AD Banker Comprehensive Practice Exam

A policy that pays out benefits without requiring proof of loss is known as a(n):

1. Indemnity Policy

2. Non-indemnity Policy

3. Conditional Policy

4. Uncertain Policy

The correct answer is: Non-indemnity Policy

A policy that pays out benefits without requiring proof of loss is characterized as a non-indemnity policy. This type of policy usually provides coverage based on the agreed terms, such as a specified benefit amount, regardless of the actual loss incurred. These policies are structured to provide a certain level of protection or financial benefit upon the occurrence of a specified event, and beneficiaries receive the stated amount without needing to validate the exact financial loss or damages suffered. In contrast, an indemnity policy typically requires the policyholder to demonstrate the extent of their losses before a payment is made, ensuring that the compensation reflects the actual financial impact. Conditional policies often impose specific requirements that must be met for benefits to be paid, while uncertain policies do not conform to insurance standards; thus, they don’t distinctly convey a clear coverage structure. Understanding the definition and implications of each type of policy helps clarify the nature and procedures in the insurance context, especially regarding payout conditions.