Which of the Following Does Not Represent the Position of the Insurance

question 25

Multiple Choice

Which of the following does not represent the position of the Insurance Contracts Act 1984 in relation to the nature of the interest the insured must have in the subject matter of insurance?

• A)The insured must have an insurable interest as defined at common law at the time the contract is made.
• B)It is not necessary to have a property interest in the subject matter at the time a contract is made.
• C)A person can take out life insurance without having an insurable interest in the life insured at the time the contract was made.
• D)An insurance contract will not be void only because the insured did not have an insurable interest at the time the contract was made.

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Definitions:

Accounting Rate of Return

A financial metric used to assess the profitability of an investment, calculated by dividing the average annual profit by the initial investment cost.

Cost of Capital

The return rate that a company must earn on its investment projects to maintain its market value and attract funds.

Net Present Value

A calculation used to determine the present value of a series of future cash flows minus the initial investment, often used in capital budgeting.

Return on Investment

A financial metric used to evaluate the efficiency of an investment, calculated by dividing the benefit (return) of an investment by the cost of the investment.