Insurance Flashcards
How it works:
is financial protection that covers any loss that might happen e.g. Burglary, Car Accident
Principles of Insurance:
Utmost Good Faith, Insurable Interest, Indemnity, Subrogation, Contribution
Utmost Good Faith
Utmost Good Faith: A person is obliged to answer all questions truthfully when completing the proposal form and disclose all relevant facts
Insurable Interest
Insurable Interest: You must gain (financially) by its existence and suffer (financially) by its loss
Indemnity
Indemnity: You cannot make a profit from a loss. The compensation you receive will only be equal to the current value of the item.
Subrogation
The insurance company has the right to seek compensation from the party that caused the loss/damage and take the damaged item for scrap value
Contribution
If you insure an item with more than one insurance company, each insurance company will contribute/divide the compensation.
Name Types of Personal Insurance
Life Assurance, Motor insurance, Home Insurance, Home Contents Insurance, Health Insurance, Travel Insurance, Mobile Insurance, Mortgage Protection Insurance
What is Life insurance
Assurance is protection against a risk that will happen e.g. death
Life Assurance: What is Whole Life Assurance
an agreed amount of money is paid to the person’s dependants when the individual dies
Life Assurance: What is Endowment Assurance
an agreed amount of money is paid when the insured reaches a certain age or on the death of the person – whichever comes first.
Life Assurance: What is Term Policy
An agreed amount is paid if you die within a certain period of time. This might be appropriate if you want to protect your family while they are young
Motor Insurace
It is required by law
Motor Insurance: What is Third Party
Third Party provides compensation to owners of property damaged by your car – it does not compensate for any damage to your car.
Motor insurance: What is Third Party Fire and Theft?
Third Party Fire and Theft: provides compensation to owners of property damaged by your car – it does not compensate for any damage to your car.
Car is also covered in case of Fire or Stolen
Motor insurance: Fully Comprehensive
Fully Comprehensive: provides compensation to all injured parties by your car AND also compensation for any damage to your car.
Due to extra cover – premium is more expensive (but worth it)
Motor Insurance: Key Terms- No Claims Bonus:
No Claims Bonus: is a discount on an insurance premium. It is a reward for not making any claims
Motor insurance: Key terms - Loading
Loading: is an extra amount added to your premium due to added risk
Home Insurance
This covers the house building in the case of fire, storm or flood damage
Home Contents Insurance
This covers the house contents in the case of fire, theft or flood damage
Health Insurance
This covers the cost of hospital care and medical bills in case of accident or illness.
Travel Insurance
This covers the person on holiday in case of missing luggage, passports, cancelled flights
Mobile Insurance
This covers the person in case their phone is lost or stolen.
Mortgage Protection Insurance
This is a type of life insurance policy that repays your mortgage if you die during the repayment term.
What are the Steps to taking out Insurance
Seek Quote, Complete Proposal Form, Pay Premium, Issue Policy.
Actuary
A person who calculates a Premium
What is compensation?
Compensation is a reward (usually money) awarded to someone in recognition of loss, suffering or injury.
What is Fully Insured
this means that you will be compensated for the full amount of the damage/loss caused.
What does Over Insured mean
this means that you will only be compensated for the value of the damage/loss caused. You will not get extra.
Under- Insured
this means that you will only be compensated for a proportion of the damage/loss caused
What is Average Clause
is a condition included in insurance policies that limits the value of a claim if you are under-insured
What is Insurable Risk?
it must be possible to calculate the risk involved and there must be a likelihood of the risk not happening for example burglary
What is Non-Insurable Risk
chances of the risk/loss happening are impossible to estimate
Example: End of the World
How to reduce the risk of Insurance
Install a Sprinkler System to reduce the risk of fire
Install an alarm to reduce the risk of burglary
Avoid smoking to reduce the risk of illness
