The correct answer is: B. Life insurance policies are contracts of assurance, while general insurance policies are contracts of indemnity.
A contract of indemnity is a contract in which one party agrees to reimburse another party for any losses that they may incur as a result of a specific event. A contract of assurance is a contract in which one party agrees to pay a sum of money to another party upon the occurrence of a specific event, regardless of whether or not the insured party suffers any losses.
In the case of life insurance, the insured party pays a premium to the insurer in exchange for the promise that the insurer will pay a death benefit to the insured party’s beneficiaries upon the insured party’s death. This is a contract of assurance, because the insurer is obligated to pay the death benefit regardless of whether or not the insured party suffers any losses.
In the case of general insurance, the insured party pays a premium to the insurer in exchange for the promise that the insurer will pay a sum of money to the insured party if the insured party suffers a loss as a result of a specific event, such as a fire, theft, or accident. This is a contract of indemnity, because the insurer is only obligated to pay the insured party if the insured party suffers a loss.
C is incorrect because the risk event protected against in general insurance is not certain. For example, the risk of a fire occurring is not certain.
D is incorrect because the certainty of risk event in case of general insurance does not increase with time. The risk of a fire occurring, for example, is not more certain to occur tomorrow than it is today.