the basic purpose of insurance is to:

c. whole life insurance. e. universal, Which of the following is not characteristic of universal life insurance? Registered representatives can fulfill Continuing Education requirements, view their industry CRD record and perform other compliance tasks. Most people have some kind of insurance: for their car, their house, or even their life. December 31, 2018, and December 31, 2019. Claims based on intentional. \text{Sales} &\$6,034,000& \$3,432,000\\ Put simply, insurance is a contract, represented by a policy, in which a policyholder receives financial protection or reimbursement against losses from an insurance company. Many airline passengers purchase a special life insurance policy frequently sold at the airport. What are the four major types of insurance? Definition: Insurance refers to a contractual arrangement in which one party, i.e. This group of underwriters, who gathered initially at a London coffee house owned by one Edward Lloyd, formed themselves into the association which came to be known, after the coffee house, as Lloyds of London. insurance company or the insurer, agrees to compensate the loss or damage sustained to another party, i.e. Health insurance costs have been increasing at a rate greater than the CPI. D'Leon's president, Al Watkins, decided in 201520152015 to undertake a major expansion and to "go national" in competition with Frito-Lay, Eagle, and other major snack foods companies. protection for designated beneficiaries upon the death of a covered individual, can provide protection to homeowners, renters, and the owners of motor, vehicles of various types. 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. &\textbf{Shares} &\textbf{Amount}& \textbf{Earnings} &\textbf{Equity}\\ The insurance company must verify the claim. 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. The company doubled its plant capacity, opened new sales offices outside its home territory, and launched an expensive advertising campaign. Simply put, most permanent life insurance policies have the ability to build cash value over time. 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. c. Introversion. \text{Depreciation and amortization} &116,960\\ Provide safety and security:- Insurance provides financial support and reduces uncertainties in business and human life. Insurance underwriting is best described as: The process used by insurers to decide who can be insured and to determine applicable rates that will be charged for premiums 4. By the dictionary definition, insurance is the arrangement you make with a company or a state. The basic purpose of insurance is to protect you from losses From the standpoint of the person buying insurance, the central purpose of insurance should be: to transfer risks of serious losses Which of the following forms of life insurance requires the lowest premium per dollar of initial death benefits? \text{Sinking fund payments} & 0 & 0\\ d. change financial risks and reduce losses. 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. Underwriting discussion For more on the insurance industrys contributions to society and the economy see A Firm Foundation: How Insurance Supports the Economy. True False Question 3 (1 point) Risk is uncertainty regarding economic loss. Limited payment ____ is a common provision in many term policies. As an additional benefit of to society, insurers themselves, the trustees of policyholder and stockholder funds, become major investors and suppliers of capital to the economy. In simpler words, one can answer what is an insurance policy as a form of protection from any unexpected loss or damage. AssetsCashAccountsreceivableInventoriesTotalcurrentassetsGrossfixedassetsLessaccumulateddepreciationNetfixedassetsTotalassetsLiabilitiesandEquityAccountspayableAccrualsNotespayableTotalcurrentliabilitiesLong-termdebtCommonstock(100,000shares)RetainedearningsTotalequityTotalliabilitiesandequity2016$7,282632,1601,287,360$1,926,8021,202,950263,160$939,790$2,866,592$524,160489,600636,808$1,650,568723,432460,00032,592$492,592$2,866,5922015$57,600351,200715,200$1,124,000491,000146,200$344,800$1,468,800$145,600136,000200,000$481,600323,432460,000203,768$663,768$1,468,800. d. special purpose insurance. In determining available resources that would be available after death, you would generally not consider 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. b. semiannual 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. b. living benefit REAL PROPERTY and 2. The insurance company reviews the claim for its validity and then pays out to the insured or requesting party (on behalf of the insured) once approved. Report a concern about FINRA at 888-700-0028, Securities Industry Essentials Exam (SIE), Financial Industry Networking Directory (FIND), National Association of Insurance Commissions (NAIC) Consumer Information, Understanding Structured Notes With Principal Protection, Are You Staying Cyber Safe? c. quarterly Julia Kagan is a financial/consumer journalist and former senior editor, personal finance, of Investopedia. e. none of the above. We're looking for Junior Quality . Group health insurance premiums are usually lower than individual health insurance premiums. Actuarial data is used to measure: Write out the equation for the target volume (in units) profit equation if the income tax rate is t. Which of the following is the best term or phrase for a characteristic pattern of behavior or a disposition to feel and act? Many types of life insurance are available. The right to insure arising out of a financial relationship, between the insured to the insured and legally recognized. b. limited pay d. 120 days e. none of the above, With traditional whole life policies sold by an agent, sales commissions and marketing expenses account for at least ___ % of the first year's premium and at least ___% of total premiums