports the principle of indemnity
• C) prevents insurers from unfairly denying insurance claims
• D) prevents an insurer from subrogating against a negligent third party

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Definitions:

Tax Liability

The total amount of tax owed to a taxing authority, such as the IRS, based on taxable income and tax rate.

Personal and Dependency

Terms related to exemptions that can be claimed on tax returns for oneself and for dependents, affecting taxable income.

Exemption

Deductions allowed by law to reduce taxable income based on the taxpayer and dependents.

Married Couple

Two individuals legally united in marriage, whose marital status can affect their tax filings, legal rights, and other societal entitlements.