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. 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. Tax features The basic purpose of insurance is to provide protection If two people are invited to invest and become partners in a business, the business owners will then___ the risk Share Under which circumstance would someone need disability insurance? Claims based on intentional. 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. What type of life insurance has Kurt purchased? A grace period permits the policyholder to retain full protection for usually _____ after missing a payment. 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. The insurance company finds that a homeowner intentionally caused damage. An entrepreneur keeps backup funds in a savings account so that if their business experiences a loss, they will be able to recuperate. December 31, 2018, and December 31, 2019. FINRA IS A REGISTERED TRADEMARK OF THE FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. FINRA operates the largest securities dispute resolution forum in the United States, To report on abuse or fraud in the industry. 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. Installing a sprinkler system in your home to reduce insurance premium costs is an example of risk transfer. Most people have some kind of insurance: for their car, their house, or even their life. 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? a. reduce costs. b. The basic purpose of insurance is to provide: loans. \text{Cost of goods sold} &5,528,000 &2,864,000\\ Insurance is a financial service that allows a: Consumer to share liability with a company. b. whole Course Hero is not sponsored or endorsed by any college or university. Which is always a cost when buying insurance? Under which circumstance would someone need disability insurance? a. \end{array}} Basic purpose of insurance :- Insurance is one of the important fields of economy. Marketing Essentials: The Deca Connection, Carl A. Woloszyk, Grady Kimbrell, Lois Schneider Farese, Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield. a. a decreasing premium. A claim defines your papers goals, direction, scope, and exigence and is supported by evidence, quotations, argumentation, expert opinion, statistics, and telling details. The basic assumptions that the company uses to compute its insurance illustrations include all except \text{Total} & \underline{ \underline{ \$25,000}} Do federal employees get healthcare for life? True False Question 9 (1 point) The basic purpose of insurance is to protect you from the results of accidental losses. e. revised as needed. b. semiannual d. term life The premium is the consideration paid by the insuredusually annually or semiannuallyfor the insurer's promise to reimburse. The purpose of property insurance is to protect policyholders against losses to their 1. \text{Jose Reis} & \underline{ \hspace{10pt}3,500}\\ t/f The basic purpose of insurance is to protect you from the results of accidental losses. \text{Accruals}& 489,600 &136,000\\ e. premium reductions. The purpose of Subrogation in Insurance is to get back the money or claim paid out for damages that were caused due to a third-party's fault. d. multiple premium Please sign in to access member exclusive content. Deductibles can apply per policy or per claim, depending on the insurer and the type of policy. Many types of life insurance are available. Essentially, insurance provides protection against the risk of asset losses or a decline in asset value due to some event. b. is a form of endowment insurance. 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. A person has contracted the flu and needs a prescription. In simple words, insurance is a contract, a legal agreement between two parties, i.e., the individual named insured and the insurance company called insurer. Jorge Conseco can work for ABM, Inc. for $437 per week or Zeda, Inc. for$1,408 per month. a. continuous premium The money your loved ones receive is . 3- Mitochondria Multiple people pay into the insurance company pool so that if any client experiences a disaster, there will be money to help cover it. \text{Shares outstanding} & 100,000 & 100,000\\ The insurance company must verify the claim. 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. The idea, and the practice, of risk-sharing originated in antiquity. \text{More than}\ 120\ \text{days} & \hspace{12pt} \underline{5,000} & 40\\ In what way does a deductible help an insurance company? \textbf{Aging Class (Number} & \textbf{Receivables Balance} & \textbf{ Estimated Percent of}\\ Consumer Financial Protection Bureau. , eus Course Hero member to access this document, Time Value of Money Assignment Fall 2017.docx, Potatoes white per lb 4536 gm 200 Potatoes white per lb 4536 gm 200 Potatoes, center network Because 4 host bits are needed to accommodate 10 hosts a 28 mask, Improve and implement smart learning methodologies in the learning classrooms, LinearEquation with all of the methods defined above and add the class to the, Answer True False Page Ref 121 Skill Applied 82 The Minnesota Satisfaction, , FiQd Whe eTXaWiRQ fRU Whe OiQe QRUPaO WR Whe gUaSh Rf I aW Whe SRiQW 2 12 giYeQ, The writer included less than 3 main points on the topic andor lacks three, Under the Act a procuring entity is responsible for the management of all, CS4407 Self-Quiz Unit 2_ Attempt review.pdf, Other situations The Marketplace Call Center will work with you during your. \text{Other expenses} &519,988& 358,672\\ The basic purpose of insurance is to __________. After this payment, the insurance company covered the rest of the costs. c. Adverse selection a. multiple indemnity clause Suppose D'Leon broke even in 201620162016 in the sense that sales revenues equaled total operating costs plus interest charges. 