What insurance is and how it works Flashcards
define insurance how it works 4 characteristics of a legal contract demonstrate how insurance gives financial protection define insured and insurer
1
Q
Define Insurance
A
financial tool that protects people and organizations from unforeseen and extraordinary financial losses by transferring risk to another party
2
Q
How insurance works
A
Insured pays premium and then insurer promises to protect and pay for specified losses
3
Q
Principle of indemnity
A
To restore back to previous finical condition no better or worse
4
Q
Insurance policy contract
A
In order for a contract to be legal it needs 4 things
1.) Agreement
2.) Consideration
3.)Competent parties
4.)Legal purpose
5
Q
Insurance policy
A
A legally binding contract in which the insurer agrees to take on specified risks in exchange for the insureds premiums
