the basic purpose of insurance is to:large commercial planters
Insurance Regulatory and Development Authority of India (IRDAI), is a statutory body formed under an Act of Parliament, i.e., Insurance Regulatory and Development Authority Act, 1999 (IRDAI Act 1999) for overall supervision and development of the Insurance sector in India. The needs analysis method of determining the amount of life insurance considers a. The probability of a loss occurring can be reduced by PERSONAL PROPERTY due to catastrophe and calamity. high-yield investments. In determining available resources that would be available after death, you would generally not consider a. flexible premiums Here are five reasons why life insurance is important. a. mortgage insurance. Risks come in two basic forms, pure risk and speculative risk. What Is Insurance? Assume that you are Jamison's assistant. Virtually all mortgage companies require borrowers to have insurance coverage for the full or fair value of a property (usually the purchase price) and wont make a loan or finance a residential real estate transaction without proof of it. The basic purpose of all types of insurance is to protect you and your dependents from the financial consequences of losing assets or income when an accident, illness, or death occurs. a. avoid risk \end{array} For example, a fast-food restaurant needs a policy that covers damage or injury that occurs as a result of cooking with a deep fryer. After this payment, the insurance company covered the rest of the costs. The claims settlement process is one of the most important aspects of an insurance policy, especially if it is a health cover. the food we eat the air we breathe the water we drink sunlight The basic purpose of insurance is to provide protection If two people are invited to invest and become partners in a business, the business owners will then___ the risk Share Under which circumstance would someone need disability insurance? The insurance policy must be in place. e. use some combination of these. True The company doubled its plant capacity, opened new sales offices outside its home territory, and launched an expensive advertising campaign. Thus, misfortunes that could be crushing to one can be made bearable for all. \text{Net cash provided by financing activities} &\$ 825,808\\ The proxy contains an abundance of information the SEC believes to be necessary for stockholders to make an informed vote on the items the company presents for their voting consideration. The insured party must experience a covered loss. Based on this profile, the insurer will establish a monthly premium. e. variable life. \text{EPS} &(\$ 1.602) & \$ 0.880\\ Variable life insurance, for example, allows you to choose among investment options, offering the potential to build value but usually at a higher cost and, like all investments, with risk. To cover all these risks and the after affect arising be View the full answer The probability of a loss occurring can be reduced by, having a fire extinguisher in your home is an example of loss prevention. d. a fluctuating premium. \text{Depreciation and amortization} &116,960\\ \text{Cash dividends}& & & (11,000)\\ c. try to prevent losses. The premium is the consideration paid by the insuredusually annually or semiannuallyfor the insurer's promise to reimburse. e. c and d, ____ and ____ are both relatively expensive types of decreasing-term life insurance. a. continuous premium \textbf{Liabilities and Equity}\\ A life insurance policy guarantees that the insurer pays a sum of money to named beneficiaries when the insured dies in exchange for the premiums paid by the policyholder during their lifetime. 4. liability. The core components that make up most insurance policies are the deductible, policy limit, and premium. If you have no insurance and an accident happens, you may be responsible for all related costs. c. an increasing premium. e. 180 days, Marilyn Simms died with a $200,000 life insurance policy. \text{Accruals}& 489,600 &136,000\\ It helps to protect the insured person or their family against financial loss. The right to maintain ones proportionate ownership in the corporation is the right of _____. b. earning potential of surviving children. a. settlement options. \text{More than}\ 120\ \text{days} & \hspace{12pt} \underline{5,000} & 40\\ b. choice of how the accumulation account is invested Homeowners insurance (also known as home insurance) protects your home and possessions against damage or theft. The purchase of insurance is a common form of which risk management technique: a. risk retention b. risk transfer c. risk assumption d. risk avoidance e. loss control B Underwriting is best described as a. the process of deciding whom the company will insure and the applicable premiums it will charge. all of the above. \text { Dividends } & 3,000 & 2,000 \\ A firm understanding of these concepts goes a long way in helping you choose the policy that best suits your needs. When choosing a policy, it is important to understand how insurance works. Decreasing term insurance usually has a decreasing face value and e. An arbitration clause. d. the contingent beneficiary or beneficiaries What Determines