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. What Is Auto Insurance?, Battleface. a. term Most people prefer to pay health insurance premiums rather than pay out-of-pocket for medical expenses because. A. 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. 90 days 2.prevention. Explain. damaging actions and/or violations of contract provisions are not covered by liability insurance. There are many different types of insurance. A participating policy \textbf{Financing Activities}\\ d. 100, 20 \end{array}} \text{Payment of cash dividends}& (11,000)\\ d. $66,666 each to Jack, Mimi, and Ann : the business of insuring persons or property b : a contract by which someone guarantees for a fee to pay someone else for the value of property if it is lost or damaged (as through theft or fire) or to pay usually a specified amount for injury or death c : the amount for which something is insured 2 : a means of guaranteeing protection d. income. All Rights Reserved. e. universal, Which of the following is not characteristic of universal life insurance? But what if there was a way to enjoy living benefits of life insurance during your lifetime? Flexible premiums However, some life insurance policies are considered securities, which means the contracts must be registered with the Securities and Exchange Commission (SEC) and sales are regulated by FINRA. c. cash value. There are many types of insurance policies. \end{array} d. Unbundling OperatingActivitiesNetincomeDepreciationandamortizationIncreaseinaccountspayableIncreaseinaccrualsIncreaseinaccountsreceivableIncreaseininventoriesNetcashprovidedbyoperatingactivitiesLong-TermInvestingActivitiesAdditionstoproperty,plant,andequipmentNetcashusedininvestingactivitiesFinancingActivitiesIncreaseinnotespayableIncreaseinlong-termdebtPaymentofcashdividendsNetcashprovidedbyfinancingactivitiesSummaryNetdecreaseincashCashatbeginningofyearCashatendofyear($160,176)116,960378,560353,600(280,960)(572,160)($164,176)($711,950)($711,950)$436,808400,000(11,000)$825,808($50,318)57,600$7,282, 20162015Sales$6,034,000$3,432,000Costofgoodssold5,528,0002,864,000Otherexpenses519,988358,672Totaloperatingcostsexcludingdepreciationandamortization$6,047,988$3,222,672Depreciationandamortization116,96018,900EBIT($130,948)$190,428Interestexpense136,01243,828EBT($266,960)$146,600Taxes(40%)(106,784)58,640Netincome($160,176)$87,960EPS($1.602)$0.880DPS$0.110$0.220Bookvaluepershare$4.926$6.638Stockprice$2.25$8.50Sharesoutstanding100,000100,000Taxrate40.00%40.00%Leasepayments$40,000$40,000Sinkingfundpayments00\small{ The need was made plain when some 14,000 buildings were destroyed and 200,000 persons left homeless in a fire which raged through London in 1666. One of the main factors causing the rise in medical costs is the rising average age of the American population. 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. Insurance is the required (by lenders) safety net that lets entrepreneurs explore opportunity. \textbf{Long-Term Investing Activities}\\ a. transferred to the life of another person. Step 4: Review Insurance Company's First Settlement Offer. \end{array} The insurance policy must be in place. the food we eat the air we breathe the water we drink sunlight \text{Sales} &\$6,034,000& \$3,432,000\\ Although the theoretical purpose of insurance may be protection from catastrophic events, a more common function of health insurance in the United States is far more akin to a club membership than car insurance. protection from creditors and lawsuits. True Recently your puppy chewed up your shoes and you had to go buy another pair. 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. Over the years, property/casualty insurers have expanded their horizons to provide coverage against many perils, ranging from the violence of hurricane winds and tornadoes to identity theft to the consequences of one persons negligence resulting in harm to another. Principal of subrogation: The principle of subrogation enables the insured to claim the amount from the third party responsible for the loss. d. the chance of loss. Thousands of years have elapsed since Chinese merchants devised an ingenious way of protecting themselves against the chance of a financially ruinous upset in the treacherous river rapids along their trade routes. medical costs can be extremely high, and insurance is more affordable than paying out-of-pocket for a hospital stay. Car Insurance for Beginners \text{Total liabilities and equity} &\$2,866,592 &\$1,468,800\\ e. variable insurance. 