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Class 11 Business Studies Chapter 4 Business Services
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VERY SHORT TYPE QUESTIONS ANSWERS (1 MARK EACH)
A. Multiple Choice Question :
1. DTH services are provided by______.
(a) Transport companies.
(c) Cellular companies.
(d) None of the above.
Ans: (c) Cellular companies.
2. The benefits of public warehousing includes
(c) Dealer relationship.
(d) None of the above.
Ans: (b) Flexibility.
3. Which of the following is not a function of insurance ?
(a) Risk sharing.
(b) Assist in capital formation.
(c) Lending of funds.
(d) None of the above.
Ans: (c) Lending of funds.
4. Which of the following is not applicable in life insurance contract?
(a) Conditional contract.
(b) Unilateral contract.
(c) Indemnity contract.
(d) None of the above.
Ans: (c) Indemnity contract.
5. CWC stands for _______.
(a) Central water commission.
(b) Central Warehousing commission.
(c) Central warehousing corporation.
(d) Central water corporation.
Ans: (c) Central warehousing corporation.
Short Answer Questions
1. Define services and goods.
Ans: American Marketing Association was one of the pioneer is defining the word services in 1960. Accordingly, the definition services had been activities, benefits, or satisfactions which are offered for sale, or provided in connection with the sale of goods.
On the other hand, goods is a physical product which can be delivered to a purchaser and transferred the ownership. The goods are commodities on items of all types.
2. What is e-banking? What are the advantages of e-banking.
Ans: E-banking or Electronic banking, also called internet banking implies the banking activities performed by using internet are electronic system. With the application of computer technology in various fields the bank authorities are also facing pressure to make banking more liberal. Consequently majority banks of the world have started web preserve in form of ATM internet banking, support services etc.
Advantages of e-banking: Following are the advantages of e-banking-
(i) E-banking facilitates on- line management of customer’s accounts. In this systems, customers can deposit/withdraw their money from any other branches irrespective of the branch where their account is hold which provides a greater security to travelling people.
(ii) Customers can use services of ATMs anywhere which reduces the risk of carrying cash.
(iii) E-banking also provides the common banking task or writing cheques, paying bills, transferring funds, printing statements and balance inquiry etc.
(iv) E-banking plays a important role in financial market. Through E – banking channels investors can invest their money in stock market without brokers.
(v) At present internet baking is also used for payment of taxes, bill payments like Electricity water, municipal and telephones etc.
3. Write a note on various telecom services available for enhancing business.
Ans: Telecommunications include a number services such as the telephonic services, telegraphic services, e-mailing services, fax services, internet services on so. With the development of sophisticated communication technologies, we find a big change in the services profile of telecommunication organisation.
Various Telecommunication services are:
(i) Telephone services local, National, international.
(ii) Supporting telegraph service National international.
(iii) E-mail, e-commerce, facsimile, Fax services, Data-point-to-point on PSTN, on public telex.
(iv) Internal, Internet, e-business.
4. Explain briefly the principles of insurance with suitable examples.
Ans: Following are the main principles of insurance :
(i) Insurable interest: Any person taking an insurance policy must have an insurable internet in the subject matter that is misused. A person is said to have insurable internet in the property on subject matter insured if he is benefited by its existence and is prejudiced by its destruction.
(ii) Utmost Good faith: Both the insured and the insurer must have the utmost good faith on each other. The proposer (insured) must make the fullest disclosure of all. Material facts desired by the insurer.
(iii) Indemnity: The principle of indemnity is applicable to all insurance policies except life insurance policies. This means that the misuser makes a promise to compensate the less suffered by the insured i.n. case of any loss.
(iv) Principle of contribution: This principle is applicable when the property is insured with more than one insurer. The insured under this principle cannot claim compensation for more than this loss from all the companies.
Example: A has a property of Rs.1,00,000. He makes an insurance policy with B-&C for Rs.50,000 and another policy with C & Co for Rs.50,000. Now, if the property is damaged by fire for Rs.40,000
A cannot claim compensation of Rs.40,000/- from both B Co and C& Co. He can claim compensation of Rs.20,000 each from both companies.
(v) Principle of Subrogation: This principle is applicable to all insurance policies except life insurance. Thus, if the insured claims compensation from the insurance company he cannot claim the same compensation for any other party.
