Insurance is a contract (policy) in which an insurer indemnifies another against losses from specific contingencies or perils. Typically, higher limits carry higher premiums. b. loss prevention. c. savings and loan value. The insurance company changes its policies after property damage occurs. Her mother has $350 deducted from her paychecks each month.When Maria visited the doctor, her mother paid a $25 fee. All three survived Marilyn. 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. The probability of a loss occurring can be reduced by, having a fire extinguisher in your home is an example of loss prevention. \text{Net income}& (\$ 160,176)\\ Which of the following companies does not rate the financial strength of life insurance companies? The basic purpose of insurance is to _____ Protect yourself from economic losses 2. 5.) The needs approach to evaluate the right amount of life insurance is the most accurate method to determine the proper amount of death benefits. d. protection and savings. \text{Lease payments} &\$ 40,000& \$ 40,000\\ e. cash value. t/f The basic purpose of insurance is to protect you from the results of accidental losses. The Third-Party Administrator Desk or TPA desk is a support system that most hospitals have. The best way to handle risk is to Survivorship (last-to-die) insurance is used primarily to help pay estate taxes. \text{EPS} &(\$ 1.602) & \$ 0.880\\ e. biennial, When a primary beneficiary dies before the insured, proceeds are payable to If life insurance is convertible, the policy can be &&\underline{\textbf{Common Stock}}\\ Although it took a different direction from the activities at Lloyds, modern fire insurance also had its beginnings in 17th century England. Health insurance costs have been increasing at a rate greater than the CPI. &\textbf{Shares} &\textbf{Amount}& \textbf{Earnings} &\textbf{Equity}\\ d. A limited clause Life insurance is a contract between an insurer and a policy owner. a. income levels. Assuming that all of the operating expenses are fixed (or, wont change as sales increase or d. term life b. universal life e. premium reductions. In what circumstance would a property insurance claim be rejected? \end{array} d. economic identification \textbf{of Days Past Due)} & \textbf{on December}\ \bm{31} & \textbf{Uncollectible Accounts}\\ e. loan value only. Insurance is the required (by lenders) safety net that lets entrepreneurs explore opportunity. 3160\ \text{days} & \hspace{4pt}100,000 & \hspace{4pt}3\\ Principal of subrogation: The principle of subrogation enables the insured to claim the amount from the third party responsible for the loss. Lets look at the most important. The way insurance companies work, they can pay this and still make a profit. Universal life insurance is d. Fixed period To check insurance licensing, contact your state insurance commissioner. Check all that apply. D. 6-Chloroplast, Please help me calculate the increase in water, energy released in joules and energy released by 1g of bread in joules. Your insurance company will process the information, and if they accept the claim, you'll receive reimbursement for any damages. 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. Key features to consider include the length of coverage, whether you pay fixed or variable premiums, how benefits are determined and costs of coverage. \text{Total} & \underline{ \underline{ \$25,000}} c. Lifetime income Long-term care insurance can cover both nursing home and home health care. a. protection only. You pay a monthly or yearly fee to the insurance company to insure your life, health, vehicle, property, etc for a certain period. c. inappropriateness for most person's life insurance needs. It helps to protect the insured person or their family against financial loss. \end{array} The claims settlement process is one of the most important aspects of an insurance policy, especially if it is a health cover. Lump sum The insured party must file a claim. Rodney and Toni are a young couple with two small children. Insurance companies assess the risk and charge premiums for various types of insurance coverage. Flexible premiums There are four types of insurance that most financial experts recommend everybody have: life, health, auto, and long-term disability. FINRA has jurisdiction over the investment professionals and firms that sell this type of insurance product. Benefits average 19% of yearly wages at ABM and 25% at Zeda. The insurance company finds that a homeowner intentionally caused damage. 212%of82\small 2 \frac{1}{2}\% \text{ of } 82 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. technological improvements \text{Addition (subtraction) to retained earnings}& & && (171,176)\\ \text { August } & 300,000 2.prevention. Risk. Learn how coverage works. The deductible is a specific amount that the policyholder must pay out of pocket before the insurer pays a claim. c. change of policy. People are less worried when they know they have protection from risk. Annual term insurance premiums increase as you get older while whole life insurance premiums remain constant. Many airline passengers purchase a special life insurance policy frequently sold at the airport. What are the four major types of insurance? B. \text{Total equity} &\$ 492,592 &\$ 663,768\\ Life Insurance: What It Is, How It Works, and How To Buy a Policy, Fire Insurance: Definition, Elements, How It Works, and Example, Auto Insurance: Definition, How It Works, Coverage Types & Costs, Coinsurance: Definition, How It Works, and Example, Whole Life Insurance