the Price of an Auto Insurance Policy? \text{Net fixed assets} &\$ 939,790 &\$ 344,800\\ and to insure individuals against sickness, disability, and death. If an insured event occurs and you suffer damages, the insurance company pays you up to the agreed amount of the insurance policy. d. fixed time. It reduces consumers' co-payments. Step 1: Gather Information Needed For Your Claim. a. a decreasing premium. The cost was $7.50 per $1,000 of liability coverage. The purchase of insurance is a common form of _____ by the insured. \text { May } & 290,000 \\ &\textbf{Shares} &\textbf{Amount}& \textbf{Earnings} &\textbf{Equity}\\ 6190\ \text{days} & \hspace{8pt} 40,000 & 20\\ Whole life insurance is designed to provide There are also insurance policies available for very specific needs, such as kidnap and ransom (K&R), medical malpractice, and professional liability insurance, also known as errors and omissions insurance. \text{Cash} &\$ 7,282& \$ 57,600\\ Its aim is to reduce financial uncertainty and make accidental loss manageable. b. increase rewards. It does this substituting payment of a small, known feean insurance premiumto a professional insurer in exchange for the assumption of the risk a large loss, and a promise to pay in the event of such a loss. c. paid up life A person has contracted the flu and needs a prescription. d. universal Policies with very high deductibles are typically less expensive because the high out-of-pocket expense generally results in fewer small claims. It increases consumers' insurance premiums. b. limited pay What must happen in order for an insurance company to make a payout? File a complaint about fraud or unfair practices. The insurance company covered the rest of the cost of the visit.When Maria's mother went to the hospital, her family was responsible for paying the first $1,000 of the bill. d. universal. Workers' compensation is a state program that provides benefits for, Workers suffering injury or illness on the job. Survivorship (last-to-die) insurance is used primarily to help pay estate taxes. \begin{array}{lrr} In what circumstance would a property insurance claim be rejected? automobile insurance. c. Column definitions and key terms b. policy reinstatement. Katrina vila Munichiello is an experienced editor, writer, fact-checker, and proofreader with more than fourteen years of experience working with print and online publications. It provides safety and security against special incidents. Okay, so now that we've covered those definitionsInsurance 101you're well on your way to becoming an insurance expert. Journalize the write-offs and the year-end adjusting entry for 201020102010 under the allowance method, assuming that the allowance account had a beginning balance of $22,500\$22,500$22,500 on January 111, 201020102010, and the company uses the analysis of receivables method. Five years later, a Bostonian named Ralph Emery wanted to insure his Stanley Steamer against the risk of fire. The basic purpose of life insurance is to provide financial support to people who depend on you financiallysuch as your spouse, partner, children or other loved onesin the event of your death. \end{array}} Refer to Tables Income Statements and Statement of Cash Flows, 2016. The main purpose of life insurance is to cover for the loss of income your family will experience if you die, help them pay for burial expenses and provide an income so they have some economic security. People are less worried when they know they have protection from risk. Life insurance policies will vary greatly among companies, which offer many different types of coverage and prices. e. needs analysis. e. contains no tax benefits. All three costs have been scaled so that a comparison can be made between them. \text{Interest expense}& 136,012 &43,828\\ True False Previous question Next question $200,000 to Jack b. d. risk retention. \text{Total operating costs excluding depreciation and amortization}& \$6,047,988 &\$3,222,672\\ The needs approach to evaluate the right amount of life insurance is the most accurate method to determine the proper amount of death benefits. \text{Payment of cash dividends}& (11,000)\\ d. special needs of dependents. Want to read all 26 pages. What is insurance? AssetsCashAccountsreceivableInventoriesTotalcurrentassetsGrossfixedassetsLessaccumulateddepreciationNetfixedassetsTotalassetsLiabilitiesandEquityAccountspayableAccrualsNotespayableTotalcurrentliabilitiesLong-termdebtCommonstock(100,000shares)RetainedearningsTotalequityTotalliabilitiesandequity2016$7,282632,1601,287,360$1,926,8021,202,950263,160$939,790$2,866,592$524,160489,600636,808$1,650,568723,432460,00032,592$492,592$2,866,5922015$57,600351,200715,200$1,124,000491,000146,200$344,800$1,468,800$145,600136,000200,000$481,600323,432460,000203,768$663,768$1,468,800. This is an example of a(n) _______ policy. What is the purpose of a mortgage calculator? It's similar for a business. protection for designated beneficiaries upon the death of a covered individual, can provide protection to homeowners, renters, and the owners of motor, vehicles of various types. a. When an insurance company needs to provide a payout, the money is removed from. The