Example: A gets his house insured for Rs.1,00,000/-. Show house is set on fire by B. A claims compensation from the insurance company. Now, A cannot sue B to get compensation from him. Whatever right A had against B will now be shifted to the insurance company who can claim compensation from B to make good the loss suffered by it. Subrogation is thus the transfer of rights and remedies of the insured to the insurer.
5. Explain warehousing and its functions.
Ans: Storage and warehousing enables us to adjust supply according to the changes in the market demand for goods. All irregularities in production a not distribution can be removed by timely adjustment between demand and supply. Price stability in the market can thus be maintained. Warehousing and storage facilities are required by farmers, producers, processors, dealers, mercantile, agents, exporters and importers, wholesalers, and all those engaged in trade and commerce.
Functions of warehousing: Following are the functions of warehousing :
(i) Warehousing provides a convenient resting place for surplus stock of goods not required in the market for the time being.
(ii) The gap between certain time intervals between production and consumption can be easily filled by warehouses.
(iii) Goods can be stored in warehouses and their supply regulated according to the demand in the market.
(iv) Owners of goods can transfer the risk of loss through fire, theft, damage to the warehouses, who in turn can transfer it to the insurance companies.
(v) Warehouses also offer many incidental marketing services like assembling, standardisation and grading, packing etc on reasonable charges to the traders storing goods with them.
(vi) Warehouse owners issue warehouse warrants or receipts which can be used by the traders as security for loans from banks.
Long Answer Questions
1. What are services? Explain there distinct characteristics.
Ans: Various services can be classified into the following types such as
(i) Business services.
(ii) Social services.
(iii) Personal services.
Business services include banking, insurance transportation, warehousing and communication services. Social services include health care, education services provided by NGO and agencies.
Personal services are experienced differently by different customers. These are not consistent in nature.
Characteristics of services: Following are the characteristics of services –
(i) Services are intangible: A product is an object a device, a thing as against service which is a deed, a performance an effort. Therefore, when a product is bought it is something that can be seen touched, smelt, heard or worn, While there is nothing tangible to show for it where a service is sold. One can say that services are consumed but not possessed.
(ii) Services are heterogenous: That is the services are non – standardised and uniform in very clear terms. It is argued that it is often impossible to assure consistency in the services provided by a seller to standardise offerings among the sellers of the same service while it is possible to offer consistency and uniformity in case of products.
(iii) Services are inseparable: With customer participation in the process. Services are typically produced and consumed at a time. This is services are produced and consumed simultaneously. Generally, products are produced, then sold and finally consumed. However, services are sold first and then produced and consumed at the same time. Thus, a pager service company pager services while the pager user consumes it.
(iv) Services are perishable: The utility of majority of services is short-lived. As a result they can not be produced ahead of time and stocked for the periods of peak loads of demand. The perishability of services is not a problem. So, long as demand is steady for it is easier to staff for the service in advance.
(v) Services are susceptible to changing demand: The marke for services has under fluctuations. These fluctuations in demand might be seasoned, monthly, weekly, daily no even hourly. During off season one needs less transport in a day, day time than morning and evenings the demand for public transport dwindles, during nigh time one needs lesser telephone services, tourism has seasonal demand, cricket fields are unused in rainy season while golf courses in winter.
(vi) Services are subject to special pricing tactics: The distinct characteristics of perishability, fluctuations in demand and inseparability in services involve significant implications in pricing Consumers may postpone purchase or perform some services themselves. Competition plays a secondary role in many services. Quality of services cannot be fully standardised.
2. Explain the function of commercial banks with an example of each.
Ans: The functions of commercial bank’s may be discussed under the following headings
(i) Primary function.
(ii) Secondary function.
(iii) General utility functions.
(iv) Agency functions.
(i) Primary function (Accepting deposits): The primary function of banks are to accept money from the public, business, institutions as deposits, on which interest is paid. These deposits are kept with the bank for specified periods and can be withdrawn by the depositors according to the agreement made with the banks. These deposit are lent by the banks to the public, business and institutions from whom interest is realised on the money given as loans: Deposits made in banks can be made indifferent forms like time deposit savings deposit and current deposit.
