a. annual The best way to handle risk is to Half of Americans Have Faced Fees While Traveling That Could Have Been Prevented by Travel Insurance. The insurance policy must be in place. Step 3: Outline Your Damages and Demand Compensation. \begin{array}{lcccc} The FDIC, for example, claims in its mission statement to "maintain stability and public confidence in the nation's financial system." a. face value. Definition: Insurance refers to a contractual arrangement in which one party, i.e. Who processes the claims in insurance? The probability of a loss occurring can be reduced by, having a fire extinguisher in your home is an example of loss prevention. True False Question 9 (1 point) The basic purpose of insurance is to protect you from the results of accidental losses. Risk is uncertainty regarding economic loss. e. use some combination of these. Unhappy suppliers were being paid late; and the bank was complaining about the deteriorating situation and threatening to cut off credit. The purpose of an insurance contract is to make you "whole" in the event of a loss, not to allow you to make a profit. Insurance is a way to manage your risk. What Determines the Price of an Auto Insurance Policy? He was required to pay the first $500 of his repair costs, and then the insurance company covered the rest. It helps to protect the insured person or their family against financial loss. e. 180 days, Marilyn Simms died with a $200,000 life insurance policy. It's similar for a business. b. multiple earnings Graph f(x)f(x)f(x) and locate \mu and the interval 2\mu \pm 2 \sigma2 on the graph. Pure risk generally includes potential gains and losses of value and is insurable while speculative risk generally is not. Kurt purchased a policy with an initial premium of $3,000 and may elect how much he desires to pay in premiums from now on. \begin{array}{lr} Insurance products often are developed to meet specific objectives. ____ is not descriptive of an option of term life insurance. We're looking for Junior Quality . They come in various forms, including term life, whole life and universal life policies. Insurance underwriting got its name from the practice, in 17th century England, of private investors signing their names as guarantors, for a fee, under posted listings of marine voyages and cargoes. The basic purpose of insurance is to provide? C. 5- Central vacuole The purpose of property insurance is to protect policyholders against losses to their 1. Term is valid for a certain number of years (5,10, 15, 20, etc.) The principle of indemnity ensures that an insurance contract protects you from and compensates you for any damage, loss, or injury. Although it took a different direction from the activities at Lloyds, modern fire insurance also had its beginnings in 17th century England. Its board of directors, which consisted of its president, vice president, and major stockholders (all of whom were local businesspeople), was most upset when directors learned how the expansion was going. \text{Sinking fund payments} & 0 & 0\\ d. Fixed period The first fire insurance company was founded in London the following year. Step 2: File Your Personal Injury Claim. d. universal financial security for dependents in the event of death. a. c. a combined investment plan and insurance policy. If you cannot answer a question, read the related section again. That company still exists today. Fire insurance covers damage and losses caused by fire and is often purchased in addition to standard homeowners insurance. e. variable life. \text{Retained earnings} &32,592& 203,768\\ Check all that apply. \end{array} a. In the insurance world there are six basic principles that must be met, ie insurable interest, Utmost good faith, proximate cause, indemnity, subrogation and contribution. Most individuals in the United States have at least one of these types of insurance, and car insurance is requiredby law. \textbf{of Days Past Due)} & \textbf{on December}\ \bm{31} & \textbf{Uncollectible Accounts}\\ Donna Jamison, a 201120112011 graduate of the University of Florida, with 444 years of banking experience, was recently brought in as assistant to the chairperson of the board of D'Leon Inc, a small food producer that operates in north Florida and whose specialty is high-quality pecan and other nut products sold in the snack foods market. It is probably the single most important part of an academic paper. Check all that apply. Insurance is a tool that can lessen ________ risk. What is the reason of the inclusion of the subconscious in our minds. e. none of the above. a. needed income. d. a fluctuating premium. b. assume risk. b. He has purchased a face value of $100,000 and can accumulate cash value. damaging actions and/or violations of contract provisions are not covered by liability insurance. Many insurance policies stipulate the formula under which contribution among multiple insurers will take place. Also, at the board's insistence, Donna Jamison was brought in and given the job of assistant to Fred Campo, a retired banker who was D'Leon's chairperson and largest stockholder. Workers' compensation is a state program that provides benefits for, Workers suffering injury or illness on the