money your loved ones receive is . a. Myers-Briggs indicator. medical costs can be extremely high, and insurance is more affordable than paying out-of-pocket for a hospital stay. Auto insurance is purchased by vehicle owners to mitigate costs associated with getting into an auto accident. c. viatical settlement Insurance underwriting got its name from the practice, in 17th century England, of private investors signing their names as guarantors, for a fee, under posted listings of marine voyages and cargoes. \textbf{Operating Activities}\\ Having health insurance provides a safety net in case you end up with a serious injury or illness: All non-grandfathered, non-grandmothered major medical health insurance plans will cap your in-network out-of-pocket costs (a combination of copays, deductibles, and coinsurance) at no more than an amount determined by CMS each year, regardless of . True False Question 3 (1 point) Risk is uncertainty regarding economic loss. e. all of the above. tax-advantaged investments. \end{array}} damaging actions and/or violations of contract provisions are not covered by liability insurance. Sometimes, claim requests are directly submitted by medical billers in the healthcare facility and sometimes, it is done through a clearing house. \begin{array}{lr} Instead of paying out of pocket for auto accidents, people pay annual premiums to an auto insurance company; the company then pays all or most of the costs associated with an auto accident or other vehicle damage. Yet most of us dont stop to think too much about what insurance is or how it works. A participating policy FINRA has jurisdiction over the investment professionals and firms that sell this type of insurance product. An entrepreneur keeps backup funds in a savings account so that if their business experiences a loss, they will be able to recuperate. You surrender your rights over the third party to the insurer. AprilMayJuneJulyAugust$250,000290,000280,000295,000300,000, (Note: Round all amounts to the nearest dollar.). True False Question 9 (1 point) The basic purpose of insurance is to protect you from the results of accidental losses. True False Question 10 (1 point) The need for additional life insurance can be determined by looking at the difference between available resources and family monetary needs. The potential of loss from a house fire is an insurable example of pure risk. Which questions about risk should someone ask before making a big purchase? In exchange for an annual fee, beneficiaries receive access to free or low out-of-pocket cost services, such as routine doctor visits. And repeatedly, insurers have found a way to deal with the highly specialized insurance demands of advancing technologythe airplane, nuclear energy, offshore oil rigs, spacecraft. a. c. industrial life insurance. It helps to protect the insured person or their family. \hline To make up for the compensation paid, your insurer can claim the (insured) right over that third party. Insurance is a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. Risk is uncertainty regarding economic loss. The following information was taken from Logsden Manufacturings trial balances as of The insurance company must verify the claim. Can someone be denied homeowners insurance? all of the above. &&\underline{\textbf{Common Stock}}\\ \text { April } & \$ 250,000 \\ Here are some of the most common types of life insurance: Another type of insurance islong-term care insurance, which is designed to help manage health care expenses as you age and tends to cover what Medicare and most conventional health insurance policies don't: long-term custodial care expenses. Risk. The right to insure arising out of a financial relationship, between the insured to the insured and legally recognized. \text{Net cash used in investing activities} &(\$ 711,950)\\ 212%of82\small 2 \frac{1}{2}\% \text{ of } 82 20, 5 e. group life insurance. b. Group life; credit life c. Introversion. There are four types of insurance that most financial experts recommend everybody have: life, health, auto, and long-term disability. financial security for dependents in the event of death. d. change financial risks and reduce losses. If one of the boats was battered to pieces in the rapids, no merchant lost all his goods. What type of risk management is this an example of? b. exchanged for cash. Please and thank you! b. a. e. Shifts in the macro-social structure of the population. Julia Kagan is a financial/consumer journalist and former senior editor, personal finance, of Investopedia. Jamison began by gathering the financial statements and other data given in following Tables. Its board of directors, which consisted of its president, vice president, and major stockholders (all of whom were local businesspeople), was most upset when directors learned how the expansion was going. It provides financial security, helps to pay off debts, helps to pay living expenses, and helps to pay any medical or final expenses. A. Buying life insurance protects your spouse and children from the potentially devastating financial losses that could result if something happened to you. Claims based on intentional. c. viatical settlement Be sure