LML4805
ASSIGNMENT 1 SEMESTER 1 2026
UNIQUE NO.
DUE DATE: 10 MARCH 2026
, Insurance Law - LML4805
Question 1
Statement: “Insurance contracts may be classified according to various criteria and
these classifications are not always mutually exclusive.”
This statement is correct. Insurance contracts can be classified in different ways, and a
single contract may fall into more than one category depending on the criterion used.
Common classifications include life insurance, long-term insurance, and non-
indemnity insurance.
Life insurance is a contract whereby the insurer undertakes to pay a sum of money
upon the death of the insured or after a specified period. It is primarily concerned with
human life rather than property. For example, a whole-life policy that pays the
beneficiary upon the insured’s death is life insurance.
Long-term insurance refers to policies that provide coverage for a period longer than
12 months and may include both life and non-life elements. Life insurance policies,
pension policies, and disability policies are typical examples of long-term insurance. For
instance, a retirement annuity is a long-term insurance product designed to pay out
upon retirement.
Non-indemnity insurance is insurance where the insurer’s obligation is not measured
by the actual loss suffered, unlike indemnity insurance which reimburses only the
loss. Life insurance is a key example of non-indemnity insurance because the payout is
a fixed sum agreed in the contract, irrespective of any financial loss the beneficiaries
may have experienced. Another example is disability income insurance, which pays a
predetermined benefit regardless of the insured’s actual loss of earnings.
In summary, life insurance is a type of long-term insurance and also a form of non-
indemnity insurance. Hence, classifications overlap, confirming that insurance contracts
can be classified according to multiple criteria simultaneously.
ASSIGNMENT 1 SEMESTER 1 2026
UNIQUE NO.
DUE DATE: 10 MARCH 2026
, Insurance Law - LML4805
Question 1
Statement: “Insurance contracts may be classified according to various criteria and
these classifications are not always mutually exclusive.”
This statement is correct. Insurance contracts can be classified in different ways, and a
single contract may fall into more than one category depending on the criterion used.
Common classifications include life insurance, long-term insurance, and non-
indemnity insurance.
Life insurance is a contract whereby the insurer undertakes to pay a sum of money
upon the death of the insured or after a specified period. It is primarily concerned with
human life rather than property. For example, a whole-life policy that pays the
beneficiary upon the insured’s death is life insurance.
Long-term insurance refers to policies that provide coverage for a period longer than
12 months and may include both life and non-life elements. Life insurance policies,
pension policies, and disability policies are typical examples of long-term insurance. For
instance, a retirement annuity is a long-term insurance product designed to pay out
upon retirement.
Non-indemnity insurance is insurance where the insurer’s obligation is not measured
by the actual loss suffered, unlike indemnity insurance which reimburses only the
loss. Life insurance is a key example of non-indemnity insurance because the payout is
a fixed sum agreed in the contract, irrespective of any financial loss the beneficiaries
may have experienced. Another example is disability income insurance, which pays a
predetermined benefit regardless of the insured’s actual loss of earnings.
In summary, life insurance is a type of long-term insurance and also a form of non-
indemnity insurance. Hence, classifications overlap, confirming that insurance contracts
can be classified according to multiple criteria simultaneously.