paid over the life of the policy. \text{Net cash used in investing activities} &(\$ 711,950)\\ Risk. a. social security benefits. e. needs analysis. \text{Additions to property, plant, and equipment}& (\$ 711,950)\\ e. biennial, When a primary beneficiary dies before the insured, proceeds are payable to 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. d. Unbundling 12 Likes, 0 Comments - Info Lowongan Kerja (@lokermalangsekitar) on Instagram: "Akun yang di tag : @24Slides Hello! Its also known as no-fault insurance.. Viewed as a form of mutual aid, risk-sharing can be seen not only as sound business practice, but as enlightened social behavior rooted in accepted principles of ethics. The primary purpose of life insurance is to provide In return, the insurer pays for the financial damages in case of any harm to the insured person or object. It increases consumers' insurance premiums. Insurance is the required (by lenders) safety net that lets entrepreneurs explore opportunity. e. reduce insurance premiums. e. Disclaimer, Which type of settlement option pays the beneficiary over a specified time frame? \text { Percent collected in the month after the sale } & \quad 68 \\ What percentage of your income should you spend on life insurance? Technically, the basic function of property/ casualty insurance is the transfer of risk. Insurance companies assess the risk and charge premiums for various types of insurance coverage. \hline Pure risk generally includes potential gains and losses of value and is insurable while speculative risk generally is not. 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. b. interest only. Course Hero is not sponsored or endorsed by any college or university. a. 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. \text { Retained earnings } & 47,000 & 16,000 \\ Madan Bahsin concludes in her research paper that examined the fraud at Satyam that the scandal brought to light the importance of ethics and its relevance to corporate culture. Explain what you believe Bahsin meant by linking the ethical reasoning methods discussed in the text to corporate governance, using the Satyam fraud to illustrate your points. , eus LESSON 1: BASIC PRINCIPLES OF LIFE AND HEALTH INSURANCE and THE INSURANCE INDUSTRY 1.1 The Role of Insurance The function of insurance is to safeguard against financial loss by having the "losses of the few" paid by "contributions of the many" that are exposed to the same risk. The company was also known as Hand in Hand, after its firemark, a symbol that appeared originally on houses that were insured by the Contributionship. \text{EBT} &(\$ 266,960) &\$ 146,600\\ Our society could hardly function without insurance. A person was in a car accident and cannot work for several months. Personal injury protection (PIP) is a feature of auto insurance that covers medical expenses related to a car accident. \textbf{Operating Activities}\\ In what circumstance would a property insurance claim be rejected? Today, home owners, car owners, businesses and institutions have available to them a wide range of insurance products, many of which have become a necessity for the functioning of a free-enterprise economy. a. needed income. It is useful protection for those traveling domestically or abroad. 8 Tips for Securing Your Financial Accounts. In what circumstance would a property insurance claim be rejected? 1. \text{Increase in accounts receivable}& (280,960)\\ Subrogation is a part of all indemnity claims. Three components of any type of insurance are crucial: premium, policy limit, and deductible. 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 most valuable single technique in determining how much life insurance is needed is: Underwriting helps protect life insurance companies from which of the following? \text { Income from operations } & 25,000 & 16,000 \\ 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. Roland has purchased a new tablet. It helps to protect the insured person or their family against financial loss. 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. The policy limit is the maximum amount that an insurer will pay under a policy for a covered loss. What is the definition of premium? d. the chance of loss. Increasing the deductible is likely to lower the premium on a comprehensive major medical policy. Or to help with big, long-term expenses, like your kids' education. e. all of the above. a. Repair: This is also another way of providing compensation. \text{Increase in accruals}& 353,600\\ a. limited pay b. primarily sold to college students. If you have no insurance and an accident happens, you may be responsible for all related costs. If life insurance is convertible, the policy can be OASDHI, sometimes called social security, actually refers to the following: Old-age, Survivor's, Disability, and Health Insurance, Percentcollectedinthemonthafterthesale, Percentcollectedinthesecondmonthafterthesale, Marketing Essentials: The Deca Connection, Carl A. Woloszyk, Grady Kimbrell, Lois Schneider Farese, Fundamentals of Financial Management, Concise Edition. What Determines the Price of an Auto Insurance Policy? 6190\ \text{days} & \hspace{8pt} 40,000 & 20\\ e. insurance. Most importantly, it would be difficult to obtain credit or financing since few lenders or investors would be willing to risk funds without a guarantee of safety for their investments. 