Definition: How It Works, With Examples, Personal Injury Protection: What it is, How it Works. In simpler words, one can answer what is an insurance policy as a form of protection from any unexpected loss or damage. e. An arbitration clause. \text{Retained earnings} &32,592& 203,768\\ Buying life insurance protects your spouse and children from the potentially devastating financial losses that could result if something happened to you. 4. liability. \text { Dividends } & 3,000 & 2,000 \\ There are many types of insurance policies. Insurers will evaluate historical loss for perils, examine the risk profile of the potential policyholder, and estimate the likelihood of the policyholder to experience risk and to what level. \text{Tax rate} & 40.00\% & 40.00\%\\ Assume that you are Jamison's assistant. b. whole Fire insurance covers damage and losses caused by fire and is often purchased in addition to standard homeowners insurance. e. reduce insurance premiums. The settlement option chosen by most beneficiaries is \text{Marcie Moffet} & 3,800\\ OperatingActivitiesNetincome($160,176)Depreciationandamortization116,960Increaseinaccountspayable378,560Increaseinaccruals353,600Increaseinaccountsreceivable(280,960)Increaseininventories(572,160)Netcashprovidedbyoperatingactivities($164,176)Long-TermInvestingActivitiesAdditionstoproperty,plant,andequipment($711,950)Netcashusedininvestingactivities($711,950)FinancingActivitiesIncreaseinnotespayable$436,808Increaseinlong-termdebt400,000Paymentofcashdividends(11,000)Netcashprovidedbyfinancingactivities$825,808SummaryNetdecreaseincash($50,318)Cashatbeginningofyear57,600Cashatendofyear$7,282\small{ The money your loved ones receive is . e. revised as needed. Nonforfeiture rights guarantee that a policyholder will not lose his or her ____. c. Convertible e. anticipate risks. End of preview. Increasing the deductible is likely to lower the premium on a comprehensive major medical policy. d. the chance of loss. Underwriting discussion The insurance company finds that a homeowner intentionally caused damage. prevention. What Is Insurance?, Insurance Information Institute. In the homeowner example, if the owner bought two $250,000 policies on his home from different companies, and a fire occurred that was covered under both policies, the owner files a claim with one company. b. a. needed income. Transferring risk means asking an insurance company to take over the risk for a small payment (the premium). \textbf{Assets}\\ These contracts require policyholders to identify and describe the property that is covered and to specify the causes of loss, called , for which a policyholder will be compensated in the event of loss. b. a level premium. d. risk retention. \hline \text { Accounts receivable } & \$ 14,000 & \$ 18,000 \\ b. universal Under which circumstance would someone need disability insurance? The first fire insurance company was founded in London the following year. Refer to the case related to Satyam. Check all that apply. 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. Half of Americans Have Faced Fees While Traveling That Could Have Been Prevented by Travel Insurance., Investopedia requires writers to use primary sources to support their work. Short-term shocks in the investment markets 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. a. age. In some instances, life insurance can help replace a portion of the household income your spouse, partner or children will lose if you pass away. The company was also known as Hand in Hand, after its firemark, a symbol that appeared originally on houses that were insured by the Contributionship. b. is a form of endowment insurance. Most people have some kind of insurance: for their car, their house, or even their life. You want to pay premiums for 20 years and have your insurance premium obligations finished at that time, but you feel you will need life insurance for the rest of your life. Suppose D'Leon broke even in 201620162016 in the sense that sales revenues equaled total operating costs plus interest charges. The basic purpose of insurance is to protect you from losses! But what if there was a way to enjoy living benefits of life insurance during your lifetime? a. \hline d. Industrial life; special-purpose policies \text{Total assets} &\$2,866,592& \$1,468,800\\ a. settlement options. 3. protection. The Bottom Line Insurance is a contract in which an insurer indemnifies another against losses from specific contingencies or perils. A. C) Protect you from losses Advertisement Advertisement New questions in Biology. Viewed as a form of mutual aid, risk-sharing can be seen not only as sound business practice, but as enlightened social behavior rooted in accepted principles of ethics. The larger the number of premium payers, the more accurately insurers are able to estimate probable losses thus calculate the amount of premium to be collected from each. The insurance policy must be in place. d. term insurance. d. special needs of dependents. The insured party must purchase property. \hline The insured party must file a claim. b. interest only. The probability of a loss occurring can be reduced by e. extended-term option, The _________ option allows a terminally ill insured to receive a percentage of the death benefit for immediate use. 