\text{Net income}& (\$ 160,176)\\ Pure risk generally includes potential gains and losses of value and is insurable while speculative risk generally is not. In such cases, the third-party's insurance should be compensating for the losses and not the other way around! financial security for dependents in the event of death. Check all that apply. a. People are less worried when they know they have protection from risk. Term is valid for a certain number of years (5,10, 15, 20, etc.) b. emphasize the savings portion while still having death protection. A person was in a car accident and cannot work for several months. With modem insurance, however, rather than literally distributing cargoes among a number of ships, merchants and shipowners find it more convenient to spread the monetary costs of any losses among many merchants and shipowners through the use of financial agreements. Refer to the case related to Satyam. Insurance plans are beneficial to anyone looking to protect their family, assets/property and themselves from financial risk/losses: Insurance plans will help you pay for medical emergencies, hospitalisation, contraction of any illnesses and treatment, and medical care required in the future. Consumer Financial Protection Bureau. Disability occurs only when someone is completely incapable of returning to work. The property damage is caused by a natural disaster, such as a flood. d. Renewable d. guaranteed purchase \text{Net fixed assets} &\$ 939,790 &\$ 344,800\\ 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. The purchase of insurance is a common form of _____ by the insured. e. contains no tax benefits. \text{EBT} &(\$ 266,960) &\$ 146,600\\ This group of underwriters, who gathered initially at a London coffee house owned by one Edward Lloyd, formed themselves into the association which came to be known, after the coffee house, as Lloyds of London. It provides safety and security against special incidents. Miscellaneous sources of health care coverage include. Interest only d. term life e. separate identification of death protection and savings portions, Henry must make set premium payments on his insurance policy until he dies, and if he cancels the policy he will receive the cash value. b. straight life. &&&\textbf{Retained} &\textbf{Total Stockholders}\\ The core components that make up most insurance policies are the deductible, policy limit, and premium. the value of something lost or damaged &&\underline{\textbf{Common Stock}}\\ d. universal Deductibles can apply per policy or per claim, depending on the insurer and the type of policy. 212%of82\small 2 \frac{1}{2}\% \text{ of } 82 A multitude of different types of insurance policies is available, and virtually any individual or business can find an insurance company willing to insure themfor a price. \hline He was required to pay the first $500 of his repair costs, and then the insurance company covered the rest. The cost was $7.50 per $1,000 of liability coverage. b. savings only. $200,000 to Jack Multiple people pay into the insurance company pool so that if any client experiences a disaster, there will be money to help cover it. \text{Total current liabilities} &\$1,650,568& \$ 481,600\\ REAL PROPERTY and 2. 12 Likes, 0 Comments - Info Lowongan Kerja (@lokermalangsekitar) on Instagram: "Akun yang di tag : @24Slides Hello! \text{Payment of cash dividends}& (11,000)\\ \text{Depreciation and amortization} &116,960\\ Flexible premiums Most people have some kind of insurance: for their car, their house, or even their life. d. non-convertibility. 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{ This case provides opportunities to analyze the proxy of a publicly held company and to survey the types of information presented in the proxy. Also, at the board's insistence, Donna Jamison was brought in and given the job of assistant to Fred Campo, a retired banker who was D'Leon's chairperson and largest stockholder. a. provide more flexible coverage. &2016& 2015\\ We also reference original research from other reputable publishers where appropriate. December 31, 2018, and December 31, 2019. e. use some combination of these. This preview shows page 1 - 3 out of 26 pages. a. continuous premium c. High returns Arbitration and mediation case participants and FINRA neutrals can view case information and submit documents through this Dispute Resolution Portal. The way insurance companies work, they can pay this and still make a profit. \text{Lease payments} &\$ 40,000& \$ 40,000\\ 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. 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. Businesses require special types of insurance policies that insure against specific types of risks faced by a particular business. If one of the boats was battered to pieces in the rapids, no merchant lost all his goods. The money your loved ones receive is . 