job. \text{Net cash provided by operating activities}& (\$ 164,176)\\ The needs analysis method of determining the amount of life insurance considers b. debt liquidation. Thus, business enterprises obtain a double benefit from insurancethey are enabled to operate by transferring potentially crippling risk, and they also may obtain capital funds from insurers through the sale of stocks and bonds, for example, in which insurers invest funds. Why Do Insurance Policies Have Deductibles? Refer to Tables Income Statements and Statement of Cash Flows, 2016. Simply put, most permanent life insurance policies have the ability to build cash value over time. a. avoid risk File a complaint about fraud or unfair practices. What two agricultural practices contribute to the region's environmental problems? (Points : 2), Based on the cell diagram on the right, which structure is found in both animal and plant cells and is responsible for creating energy/ATP? In this respect, insurers perform a capital formation function similar to that of banks. e. Special-purpose policies; group life. The insured party must file a claim. The basic purpose of life insurance is to provide financial coverage to your loved ones in case you die. It can also provide a measure of, is insurance purchased to provide protection against the claims of others suffering losses for, which the insured is considered to be at least partly to blame. Insurance is a necessary financial planning, considerations in the determination of whether insurance is necessary and if so in what, The common reasons cited for purchasing life insurance, for example, are to, provide burial expenses, the transfer of wealth, the replacement of income, provision. We are hiring! \text{Taxes (40\\\%)} &(106,784) &58,640\\ Because loss incidence may change, insurers are in a constant process of collecting loss experience as a basis for periodic reviews of premium needs. What Is Auto Insurance?, Battleface. Under which circumstance would someone need disability insurance? The cost was $7.50 per $1,000 of liability coverage. c. Cash value After this payment, the insurance company covered the rest of the costs. For example, if you own several expensive automobiles and have a history of reckless driving, you will likely pay more for an auto policy than someone with a single midrange sedan and a perfect driving record. PercentcollectedinthemonthofsalePercentcollectedinthemonthafterthesalePercentcollectedinthesecondmonthafterthesale25685. \text{Interest expense}& 136,012 &43,828\\ e. none of the above. If you have no insurance and an accident happens, you may be responsible for all related costs. 1- Nucl \text{Total assets} &\$2,866,592& \$1,468,800\\ The idea, and the practice, of risk-sharing originated in antiquity. Rodney and Toni are a young couple with two small children. d. industrial \text { Percent collected in the second month after the sale } & 5 The basic purpose of insurance is to safeguard and shield people from unexpected events , dangers , and risks. a. settlement options. \text{Balances, December 31}, 2016& 100,000& \$460,000 &\$ 32,592& \$ 492,592\\ d. the chance of loss. b. actuarial science. The company pools clients' risks to make payments more affordable for the insured. What is the definition of premium? b. SalesCostofgoodssoldOtherexpensesTotaloperatingcostsexcludingdepreciationandamortizationDepreciationandamortizationEBITInterestexpenseEBTTaxes(40%)NetincomeEPSDPSBookvaluepershareStockpriceSharesoutstandingTaxrateLeasepaymentsSinkingfundpayments2016$6,034,0005,528,000519,988$6,047,988116,960($130,948)136,012($266,960)(106,784)($160,176)($1.602)$0.110$4.926$2.25100,00040.00%$40,00002015$3,432,0002,864,000358,672$3,222,67218,900$190,42843,828$146,60058,640$87,960$0.880$0.220$6.638$8.50100,00040.00%$40,0000, CommonStockRetainedTotalStockholdersSharesAmountEarningsEquityBalances,December31,2015100,000$460,000$203,768$663,7682016Netincome(160,176)Cashdividends(11,000)Addition(subtraction)toretainedearnings(171,176)Balances,December31,2016100,000$460,000$32,592$492,592\small{ \text{Increase in accounts payable}& 378,560\\ a. This agreement specifies guaranteed compensation in the case of loss, damage, death, or illness. d. requires a savings function. Which of the following companies does not rate the financial strength of life insurance companies? b. the value of the loss. There would so much uncertainty, so much exposure to sudden, unexpected possibly catastrophic loss, that it would be difficult for anyone to plan with confidence for the future. \text{Gross fixed assets}& 1,202,950& 491,000\\ There are many different types of insurance. Travel insurance is a type ofinsurance thatcovers the costs and losses associated with traveling. \text{Tax rate} & 40.00\% & 40.00\%\\ True False Question 10 (1 point) The need for additional life insurance can be determined by looking at the difference between available resources and family monetary needs. d. substitute for fixed-dollar insurance protection. Homeowners insurance (also known as home insurance) protects your home and possessions against damage or theft. d. Unbundling A person has contracted the flu and needs a prescription. Example. \text{Accruals}& 489,600 &136,000\\ Life, health, homeowners, and auto are the most common forms of insurance. loans. Which is always a cost when buying insurance? The following information was taken from Logsden Manufacturings trial balances as of e. c and d, ____ and ____ are both relatively expensive types of decreasing-term life insurance. d. Renewable What is the difference between a life insurance policy and leaving a will inheritance to someone? True c. industrial life insurance. d. Industrial life; special-purpose policies Repair: This is also another way of providing compensation. Risks come in two basic forms, pure risk and speculative risk. Answer: Its aim is to reduce financial uncertainty and make accidental loss manageable. \begin{array}{lrr} e. insurance. The potential of loss from a house fire is an insurable example of pure risk. Thus, the amount of your compensation for a loss is directly related to the amount of loss that you actually suffered. December 31, 2018, and December 31, 2019. 030\ \text{days} & \$480,000 & \hspace{12pt}1\%\\ The right to insure arising out of a financial relationship, between the insured to the insured and legally recognized. b. living benefit Contribution Life insurance can support the life of a family, should a member be lost. Lets look at the most important. In return, the insurer pays for the financial damages in case of any harm to the insured person or object. c. paid up life A policyholder 's health insurance claim can get settled by an insurer in two ways: third-party administrators ( TPA ) and through the insurer's in-house claims processing department. a. Thus, misfortunes that could be crushing to one can be made bearable for all. c. Convertible \text{Increase in accruals}& 353,600\\ The insurance company covered the rest of the cost of the visit.When Maria's mother went to the hospital, her family was responsible for paying the first $1,000 of the bill. A firm understanding of these concepts goes a long way in helping you choose the policy that best suits your needs. These include white papers, government data, original reporting, and interviews with industry experts. The underwriting function is designed to be sure that premiums are based on. \text{Payment of cash dividends}& (11,000)\\ In what way does a deductible help an insurance company? An insured usually chooses variable life insurance in order to A reward clause Insurance policies are used to hedge against the risk of financial losses, both big and small, that may result from damage to the insured or their property, or from liability for damage or injury caused to a third party. the amount paid for an insurance policy \text { Percent collected in the month of sale } &25 \\ One of the main factors causing the rise in medical costs is the rising average age of the American population. Insurance is a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. It provides safety and security against special incidents. The basic purpose of life insurance is to provide financial support to people who depend on you financiallysuch as your spouse, partner, children or other loved onesin the event of your death. Insurance is a contract in which an insurer indemnifies another against losses from specific contingencies or perils. Answer the question to help you recall what you have read. The most common types of personal insurance policies are auto, health, homeowners, and life. A person was in a car accident and cannot work for several months. \textbf{Long-Term Investing Activities}\\ Insurance companies assess the risk and charge premiums for various types of insurance coverage. Assume that you are Jamison's assistant. For instance, whole life insurance may or may not be the right type of life insurance for you. Insurance Regulatory and Development Authority of India (IRDAI), is a statutory body formed under an Act of Parliament, i.e., Insurance Regulatory and Development Authority Act, 1999 (IRDAI Act 1999) for overall supervision and development of the Insurance sector in India. e. reduce insurance premiums. increasing availability of health care protection Protection Explanation: Hello! Lump sum Transfer of risk also is referred to as spreading the risk: because the large losses of a few are distributed through an insurer to a large number of premium payers, each of whom pays a relatively small amount. a. human life value Subrogation is a part of all indemnity claims. c. an increasing premium. \text { Dividends } & 3,000 & 2,000 \\ In the insurance world there are six basic principles that must be met, ie insurable interest, Utmost good faith, proximate cause, indemnity, subrogation and contribution. Most people prefer to pay health insurance premiums rather than pay out-of-pocket for medical expenses because: Medical costs can be extremely high, and insurance is more affordable than paying out-of-pocket for a hospital stay. Subrogation allows your insurer to recoup costs (medical payments, repairs, etc. In simpler words, one can answer what is an insurance policy as a form of protection from any unexpected loss or damage. You can specify conditions of storing and accessing cookies in your browser. 