(i) Primary function (making loans and advances): From the deposits received by bank loans and advances are made to the general public, business and various organisations. The banks make their earning from these loans or advances on which interest is charged. Banks thus accept deposits from the public having surplus funds, and extends these deposits to industry and commerce and personal use. Thereby helping in economic development of a country. It is therefore said that banks mobilise the surplus funds of the public and invests these in productive economic activity.
(iii) Secondary Functions: Acceptance of deposits and making loans and advances by a bank is a primary function. But is also takes up secondary or subsidiary functions. Which are of equal importance to a bank. for the point of view of service to the public.
These subsidiary functions are:
(a) Agency functions.
(b) General utility functions.
(a) Agency functions: Following are the agency functions :
(i) collection of bills, cheques, interest etc.
(ii) making payments and executing standing orders.
(iii) undertaking purchase and sale of securities.
(iv) transfer of funds.
(v) acting as administrators etc.
(b) Utility Functions: Following are the utility functions :
(i) Making safe custody of valuables.
(ii) issuing various credit documents.
(iii) Underwriting capital issues.
(iv) Acceptance of Bills.
(v) Providing trade information.
(vi) Dealing in Foreign Currency.
(vii) Dealing as advisors.
(viii) Providing credit information.
(ix) Financing of foreign trade.
3. Write a detailed note on various facilities offered by Indias
Ans: Various facilities offered by Indian Postal Department can be understood for its various services.
(i) Postal services: The basic post office services are carriage of letters articles and parcels under various categories from one place to another place both within the country and outside the post office takes the help of various means of transport. Communication like road, railways, airways and sea ways. The postal services can be categorised into various categories like-
(b) Book Post.
(c) Registered letters and parcels.
(d) Value payable post.
(e) Express Delivery.
(f) Under certificate of posting.
(g) Post boxes and bags.
(h) Parcels. and
(i) Returned letter office.
(ii) Banking and Investment functions of the post office: The post office also provides banking and investment functions. To encourage thrift and promote savings amongst the people the post office performs the following functions –
(a) Receiving deposits in saving bank account.
(b) Selling postal cash certificates.
(c) Purchasing selling and depositing Govt. Securities on behalf of customers.
(d) Depositing money with the Accountant General at internet.
(e) Issuing postal life insurance to Govt servants.
The post office also provides remittance services for sending money from one place to another.
This is done in the following ways:
(1) By money orders.
(ii) By postal orders.
(iii) By post stamps.
(iv) By Insurance.
(iii) communication services of the post office: Telegraph and telephone services of the post office forms a part of the telecommunication services of the post office by which long distances can be covered within the minimum time. Today however, computers are also used to general information through a wide network of electronic exchange (Internet). Following are the telegraph and telephone services of the post office-
4. Describe various types of insurance and examine the nature of risks protected by each type of insurance.
Ans: Following are the various types of insurance.
(i) Life insurance/assurance: It is a contract whereby the agrees to pay the insured a specified sum of money to the insured, on the expiry of a certain period of time or an death of the insured.
(ii) Marine Insurance: It is a contract whereby the insurer undertakes to indemnify the insured against the risk of marine perils, upto the extent mentioned in the policy.
(iii) Fire Insurance: It is a policy of insurance whereby the insurer undertakes to guarantee the honesty of an employee of a concern, by compensating his employer for any loss caused by dishonesty of the employee.
(iv) Fidelity Insurance: It is an insurances whereby the insurer undertakes to guarantee the honesty of an employee of a concern, by compensating his employer for any loss caused by dishonesty of the employee.
(v) Accident Insurance: It is an insurance whereby the insurer undertakes to indemnify the insured against any physical injury or damages caused to property due to any accident.
(vi) Burglary Insurance: It is an insurance whereby the insurer undertakes to indemnify the insured against any loss caused due to burglary theft and decoity etc. can be taken by banks, companies, insurance companies, households etc.
(vii) Workmen compensation insurance: In this type of insurance the insurers undertake to compensate the employee for the payment the employer is required to make to his employees for any physical injury of loss of life, limb or damage of any description which employees may sustain in the course of their duty.