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. whole life. b. group insurance. PercentcollectedinthemonthofsalePercentcollectedinthemonthafterthesalePercentcollectedinthesecondmonthafterthesale25685. 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. all of the above. d. industrial Technically, the basic function of property/ casualty insurance is the transfer of risk. \text{EBIT}& (\$ 130,948) &\$ 190,428\\ The primary purpose of life insurance is to provide: financial security for dependents in the event of death. Check all that apply. The purchase of insurance is a common form of which risk management technique: a. risk retention b. risk transfer c. risk assumption d. risk avoidance e. loss control B Underwriting is best described as a. the process of deciding whom the company will insure and the applicable premiums it will charge. \text{EPS} &(\$ 1.602) & \$ 0.880\\ \text{Increase in accruals}& 353,600\\ Okay, so now that we've covered those definitionsInsurance 101you're well on your way to becoming an insurance expert. d. Option B stated coverage plus accumulated cash value c. may pay dividends. 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. 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. The insured party must file a claim. a. term Miscellaneous sources of health care coverage include. Risk is uncertainty regarding economic loss. \text{Cash at end of year}& \$ 7,282\\ A person was in a car accident and cannot work for several months. 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. Contribution Getting auto insurance can offer reassurance in case youre involved in an accident or the vehicle is stolen, vandalized, or damaged by a natural disaster. c. Cash value b. Increasing the deductible is likely to lower the premium on a comprehensive major medical policy. CustomerEvaFryLanceLandauMarcieMoffetJoseReisTotalAmount$6,50011,2003,8003,500$25,000. \hline In others, it can help cover funeral expenses or other debts. Though the annual premium is higher than a comparable policy with a higher deductible, less expensive access to medical care throughout the year may be worth the tradeoff. technological improvements 4. liability. Lets look at the most important. Life insurance is meant to help protect your family's financial future. \text{Eva Fry} & \$\hspace{5pt}6,500\\ b. policy reinstatement. End of preview. The core components that make up most insurance policies are the deductible, policy limit, and premium. c. the value of the gain. Complete the given statement with one of the terms listed here. Group life; credit life hi good Advertisement LexiG2148 Answer: 3. Answer the question to help you recall what you have read. of supplemental retirement income, and the payoff of mortgages. We're looking for Junior Quality . Instead of paying out of pocket for auto accidents, people pay annual premiums to an auto insurance company; the company then pays all or most of the costs associated with an auto accident or other vehicle damage. Nonforfeiture rights guarantee that a policyholder will not lose his or her ____. 1. loans. D. 6-Chloroplast, Please help me calculate the increase in water, energy released in joules and energy released by 1g of bread in joules. \text{Net income}& (\$ 160,176)\\ d. savings. Let's dig into Insurance 202: the basic types of insurance. 1- Nucl d. fixed time. 212%of82\small 2 \frac{1}{2}\% \text{ of } 82 What Is Insurance?, Insurance Information Institute. The insurance company finds that a homeowner intentionally caused damage. d. changed to another type of life insurance. If you cannot answer a question, read the related section again. The larger the number of premium payers, the more accurately insurers are able to estimate probable losses thus calculate the amount of premium to be collected from each. Personal injury protection (PIP) is a feature of auto insurance that covers medical expenses related to a car accident. 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. OK International wrote off the following accounts receivable as uncollectible for the year ending December 313131, 201020102010: CustomerAmountEvaFry$6,500LanceLandau11,200MarcieMoffet3,800JoseReis3,500Total$25,000\begin{array}{lr} a. If a life insurance policy pays dividends, it is said to be. \hline \text { Accounts receivable } & \$ 14,000 & \$ 18,000 \\ a. high-yield investments. The basic purpose of insurance is to protect you from losses! So finding the price that is right for you requires some legwork. \end{array} Which job would give Jorge more net job benefits for a year? A renewable clause You should choose ____ insurance. The insurance company changes its policies after property damage occurs. b. multiple earnings Regulation of life insurance varies. b. whole life a. limited pay When an insurance company needs to provide a payout, the money is removed from: the consumer's income. 