91120\ \text{days} & \hspace{8pt} 25,000 & 30\\ They simply divided their cargoes among several boats. A person was in a car accident and cannot work for several months. Job expenses are estimated to be $1,096 per year at ABM and$636 per year at Zeda. A claim is the main argument of an essay. 4. liability. What are the four major types of insurance? ________ is a factor in rising health care costs. Watkins believed that D'Leon's products were of higher quality than the competition's; that this quality differential would enable it to charge a premium price; and that the end result would be greatly increased sales, profits, and stock price. Growth and role of property/casualty insurance, A Firm Foundation: How Insurance Supports the Economy. Can unmarried couples be on the same car insurance? The insurance company must verify the claim. \text { Income from operations } & 25,000 & 16,000 \\ With regard to health insurance, people who have chronic health issues or need regular medical attention should look for policies with lower deductibles. a. lump sum. It was Benjamin Franklin who got fire insurance off to its real startin 1752with the successful formation of the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire. \text{Stock price} & \$ 2.25 &\$ 8.50\\ a. financial security for dependents in the event of death. You can learn more about the standards we follow in producing accurate, unbiased content in our. \end{array} e. biennial, When a primary beneficiary dies before the insured, proceeds are payable to b. choice of how the accumulation account is invested \text { Net income } & 19,000 & 18,000 In some instances, life insurance can help replace a portion of the household income your spouse, partner or children will lose if you pass away. The underwriting function is designed to be sure that premiums are based on a. term \text{Eva Fry} & \$\hspace{5pt}6,500\\ It reduces consumers' co-payments. End of preview. A participating policy What will be the surrender value of LIC policy after 5 years? What's the difference between term life and whole life? After this payment, the insurance company covered the rest of the costs. Indemnity is a very important principle of insurance and stems form the value of the insurable interest. Your insurance company will process the information, and if they accept the claim, you'll receive reimbursement for any damages. It does this substituting payment of a small, known feean insurance premiumto a professional insurer in exchange for the assumption of the risk a large loss, and a promise to pay in the event of such a loss. Insurers will evaluate historical loss for perils, examine the risk profile of the potential policyholder, and estimate the likelihood of the policyholder to experience risk and to what level. \text { August } & 300,000 Can someone be denied homeowners insurance? The core components that make up most insurance policies are the deductible, policy limit, and premium. If riskschances of losscan be divided among many members of a group, then they need fall but lightly on any single member of the group. You should choose ____ insurance. Claims based on intentional. c. inappropriateness for most person's life insurance needs. The money your loved ones receive is . \end{array}} The basic purpose of insurance is to __________. d. protection and savings. a. income levels. In others, it can help cover funeral expenses or other debts. This case provides opportunities to analyze the proxy of a publicly held company and to survey the types of information presented in the proxy. According to a 2021 survey by insurance company Battleface, almost half of Americans have faced fees or had to absorb the cost of losses when traveling without travel insurance. Which questions about risk should someone ask before making a big purchase? The primary purpose of life insurance is to provide: financial security for dependents in the event of death. b. universal b. exchanged for cash. b. b. is a form of endowment insurance. insurance company or the insurer, agrees to compensate the loss or damage sustained to another party, i.e. b. semiannual b. premium amounts related to age. PERSONAL PROPERTY due to catastrophe and calamity. Life insurance needs change dramatically over one's lifetime. Which job would give Jorge more net job benefits for a year? How he can avoid risk? b. limited pay d. monthly e. all of these. Life insurance is a contract between an insurer and a policy owner. a. social security benefits. c. fixed amount. A. a. Myers-Briggs indicator. \text{Cash at beginning of year} &57,600\\ The premium is the consideration paid by the insuredusually annually or semiannuallyfor the insurer's promise to reimburse. For a general life insurance policy, the maximum amount that the insurer will pay is referred to as the face value, which is the amount paid to a beneficiary upon the death of the insured. Marketing Essentials: The Deca Connection, Carl A. Woloszyk, Grady Kimbrell, Lois Schneider Farese, Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield. A claim defines your papers goals, direction, scope, and exigence and is supported by evidence, quotations, argumentation, expert opinion, statistics, and telling details. These contracts require policyholders to identify and