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. They simply divided their cargoes among several boats. \text { Percent collected in the month of sale } &25 \\ a. continuous premium Depending on the type of life insurance policy and how it is used, permanent life insurance can be considered a financial asset because of its ability to build cash value or be converted into cash. Most people prefer to pay health insurance premiums rather than pay out-of-pocket for medical expenses because. What is the purpose of a mortgage calculator? Who processes the claims in insurance? Why Do Insurance Policies Have Deductibles? ____ can be both an advantage and a disadvantage of universal life insurance. The insurance company pays you or someone you choose if something bad happens to you. Auto insurance is purchased by vehicle owners to mitigate costs associated with getting into an auto accident. \text{Jose Reis} & \underline{ \hspace{10pt}3,500}\\ The premium is determined by the insurer based on your or your businesssrisk profile, which may include creditworthiness. Answer: Its aim is to reduce financial uncertainty and make accidental loss manageable. \text{Cash at beginning of year} &57,600\\ c. try to prevent losses. In the homeowner example, if the owner bought two $250,000 policies on his home from different companies, and a fire occurred that was covered under both policies, the owner files a claim with one company. People are less worried when they know they have protection from risk. In what circumstance would a property insurance claim be rejected? File a complaint about fraud or unfair practices. It's similar for a business. nie chce mi sie tego robic batman lidia gra w, Case Study: Personal Financial Planning 1, Fundamentals of Financial Management, Concise Edition. e. Trait. e. 180 days, Marilyn Simms died with a $200,000 life insurance policy. and to insure individuals against sickness, disability, and death. b. protection from creditors and lawsuits. d. universal. \textbf{Liabilities and Equity}\\ Which questions about risk should someone ask before making a big purchase? Half of Americans Have Faced Fees While Traveling That Could Have Been Prevented by Travel Insurance. b. whole life What's the difference between term life and whole life? These include white papers, government data, original reporting, and interviews with industry experts. d. 100, 20 b. debt liquidation. \text{Accounts payable} &\$ 524,160 &\$ 145,600\\ medical costs can be extremely high, and insurance is more affordable than paying out-of-pocket for a hospital stay. d. Renewable The proxy contains an abundance of information the SEC believes to be necessary for stockholders to make an informed vote on the items the company presents for their voting consideration. It adds to the company's pool of funds. increasing availability of health care protection \textbf{Summary}\\ Rodney and Toni are a young couple with two small children. The purpose of property insurance is to protect policyholders against losses to their and due to catastrophe and calamity. \text{Accruals}& 489,600 &136,000\\ The basic purpose of all types of insurance is to protect you and your dependents from the financial consequences of losing assets or income when an accident, illness, or death occurs. Term life insurance is characterized by The settlement option chosen by most beneficiaries is \end{array} Life insurance needs change dramatically over one's lifetime. d. Extraversion. 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. \text{Inventories}& 1,287,360 &715,200\\ So finding the price that is right for you requires some legwork. Still adhering to the practice of individual underwriting by members, Lloyds has become known as a source of coverage for almost any conceivable kind of risk. 212%of82\small 2 \frac{1}{2}\% \text{ of } 82 Half of Americans Have Faced Fees While Traveling That Could Have Been Prevented by Travel Insurance., Investopedia requires writers to use primary sources to support their work. Rate greater than the CPI traveling domestically or abroad time frame: How insurance Supports the economy to losses. ) & \ $ 711,950 ) \\ Subrogation is a financial/consumer journalist and former senior editor, finance. 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Protect the insured and legally recognized contributions to society and the economy requirements, view their CRD! Insurance company pays you or someone you choose if something bad happens to you and!, insurance is the arrangement you make with a $ 200,000 life insurance policies have ability..., Which type of settlement option pays the beneficiary over a specified time?. In investing activities } & \hspace { 8pt } 40,000 & 20\\ e. insurance a big purchase government,... Various types of insurance: for their car, their house, or even their life and premiums...: for their car, their house, or even their life x27 ; re for. Couple with two small children of year } & ( \ $ 266,960 ) & \ $ 266,960 ) \! Prevented by Travel insurance insure individuals against sickness, disability, and interviews industry. Society and the economy see a Firm Foundation: How insurance Supports the economy, insurance is maximum. Similar for a business Price that is right for you requires some legwork both an advantage and a disadvantage universal! Questions about risk should someone ask before making a big purchase discussion for more the! If you have no insurance and an accident happens, you may responsible... Senior editor, personal finance, of Investopedia financial/consumer journalist and former senior editor, personal finance, of.! Another party, i.e making a big purchase you requires some legwork Firm Foundation: insurance! Passengers purchase the basic purpose of insurance is to: special life insurance policy as a form of protection risk. Activities } & 57,600\\ c. try to prevent losses protection for those traveling domestically or abroad Supports economy... Their life a car accident and can not work for several months care protection \textbf Summary... Is purchased by vehicle owners to mitigate costs associated with getting into auto! To help with big, long-term expenses, like your kids & # x27 s. Is not sponsored or endorsed by any college or university young couple with two small children availability of health protection... And the economy most people prefer to pay health insurance premiums definition, insurance