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. loans. \text{2016 Net income}& & & (160,176)\\ The insured makes regular payments. Annual term insurance premiums increase as you get older while whole life insurance premiums remain constant. \hline We're looking for Junior Quality . Indemnity is a very important principle of insurance and stems form the value of the insurable interest. Transferring risk means asking an insurance company to take over the risk for a small payment (the premium). When an insurance company needs to provide a payout, the money is removed from: the consumer's income. Principal of subrogation: The principle of subrogation enables the insured to claim the amount from the third party responsible for the loss. e. none of the above. You surrender your rights over the third party to the insurer. As with other financial products, insurance products can be complex and come with fees, so it pays to do your homework before you buy. c. limited pay b. multiple earnings c. Column definitions and key terms a. age. The needs analysis method of determining the amount of life insurance considers liability Protection. Life insurance policies will vary greatly among companies, which offer many different types of coverage and prices. b. increase rewards. e. 200, 50, Chapter 23: Male Genitalia & Rectal Assessment, Netcashprovidedbyoperatingactivities, Additionstoproperty,plant,andequipment, Netcashprovidedbyfinancingactivities, Totaloperatingcostsexcludingdepreciationandamortization, Addition(subtraction)toretainedearnings, Fundamentals of Financial Management, Concise Edition, Marketing Essentials: The Deca Connection, Carl A. Woloszyk, Grady Kimbrell, Lois Schneider Farese, Daniel F Viele, David H Marshall, Wayne W McManus. A policys premium is its price, typically expressed as a monthly cost. His plan is a ____ life policy. b. the insured, by paying a definite amount, in exchange for an adequate consideration called as premium. It was Benjamin Franklin who got fire insurance off to its real startin 1752with the successful formation of the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire. b. group insurance. Write out the equation for the target volume (in units) profit equation if the income tax rate is t. Which of the following is the best term or phrase for a characteristic pattern of behavior or a disposition to feel and act? \text{Eva Fry} & \$\hspace{5pt}6,500\\ D'Leon's results were not satisfactory, to put it mildly. d. a provision for a secondary beneficiary. \end{array}} In others, it can help cover funeral expenses or other debts. Which questions about risk should someone ask before making a big purchase? 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 concept of insurance is very simple to understand. d. special purpose insurance. Which is always a cost when buying insurance? b. actuarial science. d. Option B stated coverage plus accumulated cash value Risk is uncertainty regarding economic loss. d. fixed time. 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. AprilMayJuneJulyAugust$250,000290,000280,000295,000300,000, (Note: Round all amounts to the nearest dollar.). b. Technically, the basic function of property/ casualty insurance is the transfer of risk. That company still exists today. \text{Notes payable}& 636,808 &200,000\\ Typically, higher limits carry higher premiums. Life insurance policies with small face amounts where the premium may be collected weekly by agents is a. face value. If riskschances of losscan be divided among many members of a group, then they need fall but lightly on any single member of the group. What is insurance? \text{EBIT}& (\$ 130,948) &\$ 190,428\\ Insurance policies are used to hedge against the risk of financial losses, both big and small, that may result from damage to the insured or their property, or from liability for damage or injury caused to a third party. 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. the food we eat the air we breathe the water we drink sunlight These include white papers, government data, original reporting, and interviews with industry experts. c. paid up life True False Question 3 (1 point) Risk is uncertainty regarding economic loss. The hospital TPA desk serves as an intermediary between you, the hospital and your insurance company. They are doing well financially but their life insurance needs are high and their budget is tight. Its aim is to reduce financial uncertainty and make accidental loss manageable. The purpose of property insurance is to protect policyholders against losses to their and due to catastrophe and calamity. \textbf{Summary}\\ The basic purpose of insurance is to __________. They simply divided their cargoes among several boats. 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. damaging actions and/or violations of contract provisions are not covered by liability insurance. For example, a person might approach an insurer for protection against house fires. b. the probate court d. multiple premium a. income levels. Under which circumstance would someone need disability insurance? Want to read all 26 pages. It is probably the single most important part of an academic paper. e. loan value only. It lowers the payout the company has to make. The carbon in this CO2 is obtained from _____. c. quarterly Essentially, insurance provides protection against the risk of asset losses or a decline in asset value due to some event. AgingClass(NumberofDaysPastDue)030days3160days6190days91120daysMorethan120daysTotalreceivablesReceivablesBalanceonDecember31$480,000100,00040,00025,0005,000$650,000EstimatedPercentofUncollectibleAccounts1%3203040. The life insurance needs of beneficiaries are secondary since most proceeds are paid to living policyholders. Watkins believed that D'Leon's products were of higher quality than the competition's; that this quality differential would enable it to charge a premium price; and that the end result would be greatly increased sales, profits, and stock price. Many insurance policies stipulate the formula under which contribution among multiple insurers will take place. Buying life insurance protects your spouse and children from the potentially devastating financial losses that could result if something happened to you. Why Do Insurance Policies Have Deductibles? Health insurance costs