(viii) Motor car third party and comprehensive insurance: Motor cars are exposed to damaged or losses due to theft burglary, accident etc. To guard against all such risks the owner may take a policy. The owner can also take a third party insurance, which would misuse the owner against risks of damage to third parties while running his car on the road. In case he takes a comprehensive policy is would guard him against all possible sides of third party damage, theft, accident and damage.
(ix) Employees liability insurance: Such a policy is taken out by an employer to misuse him against the negligence of his inefficient employees for whose negligence the employer may have to compensate his client whose work was negligently done by an employee.
(x) Public liability insurance: This type of insurance policy covers the public who may be insured in the premises of a merchant.
(xi) Cash in transit insurance: This type of insurance covers the risks of theft or burglary of cash remitted from one place to another.
5. Explain in detail the warehousing services.
Ans : Following are the services rendered by warehousing:
(i) Warehousing facilities are required for the marketing of agricultural goods. Whose demand is regular but production is seasonal.
(ii) Due to the factory system of productive a huge quantity of goods accumulate at the factory. It thus regimes proper warehousing of goods from the stage of the factory to the homes of consumer’s.
(iii) Production of certain industrial goods may be continuous, but their demand may be seasonal, e.g. raincoats, umbrellas, woollen goods etc. These goods thus require warehousing facilities.
(iv) Today goods under the modern factory system are produced in large amount for a wide market. They need to be moved from centres of production to centres of consumption and at the same time they cannot be sold at once. Thus, during this period, warehousing would be required at all marketing points.
(v) Warehouses are also required by the farmers and traders to hold goods till a time they get favourable prices.
(vi) Banks also advances loans to traders and manufacturers against warehouse receipts.
ADDITIONAL QUESTIONS & ANSWERS
(a) Fill up the blanks:
(i) Services are _________ ( Intangible / Tangible)
(ii) Services are _________ (inconsistency / consistency)
(iii) Banking, Insurance ete are examples of services (Business / Social)
(iv) Foreign exchange banks, Industrial banks are _________ (specialised/commercial) banks
(v) For providing postal services the whole country has been divided into _________ postal circle (22/20/21)
(vi) Full meaning of VSAT _________.
Ans: Very Small Aperture Terminal.
(vii) Full Meaning of DTH _________.
Ans: Direct to Home.
(viii) Blue Dart is an example of private _________ company.
Short Answer Questions
1. Define a Bank.
Ans: The Banking Regulation Act, 1949, defines banking company as a company which transacts the business of banking in any state of India. The word banking has been defined under the same Act as “the accepting for the purpose of lending or investment or deposits of money from the public, repayable on demand or otherwise and withdrawable by cheque, draft, order or otherwise”.
2. What are the different kinds of Bank?
Ans: On the basis of the functions performed by the banks they are classified into the following kinds :
(i) Commercial Banks.
(ii) Industrial Banks.
(iii) Agricultural Banks.
(iv) Exchange Banks.
(v) Post office savings Bank.
(vi) Indigeneous Banks.
(vi) Regional Rural Banks.
(viii) Export-Import Banks.
(ix) National Bank for Agricultural and Rural Development.
(x) State Bank of India.
(xi) Reserve Bank of India.
3. What are the differences between a Current Account and a Saving Deposit Account?
Ans: The differences between a Current Account and Savings Deposit Account are given below:
4. What are the differences between a Fixed Deposit and Savings Bank Deposit Accounts?
Ans: The following are the main differences between fixed deposit and savings bank deposit account.
5. What are the differences between a Fixed Deposit and Current Account?
Ans: The differences between fixed deposit and current access are described below:
6. Name the different types of accounts that can be opened in a bank.
Ans: The following different types of accounts can be opened in a bank:
(i) Savings Deposit Bank Account.
(ii) Fixed Deposit or Term Deposit Account.
(iii) Current Account.
(iv) Recurring Deposit Account.
7. What is insurance ?
Ans: According to Dictionary of business and finance, insurance is started to mean a form of contract or agreement under which one party agrees in return for a consideration to pay an agreed amount of money to another party to make good a loss is to compensate, damage or injury to something for value in which the insured has a pecuniary or monetary interest as a result of some uncertain event.
According to E. W. patterson, “Insurance is a contract by which one party, for a compensation called premium, assumes particular risks of the other party and promise to pay him or his nominee a certain as ascertainable sum of money on a specified contingency.”