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. homeowners insurance. d. guaranteed purchase Under which circumstance would someone need disability insurance? Bennett Inc. found that about 15%15 \%15% of its sales during the month were for cash. OperatingActivitiesNetincomeDepreciationandamortizationIncreaseinaccountspayableIncreaseinaccrualsIncreaseinaccountsreceivableIncreaseininventoriesNetcashprovidedbyoperatingactivitiesLong-TermInvestingActivitiesAdditionstoproperty,plant,andequipmentNetcashusedininvestingactivitiesFinancingActivitiesIncreaseinnotespayableIncreaseinlong-termdebtPaymentofcashdividendsNetcashprovidedbyfinancingactivitiesSummaryNetdecreaseincashCashatbeginningofyearCashatendofyear($160,176)116,960378,560353,600(280,960)(572,160)($164,176)($711,950)($711,950)$436,808400,000(11,000)$825,808($50,318)57,600$7,282, 20162015Sales$6,034,000$3,432,000Costofgoodssold5,528,0002,864,000Otherexpenses519,988358,672Totaloperatingcostsexcludingdepreciationandamortization$6,047,988$3,222,672Depreciationandamortization116,96018,900EBIT($130,948)$190,428Interestexpense136,01243,828EBT($266,960)$146,600Taxes(40%)(106,784)58,640Netincome($160,176)$87,960EPS($1.602)$0.880DPS$0.110$0.220Bookvaluepershare$4.926$6.638Stockprice$2.25$8.50Sharesoutstanding100,000100,000Taxrate40.00%40.00%Leasepayments$40,000$40,000Sinkingfundpayments00\small{ However, some life insurance policies are considered securities, which means the contracts must be registered with the Securities and Exchange Commission (SEC) and sales are regulated by FINRA. c. earning potential of surviving spouse. d. needs analysis Bennett has the following accounts receivable collection experience: Percentcollectedinthemonthofsale25Percentcollectedinthemonthafterthesale68Percentcollectedinthesecondmonthafterthesale5\begin{array}{lr} \hline For the most recent year presented in your proxy, what was the total annual compensation received by the chairman and CEO of the company. The least expensive form of whole life insurance protection is A person was in a car accident and cannot work for several months. \text { July } & 295,000 \\ b. the probate court a. term Report a concern about FINRA at 888-700-0028, Securities Industry Essentials Exam (SIE), Financial Industry Networking Directory (FIND), National Association of Insurance Commissions (NAIC) Consumer Information, Understanding Structured Notes With Principal Protection, Are You Staying Cyber Safe? a. annual 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. d. Renewable , eus e. all of the above. d. substitute for fixed-dollar insurance protection. Advances in medical technology, prescriptions drugs and treatments have substantially reduced the costs health care in recent decades. After this payment, the insurance company covered the rest of the costs. The basic purpose of insurance is to protect you from losses From the standpoint of the person buying insurance, the central purpose of insurance should be: to transfer risks of serious losses Which of the following forms of life insurance requires the lowest premium per dollar of initial death benefits? Interest only c. Column definitions and key terms Want to read all 26 pages. The purpose of property insurance is to protect policyholders against losses to their 1. \text{Increase in notes payable}& \$ 436,808\\ An insurance claim is a formal request to an insurance company asking for a payment based on the terms of the insurance policy. This would be an example of risk assumption. Jorge Conseco can work for ABM, Inc. for $437 per week or Zeda, Inc. for$1,408 per month. . The basic purpose of insurance is to provide? c. paid up life In this respect, insurers perform a capital formation function similar to that of banks. c. an increasing premium. d. $66,666 each to Jack, Mimi, and Ann Each stood to lose only a small portion. As an additional benefit of to society, insurers themselves, the trustees of policyholder and stockholder funds, become major investors and suppliers of capital to the economy. When the automobile came along, insurance wasnt far behindto provide financial protection and peace of mind to car owners whose accidents, though few in the early days, nevertheless could be costly. 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. Consider factors such as your risk tolerance, available capital to spend, cost of the policy and the extent to which the people you leave behind when you die rely on you financially. Please sign in to access member exclusive content. b. earning potential of surviving children. In this agreement, the insurer promises to help with the losses of the insured on the happening contingency. Its aim is to reduce financial uncertainty and make accidental loss manageable. \text { Accounts payable } & 22,000 & 15,000 \\ \end{array}} Workers' compensation is a state program that provides benefits for, Workers suffering injury or illness on the job. Life insurance is a contract in which an insurer, in exchange for a premium, guarantees payment to an insureds beneficiaries when the insured dies. The purpose of this principle is to set back the insured to the same financial position that existed before the loss or damage occurred. 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. Subrogation allows your insurer to recoup costs (medical payments, repairs, etc. 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 basic assumptions that the company uses to compute its insurance illustrations include all except the insured, by paying a definite amount, in exchange for an adequate consideration called as premium. 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{ In exchange for an annual fee, beneficiaries receive access to free or low out-of-pocket cost services, such as routine doctor visits. 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