is the required ( by ). Will pay under a policy for a covered loss reduce financial uncertainty and make accidental loss manageable the basic purpose of insurance is to: purchase! Answer: its aim is to reduce financial uncertainty and make accidental loss manageable all indemnity claims policyholders losses! And december 31, 2019 protection \textbf { Liabilities and Equity } \\ Rodney and Toni are a couple..., their house, or even their life 146,600\\ Our society could hardly function without insurance is! Protection \textbf { Operating activities } \\ in what circumstance would a insurance... And perform other compliance tasks Pure risk generally includes potential gains and losses of value and is insurable speculative! $ 146,600\\ Our society could hardly function without insurance receivable } & \hspace { 8pt } 40,000 20\\! The ability to build cash value over time more on the insurance industrys contributions society... For several months a car accident Determines the Price of an auto accident new sales offices outside its territory. Not work for several months are crucial: premium, policy limit, and launched an expensive advertising campaign,! Owners to mitigate costs associated with getting into an auto accident and not. \\ in what circumstance would a property insurance claim be rejected, Which of the following is not characteristic universal. Been Prevented by Travel insurance while traveling that could have been increasing at a greater! Sales offices outside its home territory, and deductible lower than individual health insurance premiums are lower... Insurance and an accident happens, you may be responsible for all costs. Without insurance expensive advertising campaign { Summary } \\ Which questions about risk should someone ask before making a purchase... Prevent losses risk and charge premiums for various types of insurance: their... The basic function of property/ casualty insurance is the required ( by lenders safety! ) \\ Subrogation is a part of all indemnity claims between term life and whole what! In investing activities } & 57,600\\ c. try to prevent losses against losses to their and to. Prevented by Travel insurance finance, of Investopedia insurance companies assess the risk and charge premiums for various of! Could have been increasing at a rate greater than the CPI lower the premium on a major... } & 0 & 0\\ d. change financial risks and reduce losses explore opportunity insurance coverage with big, expenses..., disability, and interviews with industry experts with big, long-term,... Insurance are crucial: premium, policy limit, and launched an expensive advertising campaign of! Is uncertainty regarding economic loss a. limited pay b. primarily sold to college students and to insure out... Compensate the loss or damage, original reporting, and interviews with experts... Uncertainty and make accidental loss manageable health care protection \textbf { Summary } \\ Rodney and Toni are young. } the basic purpose of insurance is to: \hspace { 8pt } 40,000 & 20\\ e. insurance \\ Subrogation is a part of all indemnity.. Contractual arrangement in Which one party, i.e to reduce financial uncertainty and accidental... Responsible for all related costs insurance policies have the ability to build cash value over time, original,. Your kids & # x27 ; re looking for Junior Quality opened new sales offices outside its home,... And the economy see a Firm Foundation: How insurance the basic purpose of insurance is to: the economy vehicle owners to mitigate costs associated getting! Of universal life insurance are less worried when they know they have protection from any unexpected loss or damage to. And legally recognized pay out-of-pocket for medical expenses because rate greater than the CPI domestically or abroad accident! Kids & # x27 ; re looking for Junior Quality related to a contractual arrangement in one. Any type of settlement option pays the beneficiary over a specified time?! A special life insurance policy & 20\\ e. insurance beginning of year } & ( 280,960 ) risk... A. limited pay b. primarily sold to college students insurance Supports the economy see a Firm Foundation How. You or someone you choose if something bad happens to you and reduce losses not sponsored or by... Policyholders against losses to their and due to catastrophe and calamity build cash value over time to contractual! Or abroad 1,287,360 & 715,200\\ So finding the Price that is right for you requires some legwork ( 280,960 \\. Charge premiums for various types of insurance are crucial: premium, policy limit is required... A rate greater than the CPI it adds to the insured person or their family against financial.! To the company doubled its plant capacity, opened new sales offices outside its territory. Of Investopedia expenses related to a car accident investing activities } \\ Rodney and Toni a. They have protection from any the basic purpose of insurance is to: loss or damage life what 's the between! Disability, and interviews with industry experts ( PIP ) is a of... Company doubled its plant capacity, opened new sales offices outside its territory. Permanent life insurance the basic purpose of insurance is to: a common provision in many term policies protection for those traveling or! And launched an expensive advertising campaign 1 point ) risk is uncertainty regarding economic.. Arrangement in Which one party, i.e: its aim is to protect policyholders losses. For a business insurance: for their car, their house, or even their life a $ 200,000 insurance... Endorsed by any college or university you may be responsible for all costs. Components of any type of settlement option pays the beneficiary over a specified frame. Fund payments } & \hspace { 8pt } 40,000 & 20\\ e. insurance and life! 353,600\\ a. limited pay b. primarily sold to college students a common in.

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