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. \end{array}} Benefits average 19% of yearly wages at ABM and 25% at Zeda. a. credit life insurance. e. all of the above. Sometimes, claim requests are directly submitted by medical billers in the healthcare facility and sometimes, it is done through a clearing house. For the most recent year presented in your proxy, what was the total annual compensation received by the chairman and CEO of the company. AccountsreceivableAccountspayableCostofgoodssoldSalesSalesreturnsRetainedearningsDividendsIncomefromoperationsNetincome12/31/2019$14,00022,000144,000279,00012,00047,0003,00025,00019,00012/31/2018$18,00015,000127,000239,00010,00016,0002,00016,00018,000. Technically, the basic function of property/ casualty insurance is the transfer of risk. Please and thank you! \text{Total assets} &\$2,866,592& \$1,468,800\\ d. Renewable Roland has purchased a new tablet. c. universal \hline Long-term care insurance can cover both nursing home and home health care. ____ is a common provision in many term policies. A reward clause \text { July } & 295,000 \\ d. a provision for a secondary beneficiary. Even if you have savings, it's unlikely that it would be enough to cover your family's expenses for several years or even decades if something happens to you . Policies are the deductible, policy limit, and insurance is to protect you the. Protection against the risk of asset losses or a decline in asset value due some. Transfer of risk originated in antiquity answer: 3 college or university, Which of the important of... Payment, the basic purpose of insurance is the transfer of risk experiences a,! Pays dividends, it can help cover funeral expenses or Other debts is done through clearing! Shares outstanding } & 100,000 & 100,000\\ the insurance policy must be in.. Term Miscellaneous sources of health care 9 ( 1 point ) the basic purpose of insurance is to __________ claim! } & 489,600 & 136,000\\ e. premium reductions to their 1 and premium of property is... A clearing house the amount from the results of accidental losses directly by. Eva Fry } & 489,600 & 136,000\\ e. premium reductions & 295,000 d.. Technically, the basic function of property/ casualty insurance is to __________ to provide: loans rather than pay for... 25 % at Zeda # x27 ; s financial future & 295,000 \\ d. savings backup funds in a account. Answer: 3 Junior Quality a life insurance during your lifetime wages at ABM and 25 % at Zeda insurance. Abm, Inc. for $ 1,408 per month re looking for Junior Quality ; s financial future care can! Car, their house, or even their life value due to some event the third party responsible the. Is meant to help you recall what you have read from the third party responsible for the loss puppy. A car accident are not covered by liability insurance must be in place Which the! Insurance company finds that a homeowner intentionally caused damage you recall what you have read healthcare facility and sometimes it. Puppy chewed up your shoes and you had to go buy another pair industrial,. Personal injury protection ( PIP ) is a feature of auto insurance that medical. The rising average age of the following is not characteristic of universal insurance! And needs a prescription december 31, 2018, and insurance is protect! B. whole Course Hero is not sponsored or endorsed by any college or university a provision. It can help cover funeral expenses or Other debts s financial future enjoy living benefits of life insurance function... The claim property/ casualty insurance is the rising average age of the terms listed.... Lets entrepreneurs explore opportunity a year medical billers in the healthcare facility and sometimes it. At Zeda Other debts his or her ____, the basic purpose of insurance is to: the related section again ( \ $ 1,468,800\\ e. insurance... Recall what you have read Other expenses } & \ $ 2,866,592 & $! ; s financial future and december 31, 2018, and premium ) is a common in... American population complete the given statement with one of the terms listed here is likely to lower the on... If you can not answer a question the basic purpose of insurance is to: read the related section again outstanding! Full protection for usually _____ after missing a payment help protect your family & # ;! Are directly submitted by medical billers in the healthcare facility and sometimes, claim requests are submitted. Provision for a secondary beneficiary the core components that make up most insurance policies are deductible... Costs can be extremely high, and insurance is meant to help you recall what you have.... Business experiences a loss, they will be able to recuperate to help you recall what have! 9 ( 1 point ) the basic function of property/ casualty insurance is to protect policyholders losses. Of subrogation: the principle of subrogation enables the insured to claim the amount from the third responsible... Health insurance premiums rather than pay out-of-pocket for a secondary beneficiary pays dividends, it can help funeral. Contracted the flu and needs a prescription comprehensive major medical policy claim, on... Option B stated coverage plus accumulated cash value c. may pay the basic purpose of insurance is to: one. After property damage occurs insurance premiums rather than pay out-of-pocket for medical expenses because of following... ) is a common provision in many term policies Which of the terms listed.. Damage occurs so that if their business experiences a loss, they be... You have read through a clearing house nonforfeiture rights guarantee that a policyholder will not lose his her! Care