Thus, insurance is a kind of contract between the insured and insurer. Insured agrees to pay premium and the insurer agrees to compensate loss. The payment is being made to the insured as per the term condition mentioned in Insurance Policy.”
8. Mention the characteristics of a Insurance.
Ans: An insurance has the following characteristics.
(i) Agreement: Insurance is an agreement between the insured and insurer. Insurer contact is made under the provisions of Indian contract 1872.
(ii) Two Parties: Two parties are involved to the contract of insurance, Viz insured and insurer.
(iii) Utmost good faith: Insurance agreement or contract is based on utmost good faith. Therefore, the insured mud-disclose all the material facts regarding the insured individual goods and property etc.
(iv) Insurable interest: It is the basic and essential requirement of an insurance contract that the person taking the insurance policy must have personal and direct insurable interest in the insured person or property. Insurable interest means monetary interest in the subject matter of insurance contract.
9. What is Life Insurance?
Ans: Life insurance is a contract between a person and life insurance corporations. Private Life insurance companies or banks and post office who have undertaken insurance business as they can may be. According to the contract of life insurance, a specified sum of money is payable by the life insurance corporation or other organisation on the death of the insured or after the expiry of the policy periods. Which ever is earlier.
10. Mention the features of life insurance contract.
Ans: The basic features of life insurance contract are mentioned below:
(a) Nature of contract: Life insurance is a contract of guarantee. The essentials of a valid contract for a life insurance contract are as follows : –
(i) Offer and acceptance.
(ii) Competency of the parties is capacity to contract.
(iii) Free consent.
(b) Insurable interest: Insurable interest must be present in every contract of life insurance..
(c) Surrender Value: The provision of surrender value exists in life insurance contract.
(d) Assignment: There is a provision of assignment of policy in favour of thus.
(e) Utmost good faith: Life insurance contract is bond on utmost good faith. The insured should disclose all the material facts to the insurer.
(f) Continuity: Life insurance is a contract of continuity and extended over a number of years and even for whole life as they can may be.
11. Mention the advantages of life insurance.
Ans: The life insurance has many advantages redressed to the society.
The benefits of the life insurance are discussed below:
(a) Security and safety: It provides Security and safety to their insured and to the family members and dependents.
(b) Receipt money: On maturity a lump sum amount of money is received by the insured which may be invested further or may be used for meeting one time important expenses etc.
(c) Income tax relief: Life insurance policy holders get relief from income tax as permitted under income Tax Act.
(d) Collateral for securing loan: Loans can be taken from banks against the security of life insurance policy.
(e) Savings: Life insurance encourages savings among the people in the society through various schemes of the life insurance corporation.
12. What is Life Assurance?
Ans: Assurance refers to a contract under which the sum assured is bound to be paid sooner. In can of assurance, amount is paid either on maturity of policy or damages or loss is, life insurance. In can of assurance, the payment of certain sum of money on the happening of an event is certain e.g. the amount assured by a life policy must be paid on the attainment of a particular age specified in the contract or after death whichever is earlier.
13. What is fire insurance?
Ans: Fire insurance is an agreement between the insurance company and the owner of the property, wherein insurance company, after receiving specified premium, assures payment of actual or the amount of the five policy which ever is less if the insured property catches fire. Fire insurance is a contract of indemnity. The amount is fixed by the parties at the time of contract. Premium is fixed and paid at a time. The loss can be ascertained only after the fire has occurred. If there is no loss, there is no liability even in there is fire.
14. What are their features of fire insurance?
Ans: The following are the features of fire insurance :
(i) It is a contract of indemnity. The insurer is liable only to the extent of loss suffered.
(ii) It is a contract of utmost good faith. The policy holder and the insurer must not conceal any material facts from each often.
(iii) Fire insurance policy is made for one year only. The policy can be rescued according to the terms of the policy.
(iv) The insured must have the insurable interest in the subject matter both at the time of insurance and at the time of loss.
(v) The risk covered by the fire insurance contract is the loss resulting from fire or some other cause which is the proximate cause of the loss.
(vi) It is subject to the principles of subrogation and contribution.