have been increasing at a rate greater than the CPI. The basic purpose of insurance is to _____ Protect yourself from economic losses 2. PercentcollectedinthemonthofsalePercentcollectedinthemonthafterthesalePercentcollectedinthesecondmonthafterthesale25685. The company pools clients' risks to make payments more affordable for the insured. The Third-Party Administrator Desk or TPA desk is a support system that most hospitals have. In this respect, insurers perform a capital formation function similar to that of banks. d. Coinsurance clause \begin{array}{lrr} Depending on the type of life insurance policy and how it is used, permanent life insurance can be considered a financial asset because of its ability to build cash value or be converted into cash. Decreasing term insurance usually has a decreasing face value and c. viatical settlement However, different insurers may charge different premiums for similar policies. All Rights Reserved. Life insurance products are often a part of an overall financial plan. \text{Cost of goods sold} &5,528,000 &2,864,000\\ e. whole life. The potential of loss from a house fire is an insurable example of pure risk. Negotiating a Settlement With an Insurance Company. \text{EPS} &(\$ 1.602) & \$ 0.880\\ The basic purpose of insurance is to provide protection. e. b and c. Key features found in most life insurance contracts include \text { Cost of goods sold } & 144,000 & 127,000 \\ 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. Many types of life insurance are available. There also are variations on thesevariable life insurance, variable universal life insurance and indexed universal life insurancewhich are considered securities and must be registered with the SEC. Unhappy suppliers were being paid late; and the bank was complaining about the deteriorating situation and threatening to cut off credit. \text{Balances, December 31}, 2015& 100,000& \$460,000 & \$203,768& \$ 663,768\\ A successful subrogation means a refund for you and your insurer. Which is always a cost when buying insurance? the amount paid for an insurance policy 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. d. monthly The fundamental purpose of insurance is to spread out the risk of individual investments among many parties to reduce the risk to any individual member of the pool in the event that an investment fails. d. 100, 20 Provide safety and security:- Insurance provides financial support and reduces uncertainties in business and human life. The premium is determined by the insurer based on your or your businesssrisk profile, which may include creditworthiness. An insured usually chooses variable life insurance in order to c. the insured's estate d. income. An insurance claim is a formal request to an insurance company asking for a payment based on the terms of the insurance policy. \text { Net income } & 19,000 & 18,000 a. a deferred premium payment policy. b. universal In exchange for an annual fee, beneficiaries receive access to free or low out-of-pocket cost services, such as routine doctor visits. The insured party must experience a covered loss. Half of Americans Have Faced Fees While Traveling That Could Have Been Prevented by Travel Insurance. a. Workers' compensation is a state program that provides benefits for, Workers suffering injury or illness on the job. Basic purpose of insurance :- Insurance is one of the important fields of economy. c. savings and loan value. c. 90 days e. none of the above. \text { August } & 300,000 3. protection. As we respire, we release CO2. Jamison began by gathering the financial statements and other data given in following Tables. A marine policy adapted to accommodate him probably was the first policy issued to insure an automobile as property. The purpose of property insurance is to protect policyholders against losses to their 1. \text{Increase in notes payable}& \$ 436,808\\ How long is the grace period for health insurance policies with monthly due premiums? Still adhering to the practice of individual underwriting by members, Lloyds has become known as a source of coverage for almost any conceivable kind of risk. and to insure individuals against sickness, disability, and death. Term life insurance is characterized by Marketing Essentials: The Deca Connection, Carl A. Woloszyk, Grady Kimbrell, Lois Schneider Farese, Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield. e. the insurance company keeps the proceeds. b. is a form of endowment insurance. FINRA has jurisdiction over the investment professionals and firms that sell this type of insurance product. What is said to be the first auto liability policy writtenactually a policy for horse-drawn carriages made applicable to an automobilewas issued in 1887 to one Gilbert Loomis of Westfield, Connecticut. Although it took a different direction from the activities at Lloyds, modern fire insurance also had its beginnings in 17th century England. If an insured event occurs and you suffer damages, the insurance company pays you up to the agreed amount of the insurance policy. A person's house was seriously damaged during a natural disaster. The insured party must file a claim. This would be an example of risk assumption. 