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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Basics of Insurance

Caselet: Mr. Anil Shah has two health policies covering the same hospitalisation on an indemnity basis. Policy A has a sum insured of Rs 6 lakh and Policy B Rs 4 lakh. Eligible hospital bill is Rs 5 lakh. Both insurers apply contribution in proportion to their sum insured, and no deductibles apply. How much will Policy B bear?

Policy B bears Rs 2 lakh. Under contribution, the loss is shared in proportion to sums insured, 6 to 4, so Policy B's share is 40 percent of the Rs 5 lakh bill, while Policy A pays the remaining Rs 3 lakh.

  1. ARs 2.5 lakh
  2. BRs 2 lakhCorrect
  3. CRs 1.5 lakh
  4. DRs 4 lakh

Explanation

Ratio of sums insured is 6:4 = 60:40. Policy B bears 40% of Rs 5 lakh = Rs 2 lakh; Policy A bears Rs 3 lakh. Rs 2.5 lakh assumes equal sharing. Rs 4 lakh ignores contribution and takes B's full limit.

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