15. What is marine Insurance?
Ans: Marine insurance is an agreement in which the insurance company assures to compensate for the loss, if any caused by insured marine perils incidental marine adventure after the receipt of the premium. Marine insurance is concerned with overseas trade of goods from one country to another country by ship. So marine insurance, is foreign trade. Foreign trade involves transportation cover all type of risks which may occur during the voyage. There are many dangers during the voyage. The importers would like safe arrival of goods. The shipping company wants safety of ship.
16. What is a postal orders?
Ans: This is a method of sending money which is commonly used. In this method the sender gets the postal orders from the post office after paying the money and some charges for this service. The name of the payee is filled in the space provided for it and the place of payment is also mentioned as “payable at.”. The sender’s name and address is mentioned at the back of it. The postal orders are sent to the payee in an envelope the payee can get them cashed at his place. If the postal orders are crossed, then it will have to be deposited in a bank account.
17. What are the Features of an Ideal Warehouse?
Ans: The features of an ideal warehouse are as follows:
(i) Safety: The warehouse assumes the responsibility of storing goods safely over an agreed period of time. An ideal warehouse should project the goods from all possible dangers such as heat, cold, humidity evaporation, fire, rain, theft etc.
(ii) Proper location: An ideal warehouse should be situated at a proper location convenient to customers, sellers and other concerned parties.
(iii) Sufficient Space: There should be sufficient space for present as well as future requirements of space for storage.
(iv) Scientific Layout: An ideal warehouse must have scientific layout to facilitate easy supervision and effective control.
(v) Economy: An ideal warehouse must provide the maximum service at the lowest cost i.e., it should be such as to be economical to operate and maintain.
18. What are the essential requirements of an insurable risk?
Ans: An insurable risk must have the following essential requirements:
(i) Homogeneous Exposure Unites: There should a large number of similar units exposed to the same danger. It is necessary for predicting the loss through the law of large numbers that the units be relatively similar. If the units is heterogeneous, it will not be possible to predict the loss.
(ii) Loss should be definite: The loss suffered should be definite and mathematically measurable. In case of life insurance, death of a person is definite. In case of fire and marine insurance the amount of loss should be measurable for calculating claims.
(iii) Accidental Loss: The loss must be accidental. It must not be in the hands of the insured. If the loss is expected then it cannot be insured.
(iv) Loss should be large: The loss should be so large that the insured cannot bear it himself without economic distress. If the loss suffered is small, it is not worth while to insure it.
(v) Unlikely to produce loss to majority: There should not be likelihood that the loss should occur to many units at the same time. If it happens, then it will not be possible for the insurance company to bear such a loss. The probability of loss should be spread over a long period.
19. What are the Advantages of Insurance?
Ans: The following are the advantage of insurance:
(i) Providing Security: There is always a fear of sudden loss. There may be a fire in the factory, storm in the sea or loss of a life. In all these cases it becomes difficult to bear the loss. Insurance provides a cover against any such sudden loss. Insurance gives security to both individuals and businessman. These days insurance covers various social welfare schemes also. There are schemes providing for unemployment, sickness, accident, health and old age insurances. These schemes are helpful for poor people and help in establishing social justice.
(ii) Spreading Risk: The basic principle of insurance is to spread risk aiming a large number of persons to get insurance policies and pay premium to the insurer. Whenever there is a loss it is compensated out of the funds of the insurer. The loss is spread over among a large number of policy holders.
(iii) Source for collecting Funds: In lieu of insurance cover, an insured pays premium to the insurer. Premium is received regularly in instalments. Large funds are collected by way of premium. These funds can be profitably employed in industrial development of a country. These funds are productively used in exploiting natural resources which accelerates the industrial growth of a country. So insurance has become an important source of capital formation.
(iv) Encourages Savings: Insurance does not only protect risks but it provides an investment channel too. The insurance develops a habit of savings money by paying premiums. The amount of policy is paid to the insured or to his nominees after the expiry of the period of policy or at the time of death of the insured whichever is earlier.
(v) Encourage International Trade: International trade involves many risks in transporting goods from one country to another. In the absence of insurance, the traders will always be worried for the safe arrival of goods. Insurance provides protection against all types of risks at sea. It has helped the development of international trade on a large scale.
