Lecture 17 - Insurance and pension funds Flashcards
What are the biggest insurance companies in Canada
Manulife - 849b
Great-West Lifeco 701b
Desjardin - 407b
What is pure risk in insurance service
It is the chance of loss
What is objective risk in insurance services
Deviation of actual losses from expected loss
How does an insuracne company reduce objective riks
Underwriting claims, Deductibles, Reinusrance
What are the key considerations for insurable risks
-There has to be a lrge number of similar exposure risk, helps with underwriting and predictions
-Losses should be random
- THe losses occur independent of each other and not all at once like a flood
-The probability of loss should be caclculable
- The premium needs to be feasable
What is pricing risk
-The goal of insurance companies is to charge a rate high enough to cover calims and expenses and still make profits
- It is a competitive indutry which forces competitive rates
-Credible data is crucial
How do Intrest Rates effect insurance companies
They are susceptible to changes in rates because their investment and liabilities are long term in nature
What is straight coverage in term life insurance
Coverage over a specifc period of time with premiums increasing as you age
What is decreasing life insurance
Coverage decliens and you pay premium iver a period of years
What is increasing term life insurance
Coverage amount growth over time and the premium also increase
What is renewable life insurance
There is an option to continue after the experiation data independant of health chagnes
What is whole life insurance
You pay the same premium for your entire life and the coverage amount stays the same
What is unniversal Life insurance
The savings portion of the insurance grwoth with current intrest rates. Pays market rate on savings
What is variable life insurance
The savings are directly invested n equities
-You pay a set amount of premiums that does not change
What is a life annuities in the insurance indutry
In exchange for payments, the insurance companies pays a lifetime steady income of payments
WHat is a superannuation
It is the risk of outliving yoru money during retirement
What deos the balance sheet of life insurance look like in terms of assets. Give some examples
Assets are long term matching liabilities
- Corporate bonds/equities
-Morgages
-Goverment securities
What does the liabilities side of a life insurer look like. Give some examples
-Life insurance reserves, funds that are owed for the life of the policy
-Pension fund reserves, Accumulated commitments
WHat is property insrance
Protection from financial loss such as perils, fires, theft
What is Casulty insurance
Protection against loss caused by liabiities, For instance if you are responsible for somones injury, property damage etc.
What are some of the key differences between life policies and P/C
P/C are less predictable, need to be more liquid, shorter term than life insurance
What is a insured pension fund on the private side
a fund managed by life insurer
Give 2 examples of non insured pension companies
Trustee Managed - Usually by a bank, investment firm
-Non trustee, managmed by the employer or a labor union
What is the meaning of fully funded in pension
There is enough money set aside to pay retirement income to employes and cover future obligations
What is contributory in pension
Both employee and employer contribute
What is Fully contributory in pension
Only the employee contributes
What is non contributorty in pension
Only the employer contributes
What is a defined beenfit
Benefits set bsed on years of service and average salary