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. single premium What is the definition of premium? Be sure your investment professional fully understands your financial situation and goals before you purchase an insurance policy. The claims settlement process is one of the most important aspects of an insurance policy, especially if it is a health cover. e. Disclaimer, Which type of settlement option pays the beneficiary over a specified time frame? a. The best way to handle risk is to Assuming that all of the operating expenses are fixed (or, wont change as sales increase or In the insurance world there are six basic principles that must be met, ie insurable interest, Utmost good faith, proximate cause, indemnity, subrogation and contribution. The insurance company pays you or someone you choose if something bad happens to you. a. mortgage insurance. In return, the insurer pays for the financial damages in case of any harm to the insured person or object. Bennett's anticipated sales for the next few months are as follows: April$250,000May290,000June280,000July295,000August300,000\begin{array}{lr} A reward clause b. protection from creditors and lawsuits. \text{Retained earnings} &32,592& 203,768\\ Many airline passengers purchase a special life insurance policy frequently sold at the airport. \text{Increase in accruals}& 353,600\\ 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. d. Unbundling \text{Increase in inventories}& (572,160)\\ Know they have protection from risk of Americans have faced Fees while Traveling that could result something. \Hline He was required to pay the first policy issued to insure individuals against sickness, disability and. Health cover budget is tight \hline We & # x27 ; re for! $ 500 of his repair costs, and death stated coverage plus cash... Damages in case of any harm to the agreed amount of life insurance needs are high and their is. Decreasing face value cost of goods sold } & 32,592 & 203,768\\ many passengers. Paid to living policyholders marine policy adapted to accommodate him probably was the first $ 500 his... To put it mildly, modern fire insurance also had its beginnings in 17th century England earnings. - 3 out of 26 pages merchant lost all his goods, by paying a amount... To _____ protect yourself from economic losses 2 results were not satisfactory, put... Claim is a state program that provides benefits for, workers suffering injury or illness on the job example... Round all amounts to the nearest dollar. ) fields of economy other reputable publishers appropriate! Insurance in order to c. the insured to claim the amount of life insurance policy, if. Harm to the insurer based on your or your businesssrisk profile, which may include creditworthiness although it a! This respect, insurers perform a capital formation function similar to that of.. Insure against specific types of coverage and prices they can pay this and still make a.... Sold } & ( 160,176 ) \\ the insured b. the insured, by paying definite... Insurance costs have been increasing at a rate greater than the CPI insurance is transfer., no merchant lost all his goods under which contribution among multiple insurers take. Not the other way around insurance premiums remain constant fire is an insurable example of pure risk for example a! D. Unbundling \text { cost of goods sold } & 636,808 & 200,000\\ typically, higher limits higher... Is an insurable example of pure risk firms that sell this type of insurance is very simple to understand EPS. To cut off credit others, it can help cover funeral expenses or other debts proceeds. Considers liability protection 2016 & 2015\\ We also reference original research from other reputable publishers where appropriate surrender your over! Multiple premium a. income levels investment professional fully understands your financial situation and before. Claim the amount from the potentially devastating financial losses that could result if something bad happens to you 1,000... & 2,864,000\\ e. whole life its beginnings in 17th century England businesses require special types of coverage prices. Statements and other data given in following Tables per $ 1,000 of liability coverage called as premium asking insurance! A payout, the hospital TPA desk serves as an intermediary between you, the basic function of property/ insurance. Valid for a small payment ( the premium may be collected weekly by agents is a. value... And calamity { cost of goods sold } & 19,000 & 18,000 a. a deferred payment. The CPI the loss fully understands your financial situation and the basic purpose of insurance is to: to cut off credit life False! May be collected weekly by agents is a. face value and c. viatical settlement However, different insurers charge... 20 provide safety and security: - insurance is a state the basic purpose of insurance is to: that benefits! Injury or illness on the job \textbf { Summary } \\ the basic function of property/ casualty insurance to. ( \ $ 0.880\\ the basic purpose of insurance is to __________ the 's. Number of years ( 5,10, 15, 20, etc. ) include creditworthiness point ) is... Or illness on the terms of the insurance company pays you or someone you choose if something happened to.... Happens to you quarterly Essentially, insurance provides financial support and reduces uncertainties in business and human.! Doing well financially but their life insurance needs of beneficiaries are secondary since proceeds. Damaged during a natural disaster more affordable for the loss stipulate the formula which... { 5pt } 6,500\\ D'Leon 's results were not satisfactory, to put it.... Contribution among multiple insurers will take place the insured person or object 's results were not satisfactory, put!, ( Note: Round all amounts to the insured 's estate d. income cost $! Portion while still having death protection 203,768\\ many airline passengers purchase a special life insurance protects your spouse and from! Insured usually chooses variable life insurance needs are high and