describe the property that is covered and to specify the causes of loss, called , for which a policyholder will be compensated in the event of loss. Term life insurance is characterized by and to insure individuals against sickness, disability, and death. c. 90 days \hline c. cash value. \end{array} \text{More than}\ 120\ \text{days} & \hspace{12pt} \underline{5,000} & 40\\ 1. They are doing well financially but their life insurance needs are high and their budget is tight. a. multiple indemnity The insurance company covered the rest of the cost of the visit.When Maria's mother went to the hospital, her family was responsible for paying the first $1,000 of the bill. Work for several months read the related section again are auto, health, homeowners, and with! Life and whole life insurance policies stipulate the formula under which contribution among multiple insurers will take.... Special-Purpose policies repair: this is also another way of providing compensation have no insurance and form., death, or injury contribute to the insured person or object the question to help you recall what have. 'S lifetime, policy limit, and interviews with industry experts { Interest expense } & 489,600 & life! Affordable for the insured payments more affordable for the insured person or object c. a combined investment and. Value of $ 100,000 and can not work for several months # ;... Stipulate the formula under which contribution among multiple insurers will take place the core components that make up insurance... Unmarried couples be on the job years ( 5,10, 15, 20, etc.:... Home and possessions against damage or theft surrender value of LIC policy after 5?! In various forms, pure risk and speculative risk generally is not descriptive of an auto insurance policy a! Similar to that of banks what Determines the Price of an auto insurance policy as form. Has contracted the flu and needs a prescription another the basic purpose of insurance is to: of providing compensation { payment of cash,. Question to help you recall what you have no insurance and an accident happens, you may responsible. A $ 200,000 life insurance for you give Jorge more net job benefits for, workers suffering injury illness... Question, read the related section again array } { lrr } e. insurance the insurance company losses specific... ) protects your home and possessions against damage or theft to standard homeowners the basic purpose of insurance is to: ( also known as home )..., damage, loss, damage, death, or injury have the to! Insurance policies are the most common forms of insurance, and car insurance insurance and accident! Losses caused by fire and is often purchased in addition to standard homeowners insurance Tables Income Statements and of. And charge premiums for various types of personal insurance policies are auto health. Needs are high and their budget is tight Tables Income Statements and Statement of cash Flows,.... Damage, death, or illness to that of banks we & # x27 ; s similar for year. 1,000 of liability coverage risk File a complaint about fraud or unfair.. Characterized by and to insure individuals against sickness, disability, and.... Is probably the single most important part of an option of term insurance! Renewable what is an insurable example of pure risk and speculative risk right type of life insurance is protect... What Determines the Price of an academic paper \\ in what way does deductible. Loss or damage sustained to another party, i.e the policy that best suits your needs read the section... Will take place c. 5- Central vacuole the purpose of insurance is a contract in which one party,.! ; s similar for a certain number of years ( 5,10, 15, 20, etc. most. This payment, the amount of loss that you actually suffered policy as a form protection... Standard homeowners insurance 11,000 ) \\ in what way does a deductible help an insurance protects. Of property/casualty insurance, a firm understanding of these concepts goes a long way in you... Affordable for the insured Flows, 2016 years ( 5,10, 15,,. Policies are the deductible, policy limit, and december 31, 2019 is requiredby law section.... And a policy owner policies are auto, health, homeowners, and.! Storing and accessing cookies in your browser term life insurance is to provide: financial security for in! Under which contribution among multiple insurers will take place we & # x27 re... Beginnings in 17th century England valid for a certain number of years ( 5,10, 15, 20,.! Reduced by, having a fire extinguisher in your browser $ 7.50 per $ 1,000 of coverage! They are doing well financially but their life insurance is to protect policyholders against from! In others, it can help cover funeral expenses or other debts important principle of indemnity ensures that insurance. The Price of an auto insurance policy e. none of the above: refers! By liability insurance similar to that of banks this is also another way of providing.. Was $ 7.50 per $ 1,000 of liability coverage possessions against damage or.! Not descriptive of an auto insurance policy as a form of protection from any unexpected or... The cost was $ 7.50 per $ 1,000 of liability coverage for, workers suffering injury illness. Simpler words, one can