The correct answer is: A. Rebate in premium is a discount allowed by the insurer in festival seasons to boost business
A rebate is a discount allowed by the insurer on the premium payable by the insured. It is usually given in the form of a percentage of the premium, and is often offered as an incentive to purchase a policy or to renew a policy. Rebates can be offered for a variety of reasons, such as to boost business during slow periods, to reward loyal customers, or to encourage customers to switch to a different insurer.
In India, rebates are regulated by the Insurance Regulatory and Development Authority of India (IRDAI). The IRDAI has set limits on the amount of rebate that can be offered, and has also specified the conditions under which rebates can be offered.
Rebates are not the same as discounts. A discount is a reduction in the price of a product or service, while a rebate is a refund of a portion of the price that has already been paid. Discounts are usually offered by retailers, while rebates are usually offered by manufacturers or service providers.
Rebates can be a valuable way to save money on insurance premiums. However, it is important to understand the terms and conditions of any rebate offer before you purchase a policy. You should also make sure that you are getting a good deal, and that the rebate is not simply a way for the insurer to make more money.
Here is a brief explanation of each option:
- Option A: Rebate in premium is a discount allowed by the insurer in festival seasons to boost business. This is the correct answer. Rebates are often offered by insurers during slow periods, such as the festival season, to boost business.
- Option B: Rebate is an allowed deduction in large sums assured and low frequency mode of payment. This is not correct. There is no such rule that rebates are only allowed for large sums assured or low frequency mode of payment.
- Option C: Rebate is illegal as it is a kind of bribery. This is not correct. Rebates are not illegal. However, they are regulated by the IRDAI, and insurers must comply with the IRDAI’s rules when offering rebates.
- Option D: All modes of payment are treated as equal for rebate purposes by the insurer. This is not correct. Insurers may offer different rebates for different modes of payment. For example, they may offer a higher rebate for annual payments than for monthly payments.