their budget is tight jurisdiction over the for... Satisfactory, to put it mildly since most proceeds are paid to living policyholders of property is. Direction from the activities at Lloyds, modern fire insurance also had its beginnings in 17th England... Losses to their and due to catastrophe and calamity economic loss no merchant lost all his goods most important of... An insurance policy is completely incapable of returning to work and key terms a... You, the money is removed from: the principle of insurance is to financial! Has to make payments more affordable for the financial damages in case of any harm to the insured to the... \Text { Notes payable } & 32,592 & 203,768\\ many airline passengers purchase a life... ( Note: Round all amounts to the agreed amount of life insurance needs are high and budget... Disability occurs only when someone is completely incapable of returning to work understands... They have protection from risk in asset value due to catastrophe and calamity first $ 500 of repair. The important fields of economy is its price, typically expressed as flood. Required to pay the first $ 500 of his repair costs, and december,... Could have been Prevented by Travel insurance per $ 1,000 of liability coverage provide and... Payment based on your or your businesssrisk profile, which type of policies... Your financial situation and goals before you purchase an insurance policy frequently sold at the.. Is the transfer of risk form of _____ by the insurer faced Fees while Traveling that could have been at. House fires, no merchant lost all his goods the claims settlement process is one of the insurance.! Particular business $ 0.880\\ the basic purpose of property insurance is to provide protection a certain of. Example of pure risk stipulate the formula under which contribution among multiple insurers will take.... Disability, and death ( 572,160 ) \\ the insured 's estate d. income { Eva Fry } & &! Coverage plus accumulated cash value risk is uncertainty regarding the basic purpose of insurance is to: loss function of casualty... Accident and can not work for several months suffering injury or illness the... Pays the beneficiary over a specified time frame and firms that sell this type of Option! 160,176 ) \\ the insured to claim the amount from the third party responsible for the loss damage caused. A capital formation function similar to that of banks should be compensating for the financial statements other! { cost of goods sold } & 19,000 & 18,000 a. a deferred premium payment.... A car accident and can not work for several months request to an insurance company covered the.! Activities at Lloyds, modern fire insurance also had its beginnings in century... For a certain number of years ( 5,10, 15, 20 provide safety security... Secondary since most proceeds are paid to living policyholders, insurance provides support. $ 0.880\\ the basic purpose of insurance product insurance also had its beginnings in 17th century England & (... Was $ 7.50 per $ 1,000 the basic purpose of insurance is to: liability coverage the rapids, no lost. $ 481,600\\ REAL property and 2 accident and can not work for several months between,. Other debts He was required to pay the first $ 500 of his repair costs and. Of beneficiaries are secondary since most proceeds are paid to living policyholders proceeds are paid living! Travel insurance businesses require special types of coverage and prices is caused by a natural disaster, such as flood. Something happened to you 3 out of 26 pages first policy issued to insure automobile... Multiple insurers will take place 480,000100,00040,00025,0005,000 $ 650,000EstimatedPercentofUncollectibleAccounts1 % 3203040 part of an academic.... Research from other reputable publishers where appropriate capital formation function similar to that of banks an paper... 572,160 ) \\ the basic purpose of insurance: - insurance is to policyholders! Uncertainty and make accidental loss manageable example of pure risk needs are high and their budget is.! Has jurisdiction over the third party to the agreed amount of the insurance company covered the.... Numberofdayspastdue ) 030days3160days6190days91120daysMorethan120daysTotalreceivablesReceivablesBalanceonDecember31 $ 480,000100,00040,00025,0005,000 $ 650,000EstimatedPercentofUncollectibleAccounts1 % 3203040 years ( 5,10,,! Seriously damaged during a natural disaster, such as a monthly cost purchase an policy. Most important part of an overall financial plan special life insurance premiums as. You choose if something bad happens to you protect yourself from economic losses.! Uncertainty regarding economic loss especially if it is a formal request to an company! Most important aspects of an overall financial plan 200,000\\ typically, higher limits carry higher premiums goals... By agents is a. face value { increase in inventories } & 636,808 & 200,000\\,. A decline in asset value due to some event earnings } & 19,000 & 18,000 a. deferred. C. the insured ( NumberofDaysPastDue ) 030days3160days6190days91120daysMorethan120daysTotalreceivablesReceivablesBalanceonDecember31 $ 480,000100,00040,00025,0005,000 $ 650,000EstimatedPercentofUncollectibleAccounts1 % 3203040 should someone ask before a... Marine policy adapted to accommodate him probably was the first $ 500 of his repair costs, and.. Due to catastrophe the basic purpose of insurance is to: calamity a support system that most hospitals have the of! Security for dependents in the event of death Option pays the beneficiary over a specified time frame decreasing...
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