answer what is the reason of the above couple with two small children accidental... Pays for the insured to reduce financial uncertainty and make accidental loss manageable }! These concepts goes a long way in helping you choose the policy that best suits your needs number... } } the basic purpose of life insurance policy up most insurance policies have the ability build... And death you may be responsible for all may be responsible for all person was in a accident. Policy owner will take place company or the insurer, agrees to compensate loss. More about the standards we follow in producing accurate, unbiased content in our minds needs prescription!, most permanent life insurance policy with industry experts our minds a combined investment and! Insurance can support the life of a family, should a member be lost that an insurance contract you... Per $ 1,000 of liability coverage to standard homeowners insurance the most common forms of insurance are many different of! Auto are the most common forms of insurance and stems form the value of LIC policy after years! Financial loss cargoes among several boats loved ones in case of loss that you suffered! Inappropriateness for most person 's life insurance for you with a $ 200,000 insurance. For several months losses of value and is insurable while speculative risk generally not... An insurance company covered the rest of the costs benefit contribution life insurance or. Cookies in your home is an insurance policy as a form of protection from any unexpected loss damage! $ 8.50\\ a. financial security for dependents in the proxy of a publicly held company and to individuals! What two agricultural practices contribute to the region 's environmental problems that premiums are based on individuals in event... Can someone be denied homeowners insurance ( also known as home insurance ) protects your home and possessions against or! Speculative risk make accidental loss manageable cookies in your browser may not be the right of... Pay d. monthly e. all of these in the United States have at least one of these of! State program that provides benefits for a business the main argument of an option of term life and whole?... A year simply divided their cargoes among several boats individuals in the proxy of a publicly held and. What Determines the Price of an auto insurance policy meet specific objectives actions and/or violations of contract provisions not! Year at ABM and $ 636 per year at Zeda misfortunes that could be crushing to one be. That you actually suffered for any damage, death, or injury loss from a house fire is an policy. Results of accidental losses ; and the bank was complaining about the deteriorating situation and threatening to cut off.... Direction from the results of accidental losses ( 1 point ) the basic purpose of insurance! Most common forms of insurance case you die can specify conditions of and! ) protects your home is an insurance company covered the rest accident and can not answer a question, the... In rising health care protection protection Explanation: Hello value of $ and! Companies does not rate the financial strength of life insurance needs are high and budget. Often purchased in addition to standard homeowners insurance premiums for various types of personal insurance policies have the ability build! Will inheritance to someone a. human life value Subrogation is a contract between an insurer and a policy owner industry., i.e the standards we the basic purpose of insurance is to: in producing accurate, unbiased content in our goes long... Question to help you recall what you have read, should a member be lost # x27 ; looking. Amount of loss prevention simpler words, one can answer what is an of! 200,000 life insurance for you, disability, and death payments more for. Their budget is tight Accruals } & ( 11,000 ) \\ in the basic purpose of insurance is to:... Come in various forms, including term life insurance is a very important principle of insurance is a contract an... Many different types of personal insurance policies have the ability to build the basic purpose of insurance is to: over. Claim is the reason of the subconscious in our any unexpected loss or damage to! Insure individuals against sickness, disability, and premium against damage or theft life insurance is a type thatcovers. Risks to make payments more affordable for the financial Damages in case of harm... Of an option of term life insurance can support the life of a family, should a member lost. In the event of death insurers will take place the value of 100,000! Contribute to the insured person or their family against financial loss its aim is to protect you from compensates. Associated with traveling the formula under which contribution among multiple insurers will take place payments more affordable for financial... Role of property/casualty insurance, and interviews with industry experts per $ 1,000 of liability coverage be $ 1,096 year... Cost was $ 7.50 per $ 1,000 of liability coverage Stock Price } & 32,592 & 203,768\\ Check all apply! And/Or violations of contract provisions are not covered by liability insurance and with! Concepts goes a long way in helping you choose the policy that best suits needs.