Health and Life Part Chapter 1

A contract that Indemnifies another against lost, damage, or liability arising from an unknown event.

to make a person whole by restoring that person to the same financial position that existed before the loss.

• Pure Risk: means that there is only a chance of loss- the loss may or may not happen-and there is no possibility of gain. Only pure risk is insurable
• Speculative Risk: involves both an uncertainty of loss and of gain. Insurance does not protect individuals against losses arising out of speculative risk because these risks are undertaken voluntarily.

is the immediate specific event causing loss and giving rise to risk, the cause of risk

is any factor that gives rise to a peril, three types physical, Moral, and Morale

arise from material, structural, or operation features of a risk situation

Arise from people's habits and values

arise out of human carelessness or irresponsibility.

risk management strategy, Sharing, Transfer, Avoidance, Reduction, Retention

Allows the insurance company to turn a profit by maintaining a large number of clients. This allows them to predict how many losses may occur within a large group.

• 1.Property insurance
• 2.Casualty Insurance
• 3. Annuity
• 4.Life Insurance, Accident and Health or sickness
• 5.Variable Life
• 6.variable Annuity products
• 7. Credit

protects the Insured against the financial consequences of the direct or consequential loss or damage to property

protects the insured against financial consequences of legal liability, including that for death, injury, disability, or damage to or personal property

provides guaranteed income for the life of an annuitant

Insurance protects the insured against financial loss caused by sickness, bodily injury, or accidental death and may include diability

variable products carry investment risk, that is the insured may lose money because of a decrease in the price of a securities underlying the policy

a limited line of insurance protecting the insured, who is usually a creditor

• 1. Stock Insurers
•     a. a stock insurance company consists of stock holders also kown as shareholders
• 2. Mutual Insurers
•     a. ownship rests with the policyholders, also known as policyowners. Funds not paid after paying claims and operating costs are returned to policyowners
• 3. Reciprocal insurers
•     a. are unincorporated groups of people that provide insurance for one another through individual indemnity agreements
• 4. Fraternal Insurers
•      a. primarily life insurance carriers that exist as social organ. and usually engage in charitable and benevolent activities. members are usually drawn from fraternal lodges.
• 5. Lloyd's of London
•      a.provides a meeting place and clerical services to its members who actually transact the business of insurance.
• 6. Reinsurers
•      a. make up a specialized branch of the insurance industry that insure insurers. 
• 7. Excess and Surplus Lines
•      a.insurance for items that contain to great a risk for usual compannies
• 8. Risk Retention Groups
•      a. are composed of members who are engaged in similar business or activities. 
• 9. Self-Insurers
•      a.  insuring ones own self or business by setting aside funds in case of an emergency
• 10. US GOV'T
•      a. Fed gov't provides a variety of insurance benefits through various programs. Social security, etc.

• Domestic Insurers
•  -  a company is a domestic insurer in the state in which it is incorporated
• Foreign Insurer
•  -  a foreign insurer is licensed to conduct business in states other than the one in which it is incorporated
• Alien Insurer
•  - Companies incorporated in a country other than the United States