20. Describe in brief the principles of marine insurance.
Ans: The principles related to marine insurance are discussed below:
(i) Utmost Good faith: The marine insurance contract is based on utmost good faith on the part of both the parties. The burden of this principle is more on the insured than on the insurance company. The insured should give the full information about the subject to be insured. If a party does not act on good faith, the other party may cancel the contract.
(ii) Insurable Interest: Insurable interest means that the insured should have interest in the subject which is to be insured. He should be benefitted by the safe arrival of commodities and he should be prejudiced by the loss or damage of the goods. The insured must have insurable interest at the time of loss or damage, otherwise he will not be able to claim compensation.
(iii) Indemnity: According to this principle the insured will be compensated only to the extent of loss suffered. He will not be allowed to earn profit from the marine insurance. The underwriter provides to compensate the insured and not to replace the cargo or the ship. The money value of the subject matter is decided at the time of taking up the policy. Sometimes the value is calculated at the time of loss also. There is one exception to the principal of indemnity in marine insurance. Some profit margin also allowed to be included in the value of the goods on the assumption that the insured will carn profit when goods reach at their destination.
(iv) Cause Proxima: This is a Latin word which means the nearest or proximate cause. It helps in deciding actual cause of loss when a number of causes have contributed to the loss. The immediate cause of loss should be determined to fix the responsibility of the insurer. The remote cause for loss is not important in determining the liability. If the proximate cause is insured against, the insurer will indemnify the loss.
21. What are the differences between marine and fire insurance?
Ans: The differences between marine and fire insurance are discussed below:
22. Discuss facilities that the post office offers for remitting money from one place to another.
Ans: The post offices offer different methods for remitting money from one place to another. The following are the different methods of remitting money from one place to another.
(i) By Money order.
(ii) By postal order.
(iii) By post Stamps.
(iv) By Insurance.
(i) Money Order: The post offices provide facilities to the society in general to transmit money from one place to another safely. A form is available with the post offices on payment of a small amount. The printed form contains the different columns for the addressee, sender and payee. The form duly filled in with the amount in words as well as in figures is submitted at the post office by the sender. The amount to be remitted and commission charges of the post office are deposited along with the form. A receipt is issued to the sender mentioning the amount deposited and postal charge.
The money order form is sent to the nearest post office of the payee. The amount is handed over to the payee and his signature is obtained as evidence of getting money on the specified place of the money order form. The acknowledgement receipt signed by the payee is sent back to the sender.
This method of remitting money is useful for small amounts only because the commission charged by the post office is very high in compared to some other methods of remitting money through bank etc.
The post offices also provide facilities for remitting money very quickly through telegraphic money order. The method is very useful when money is to be remitted within a short time and quickly.
The post offices also provide facilities for remitting money through ai mail money orders. This method of sending money is quick as compared to ordinary money order but this service is available only in India.
(ii) Postal Order: This is another method of sending money which is commonly used. This method is generally used in sending application to the government when some fees are to be paid as application fee. In this method the sender gets the postal order from the post office after depositing money in the post office. Then necessary particulars are to be filled in and send it to the payee. The postal order may also be crossed.
(iii) Postal Stamps: The small amount money can be remitted through postal stamps. The postal stamps may be sent in envelop. The address can use these stamps for using postal services. The addressee cannot get cash against these stamps. This method is used in getting the postal services by the Govt. offices.
(iv) By Insurance: Another facility provided by the post office in remitting money from one place to another is through insured registered post. The amount can be put in a cloth lined envelop available in the post office. The envelops will have to be sealed with wax on various sides so that nothing should come out without breaking the seal. The postal authority do not verify the contents inside the envelops. A charge is made for registration plus insurance fees on the basis of declared value of the envelope. The postal authority ensures safe delivery of the insured post. In case the envelope is lost on the envelop of the concerned party. This method of transmitting money is most transit the postal authority pays the amount mentioned in the suitable when large sums of money are to be remitted.
23. Write a short note on Joint life Insurance.
Ans: A Policy may be taken up jointly on the lives of two or more persons. On the death of any one person, the Policy is Paid to other surviving Policy holder as the case may be. This type of Policy may be taken up by husband and wife or Partners of a firm. A joint life Policy may be whole life Policy or endowment Policy, and it may also be with or without Profits.
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