Question:
K, aged forty-five years, and his wife, aged forty-three years both have three children. K purchased a family health insurance contract that covers his wife to the age of 65. All of the conditions below will pay a death benefit EXCEPT:
A) K's wife passes on at the age of 60
B) K's wife passes on at the age of 66
C) A child passes on at the age of 15
D) A child passes on at the age of 18
Answer:
The correct answer is B. Note that the policy covers K's wife up to the age of 65 years.
Explanation:
Many health insurance plans also contain funeral or death benefits.
As with all contracts, terms and conditions are clearly spelled out in such policies.
According to the question, the policy covers K's wife to the age of 65. This age "limit" is consistent with most Life/Health/Death benefit insurances. It means that K's cover also terminates after 65.
Logically, the other beneficiaries - their children that is, are also covered given that they are below the age of 65.
So for K's wife, it means that her cover terminates automatically at midnight on the day she clocks 66 years.
In that case, K can check to see if he can pay an additional premium to modify the terms of cover so that she and he are brought back under the umbrella.
Actuaries - people who perform complex calculations to ensure that Insurance products remain profitable, as well as effective, take a lot of factors into consideration when designing the insurance products.
For life/health insurance, the following factors are critical:
`1. Life expectancy;
2. Predisposition to geriatric illnesses etc.
As people age, the probability of demise tends towards 1. In other words, the balance of statistics tilts towards certain occurrences. Insurance products are by their very nature required to possess an element called fortuity. If an event is very likely to occur, then it can no longer be insured.
In the case of life insurance, the question is not about whether or not the person will kick the bucket. The element of fortuity rests on the factor of age. The younger a person is, assuming that they are responsible and don't lead a risky life, the less likely it is for them to kick the bucket. Hence a strong element of fortuity.
Besides the issues of death, there are many risk factors associated with age. From the actuarial point of view, insurance companies would rather insure someone with a higher fortuity of health hazard than someone with a strong and very high certainty of becoming ill.
In conclusion, the policy will terminate once a condition for continued cover is breached.
For more about insurances please see the following link:
https://brainly.in/question/25991602
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