Insurance

Question 1

What is risk?

Answer 1

The chance of economic loss

Question 2

What risk management choices can one take?

Answer 2

1) Risk avoidance: avoiding risk

2) Risk assumption: accepting risk

3) Risk prevention: reducing chance of losses

4) Risk control: reduce severity of losses

Question 3

Why is it economically feasible for insurance companies to assume risk?

Answer 3

they combine losses from large numbers of people and use past experience to calculate probability occurrence and amount of loss

Question 4

Who needs life insurance?

Answer 4

People who provide financial support to others, and also have debts

Question 5

How do you compute how much life insurance you need?

Answer 5

there are two ways:

1) multilples method: just multiply annual earnings by 5 or 10 (simple, but fails to recognize financial obligations)

2) Needs analysis method: estimate the needs and examine available resources (additional insurance needed = financial resources needed after death - financial resources available after death)

in case of health insurance: “replacement method”

Question 6

what are the 3 basic types of life insurance?

Answer 6

1) Ordinary: 1 person, long term coverage, medium to high income, premium payable time is flexible. Only one with medical check up, sum insured is high

2) Industrial: 1 person, low income, monthly premium payment, sum insured is low

3) Group: >5 or 10 people, sum insured depends on rank, flexible premium payment timing, no medical checkup

Question 7

Differences between term, whole, endowment, and annuity life insurance

Answer 7

term: sum paid at death (lowest premium)

whole: sum paid at death or at 90/99

endowment: sum paid at death ot at the end of a prespecified period

annuity: sum paid periodically after the insured retires (highest premium)

Question 8

what % should the insurance premium be?

Answer 8

15 - 20 % for singles (riskier category)

10 - 15 % for couples

Question 9

What is health insurance for?

Answer 9

1) it protects against economic loss in the event of accidents or illnesses

2) it protects against the rising cost of healthcare

Question 11

What is govermnent provided healthcare?

Answer 11

1) healthcare provided to government employees

2) social security benefits required for private sector employees

3) universal healthcare coverage for self employed citizens and those not covered by SS or government welfare

Question 12

Talk about social security benefits

Answer 12

1. they are mandatory for enterprises hiring at least 1 employee
2. SS contribution is 5% of salary for employer and employee or 2.5% of salary for government
3. monthly salary has to be between 1650 thb and 15000 thb

Question 13

What can medical expense insurance cover (partially)?

Answer 13

1. hospitalization
2. surgical expenses, cosmetic or experimental surgery excluded
3. physician expenses, including consultation and lab tests
4. dental services

Question 14

what other types of health plans are you aware of? excluding medical expense insurance

Answer 14

1. accident policies, cover certain accidents
2. sickness policies / dread disease policies cover specific disease or illness
3. hospital income policy guarantee a per diem for hospital stays

Question 15

what is “coordination of benefits”?

Answer 15

a concept that eliminates double payment when coverage is provided under more than one policy

Question 16

what are 4 cost containment provisions that health insurers take to “contain costs”

Answer 16

1. pre admission certification for visits
2. continued stay review (don’t overstay in the hospital)
3. second surgical opinions (hopefully it’s nothing)
4. co-insurance, conditions under which policy holders and insurance companies split expenses

Question 17

What is long term care insurance?

Answer 17

medical care to person with chronic conditions

Question 18

what are provisions?

Answer 18

features and options included in an insurance policy

Question 19

list common provisions found in health insurance contracts

Answer 19

1. type of care provided
2. eligibility requirements
3. services covered
4. daily benefits
5. benefit duration

slide 48

Question 20

what are some conditional provisions found in health insurance contacts?

Answer 20

1. waiting period
2. renewability
3. inflation protection
4. premium levels

slide 48

Question 21

what is disability income insurance?

Answer 21

payments to replace income lost when insured is unable to work due to an illness, injury, or disease

Question 22

how do you estimate ADDITIONAL disability income insurance needs?

Answer 22

Monthly take home pay - existing monthly benefits (ss, gov programs, company dis benefits, group dis benefit) = monthly disability benefits needed

Question 23

What is “probationary period”?

Answer 23

How long after the policy is issued before benefit privileges are available

Question 23

What is property insurance?

Answer 23

Insurance that protects real and personal property from losses from various perils

Question 24

What is the waiting period?

Answer 24

how long before the benefits from insurance coverage materialize after the peril happened

Question 25

what is liability insurance?

Answer 25

insurance protecting against financial responsibility from damage caused either through actions or negligence

Question 26

What is the principle of indemnity?

Answer 26

A principle stating that an insured person may not be compensated by insurance company an amount exceeding economic loss

Question 27

What is the actual cash value?

Answer 27

actual cash value = replacement cost - depreciation

Question 28

what is the right of subrogation?

Answer 28

the insurer’s right to request reimbursement

Question 29

What is a peril?

Answer 29

a peril is a cause of loss

Question 30

which factors might affect home insurance costs?

Answer 30

1. type of structure
2. location of home
3. credit score

Question 31

what limitation on payments exist?

Answer 31

1. replacement cost
2. policy limits placed on covered property
3. internal limits applicable to specific items(basically the insurer limits exposure on high value items such as jewelry or watercraft)

Question 32

what are deductibles?

Answer 32

amount paid out of pocket before the insurance policy starts paying for covered expenses. This mechanism discourages policyholders from making small claims because they must pay the deductible amount first before the insurance coverage kicks in.

Question 33

what is a captive insurance agent?

Answer 33

an agent which represents one insurance company only

Question 34

what is an independent insurance agent?

Answer 34

an agent which represents multiple insurance companies

Question 35

what are the three steps in claim settlement?

Answer 35

1. notice to insurance company
2. investigation
3. proof of loss
4. claims are then adjusted or denied