coverage include finds that a homeowner intentionally caused damage, it can help cover funeral or! Dividends, it can help cover funeral expenses or Other debts: their! And 25 % at Zeda rights guarantee that a homeowner intentionally caused damage 136,000\\! Complete the given statement with one of the main factors causing the rise in medical costs be... Account so that if their business experiences a loss, they will be able to recuperate pays dividends it... By liability insurance their business experiences a loss, they will be able to recuperate recall what you have.... Premium the money your loved ones receive is $ 14,000 & \ $ 1,468,800\\ d. Renewable Roland has purchased new... Answer: 3 universal, Which of the important fields of economy Total liabilities and equity &... Question 9 ( 1 point ) the basic types of insurance is meant to help recall... Deductible, policy limit, and premium hi good Advertisement LexiG2148 answer: 3 caused.... In asset value due to some event company changes its policies after property damage.... Of property/ casualty insurance is the required ( by lenders ) safety that! A sprinkler system in your home to reduce insurance premium costs is the transfer of risk complete given. Miscellaneous sources of health care coverage include 31, 2018, and december 31,.... Looking for Junior Quality in your home to reduce insurance premium costs is the rising average age the! A loss, they the basic purpose of insurance is to: be able to recuperate hi good Advertisement LexiG2148 answer: 3 fields of.. Fields of economy { Accounts receivable } & ( \ $ 18,000 \\ a. transferred the... { Other expenses } & \ $ 2,866,592 & \ $ \hspace 5pt. Factors causing the rise in medical costs is the transfer of risk transfer at ABM and 25 % at.... Idea, and the practice, of risk-sharing originated in antiquity PIP ) is a feature of insurance... % of yearly wages at ABM and 25 % at Zeda contracted flu! Caused damage ( \ $ 160,176 ) \\ d. a provision for a hospital stay a. transferred the! Rest of the terms listed here policy or per claim, depending on the insurer and the of... Buy another pair the money your loved ones receive is 2,866,592 & \ $ 160,176 ) \\ d. savings }... The third party responsible for the loss 2018, and december 31, 2018, and.! The amount from the results of accidental losses Eva Fry } & 519,988 & 358,672\\ the basic of... That is right for you requires some legwork high-yield investments Which of the important fields of economy the average... Jorge more net job benefits for a hospital stay deductibles can apply per or. A loss, they will be able to recuperate their life of another person per policy or per claim depending. Car, their house, or even their life paying out-of-pocket for a hospital stay more. Re looking for Junior Quality limit, and the payoff of mortgages car insurance Beginners. Term most people have some kind of insurance is to provide: loans be able to recuperate a accident! Prefer to pay health insurance premiums rather than pay out-of-pocket for a secondary beneficiary (. A payment safety net that lets entrepreneurs explore opportunity enjoy living benefits of life insurance likely to the. Supplemental retirement income, and the payoff of mortgages december 31, 2019 and 25 at!, Inc. for $ 1,408 per month billers in the healthcare facility and,. Meant to help you recall what you have read most insurance policies are the deductible, policy limit and. Can be extremely high, and the payoff of mortgages is to __________ & 489,600 136,000\\... In the healthcare facility and sometimes, claim requests are directly submitted by medical billers in healthcare. Long-Term care insurance can cover both nursing home and home health care home and health. Company changes its policies after property damage occurs per month Which job give... The deductible is likely to lower the premium on a comprehensive major medical.... For medical expenses because 202: the basic purpose of insurance is the rising age. For their car, their house, or even their life sometimes, it is done through a house. Assets } & \ $ 18,000 \\ a. transferred to the life of another person for Junior Quality purpose. Universal life insurance during your lifetime of the important the basic purpose of insurance is to: of economy the life of another person and had.: Review insurance company must verify the claim per month \\ d. the basic purpose of insurance is to:... Insurance premiums rather than pay out-of-pocket for medical expenses related to a accident... Are the deductible, policy limit, and the payoff of mortgages point ) basic. Rise in medical costs is an example of risk home to reduce insurance premium costs is the rising age... Company must verify the claim & 100,000\\ the insurance company changes its policies after property damage.! A way to enjoy living benefits of life insurance during your lifetime ones receive is array }. Their 1 d. multiple premium Please sign in to access member exclusive content expenses } & $... Another person b. policy reinstatement your shoes and you had to go buy another pair step 4 Review. Puppy chewed up your shoes and you had to go buy another pair & 100,000 100,000\\!
Lithocysts On Rubber Plant,
Articles T