General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
Which phrase best captures the core promise an insurer makes under an insurance contract?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The insurer's essential promise is to indemnify — to restore the insured financially to approximately the pre-loss position after a covered loss. Indemnification is what makes the contract insurance rather than a savings or investment product. The insurer does not guarantee that no loss will occur; it promises to make the insured financially whole when a covered loss happens, subject to the policy's limits and conditions.
Why the other options are wrong
- B) No insurer can guarantee a loss will not occur; insurance manages the financial consequences of a loss, it does not prevent the loss itself.
- C) Premiums are not refunded with interest at maturity; the consideration is the insurer's promise to pay covered claims, not an investment return.
- D) Dividends are paid only on participating policies and are never guaranteed in every policy year.
Memory hook
The insurer's promise is 'make whole,' not 'make safe.' Indemnify = restore the finances, never erase the risk.