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Financial Products Apply knowledge of the financial products and services environment
Mrs Khan has two life policies of R1 million and R2 million with different insurers. She also has two household contents policies with different insurers, each covering her R300 000 of contents in full. She dies in a fire that destroys the contents. How much is payable in total?
RE5 practice question with a worked answer. This is one of hundreds of FSCA RE5 questions in the RegulatoryExams question bank.
- a) R3 million on the life policies and R300 000 on the contents.Correct
- b) R2 million on the life policies and R600 000 on the contents.
- c) R3 million on the life policies and R600 000 on the contents.
- d) R2 million on the life policies and R300 000 on the contents.
Why this is the answer
Life insurance is not a contract of indemnity: each policy pays its agreed sum, so both pay in full. Household contents insurance is indemnity insurance: the insured cannot recover more than the loss, so the two insurers share the R300 000 between them (contribution) and do not each pay it.
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