Life Health Insurance & Annuties Flashcards
The role of insurance
Transfer the risk of financial loss from an individual or business to insurance company
Insurance spread of the cost of unexpected financial loss of many individuals
Life insurance
Guarantees a specific sum of money, and when someone dies
Health insurance
Provides funds to cover medical bills due to sickness or injury, and also to cover the loss of money because of a disability
Annuities
Provide a stream income by making series of payments over a certain period of time
Who is insurance available for
Private companies/government
Private companies/commercial insurance companies
They are funded through premiums and so insurance for profit
Government programs
Funded with taxes and serve national and state social purposes
2 most popular types of commercial insurers
Stock companies & mutual companies
Stock insurance company
-Organize and incorporated under state law
-Stock insurance companies are owned by the stockholder who get paid to share the companies profit through dividends
-Referred to as non-participating or non-par
Mutual insures
-no stockholders
-policyholders own the company
-owners get paid through dividends
Metallization
-stock company converted into a mutual company
Demutualization
-mutual company converted into a stock company
LLOYD’s of London
-association formed to underwrite and issue insurance
-coverage on certain items and areas
Reinsurers
-insurers other companies risk
-transfer or sells a portion of risk to a reinsurance company
-company assuming the risk
Ceding company
-the insurance company transferring the risk
