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JAMB Commerce 2006 Question 6

Question 6

Insurance

Payment made to the insured by the insurer outside its legal obligation is

  1. A.premium paid
  2. B.ex gratia payment
  3. C.surrender value
  4. D.sum assured.
Show the answer and explanation

Answer: B (ex gratia payment)

Explanation

An ex gratia payment is made as a favour or goodwill gesture, even though the insurer is not legally bound to pay.