UNIT 10: INSURANCE

Question 1

How many main ideas are there in unit 10?

Answer 1

In my opinion, there are 5 main ideas:

1. Definition of insurance
2. Roles of insurance
3. Operation of insurance
4. Benefits to the insured
5. Contract

Question 2

What is insurance in financial definition?

Answer 2

Insurance is a financial arrangement that redistributes the cost of unexpected losses.

Question 3

What are the roles of insurance?

Answer 3

• predict losses in advance
• finance the cost of losses
• redistribute the cost of losses in advance.

Question 4

in what way, losses can be predicted before they occur?

Answer 4

through the operation of the insurance system.

Question 5

why the predictability of losses in advance is basic to an insurance system’s operations?

Answer 5

because it allows the cost of losses to be financed and redistributed in advance.

Question 6

what does the insurance agreement involve?

(ít vào)

Answer 6

the insurance agreement involves the transfer of many different exposures to loss to one insurance pool.

Question 7

How can an insurance system accomplish the redistribution of the costs of losses?

Answer 7

[An Insurance system accomplishes the redistribution of the cost of losses] by collecting a premium payment from every participant in the system.

Question 8

-What does the insured receive when a loss occurs?

Answer 8

The insured is compensated by the insurer when a loss occurs.

Question 9

What is insurance premium?

Answer 9

Insurance premium is the amount of money that the insured pay for the insurance company.

Question 10

Why are people willing to pay the insurance premium?

(=The benefits to the insured?)

Answer 10

Because:

• if the loss occurs, they will be compensated by the insurer.
• Even if no loss occurs, they still pay the insurance premium to be relieved of the anxiety about unexpected losses.

Question 11

Is insurance like gambling? Why?

Answer 11

No, it isn’t. Because:

• gambling is illegal + gambling contracts will not enforce.
• insurance is legal+ insurance contracts will enforce.

Question 12

What do you know about INSURANCE CONTRACTS/ contracts of insurance?

(=what is special about insurance contract?)

Answer 12

Contracts of insurance form a special class of contract in that:

• the law requires parties to them, the insured and the insurer, to exercise the utmost good faith towards each other.

Question 13

What do the insured receive in exchange for premiums?

Answer 13

• In exchange for premiums, the insured receive a promise from the insurer to be compensated in the event of a loss.

Question 14

How does an insurance system accomplishes the redistribution of the cost of losses?

Answer 14

by collecting a premium payment from every participant in the system.

Question 15

What does the term “compensation” mean?

Answer 15

Compensation means the money that the insurer pays for the insured when a loss actually occurs.

Question 16

What is an insurance policy/ insurance contract?

Answer 16

An insurance policy is a financial arrangement signed between the insurance company and the insured.

Question 17

how does insurance operate?

Not sure whether this question will be ask cause the answer is too long :/

Answer 17

• an insurance system collects premium from participants in the system.
• it gives a promise that the insured will be compensated in the event of a loss.
• it redistributes the costs of losses from the unfortunate few members to all the members of the insurance pool.
• it is able to operate because all the insured are willing to substitute the premium for uncertain loss

Question 18

what is an insurance pool?

Answer 18

An insurance pool is a fund which combines all insurance premiums.

Question 19

summarize unit 10: insurance

Answer 19

I will summarize Unit 10. Unit 10 is about insurance. In my opinion, there are 5 main ideas:

1. Firstly, it talks about the DEFINITION of insurance in financial:

• insurance is a financial arrangement that redistributes the cost of unexpected losses.

2. Secondly, it talks about the ROLES of insurances:

• predict losses in advance.
• finance the cost of losses.
• redistribute the cost of losses in advance.

3. Thirdly, it talks about INSURANCE SYSTEM OPERATIONS:

• an insurance system collects premium from participants in the system.
• it gives a promise that the insured will be compensated in the event of a loss.
• it redistributes the costs of losses from the unfortunate few members to all the members of the insurance pool.
• it is able to operate because all the insured are willing to substitute the premium for uncertain loss

4. Next, it talks about BENEFITS TO THE INSURED:

• the insured are relieved of the uncertainty about a loss
• the insured are compensated when the loss actually accurs.
• If no loss occurs during a year, the insured are willing to substitude the premium for uncertain loss.

5. Finally, it talks about CONTRACT:

• The law requires parties to exercise the utmost good faith towards each other.

(Nguồn tham khảo: tài liệu do Giảng viên Phạm Thị Thu cung cấp)

Question 20

why don’t many people buy life insurance in VN?

Answer 20

Because:

• They have a limited financial ability
• They do not have knowledge about life insurance and do not have the faith to it
• People prefer to save money in the bank.