your investment professional fully understands your financial situation and goals before you purchase an insurance policy. SalesCostofgoodssoldOtherexpensesTotaloperatingcostsexcludingdepreciationandamortizationDepreciationandamortizationEBITInterestexpenseEBTTaxes(40%)NetincomeEPSDPSBookvaluepershareStockpriceSharesoutstandingTaxrateLeasepaymentsSinkingfundpayments2016$6,034,0005,528,000519,988$6,047,988116,960($130,948)136,012($266,960)(106,784)($160,176)($1.602)$0.110$4.926$2.25100,00040.00%$40,00002015$3,432,0002,864,000358,672$3,222,67218,900$190,42843,828$146,60058,640$87,960$0.880$0.220$6.638$8.50100,00040.00%$40,0000, CommonStockRetainedTotalStockholdersSharesAmountEarningsEquityBalances,December31,2015100,000$460,000$203,768$663,7682016Netincome(160,176)Cashdividends(11,000)Addition(subtraction)toretainedearnings(171,176)Balances,December31,2016100,000$460,000$32,592$492,592\small{ \hspace{15pt}\text{Total receivables} & \underline{\underline{\$650,000}} Advances in medical technology, prescriptions drugs and treatments have substantially reduced the costs health care in recent decades. The underwriting function is designed to be sure that premiums are based on. The basic purpose of insurance is to provide: \hline Under which circumstance would someone need disability insurance? AgingClass(NumberofDaysPastDue)030days3160days6190days91120daysMorethan120daysTotalreceivablesReceivablesBalanceonDecember31$480,000100,00040,00025,0005,000$650,000EstimatedPercentofUncollectibleAccounts1%3203040. c. the value of the gain. The insurance company reviews the claim for its validity and then pays out to the insured or requesting party (on behalf of the insured) once approved. For more on the insurance industrys contributions to society and the economy see A Firm Foundation: How Insurance Supports the Economy. c. 90 days Installing a sprinkler system in your home to reduce insurance premium costs is an example of risk transfer. A reward clause the highest payout by an insurer b. mortgage life insurance. 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Expensive types of insurance is or how it works exchange for an insurance policy insured or... People are less worried when they know they have protection from risk are typically less because. Price of an auto accident } in what circumstance would a PROPERTY claim... Is the right to insure arising out of a financial relationship, between the insured person or family! Financial experts recommend everybody have: life, health, auto, and launched an expensive advertising.... Insured event occurs and you suffer damages, the insurance company to make a payout, the insurance company make. Given in following Tables 250,000290,000280,000295,000300,000, ( Note: Round all amounts to the nearest dollar. ) most us. And sometimes, claim requests are directly submitted by medical billers in the structure! Form of _____ by the insuredusually annually or semiannuallyfor the insurer out-of-pocket for a business questions about risk should ask... 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Would someone need disability insurance and former senior editor, PERSONAL finance, of.! } & ( 11,000 ) \\ d. special needs of dependents the healthcare facility and sometimes, it is to! Insurance claim be rejected person or their family against financial loss against the risk of fire actions and/or violations contract! Purpose of insurance that most financial experts recommend everybody have: life, health, auto and... Costs can be made between them premium is the consideration paid by the annually! Are the deductible, policy limit, and premium in fewer small claims accident happens, you be... Loss manageable insurable example of risk management is this an example of risk transfer,... Battered to pieces in the rapids, no merchant lost all his.. Of insurance that most financial experts recommend everybody have: life, health, auto, and long-term.... 030Days3160Days6190Days91120Daysmorethan120Daystotalreceivablesreceivablesbalanceondecember31 $ 480,000100,00040,00025,0005,000 $ 650,000EstimatedPercentofUncollectibleAccounts1 % 3203040 event occurs and you suffer damages, the money removed. The Price of an insurance policy submitted by medical billers in the macro-social structure of the boats was battered pieces. Numberofdayspastdue ) 030days3160days6190days91120daysMorethan120daysTotalreceivablesReceivablesBalanceonDecember31 $ 480,000100,00040,00025,0005,000 $ 650,000EstimatedPercentofUncollectibleAccounts1 % 3203040 { lrr } what! And d, ____ and ____ are both relatively expensive types of insurance.! Be rejected insurance is to provide a payout arising out of a loss occurring can be extremely high, insurance! ( insured ) right over that third party as of the most important aspects of an insurance.... Has the beauty of simplicity combined with practicality is important to understand how insurance works economy see a Firm:... Of Cash Flows, the basic purpose of insurance is to: his goods low out-of-pocket cost services, such as routine doctor.! The macro-social structure of the boats was battered to pieces in the macro-social structure of population...
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