Insurance is a contract (policy) in which an insurer indemnifies another against losses from specific contingencies or perils. It adds to the company's pool of funds. demand generated by Medicare a. needed income. \text{Increase in accounts receivable}& (280,960)\\ So finding the price that is right for you requires some legwork. A participating policy d. changed to another type of life insurance. After this payment, the insurance company covered the rest of the costs. b. sex. Thus, the amount of your compensation for a loss is directly related to the amount of loss that you actually suffered. 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. \text{Sales} &\$6,034,000& \$3,432,000\\ a. mortgage insurance. \text{Eva Fry} & \$\hspace{5pt}6,500\\ \text{Net income}& (\$ 160,176)& \$ 87,960\\ Subrogation is a part of all indemnity claims. Tax features This preview shows page 1 - 3 out of 26 pages. e. loan value only. b. loss prevention. Although the theoretical purpose of insurance may be protection from catastrophic events, a more common function of health insurance in the United States is far more akin to a club membership than car insurance. The insurance portion of a universal life policy is most analogous to d. non-convertibility. b. straight life. Suppose D'Leon broke even in 201620162016 in the sense that sales revenues equaled total operating costs plus interest charges. Job expenses are estimated to be $1,096 per year at ABM and$636 per year at Zeda. c. industrial life insurance. \hline \text{Common stock (100,000 shares)}& 460,000& 460,000\\ Your insurance company will process the information, and if they accept the claim, you'll receive reimbursement for any damages. \text { Percent collected in the second month after the sale } & 5 True When choosing a policy, it is important to understand how insurance works. Risks come in two basic forms, pure risk and speculative risk. c. try to prevent losses. Jorge Conseco can work for ABM, Inc. for $437 per week or Zeda, Inc. for$1,408 per month. d. term insurance. The primary purpose of life insurance is to provide The most valuable single technique in determining how much life insurance is needed is: Underwriting helps protect life insurance companies from which of the following? Life insurance is meant to help protect your family's financial future. Consumers benefit through the availability of a multitude of products and services, and the economy from the hundreds of thousands of jobs created within the insurance industry or supported by it. \text{Cash} &\$ 7,282& \$ 57,600\\ c. change of policy. Its aim is to reduce financial uncertainty and make accidental loss manageable. The property damage is extensive and requires lengthy and expensive repairs. 3160\ \text{days} & \hspace{4pt}100,000 & \hspace{4pt}3\\ To make up for the compensation paid, your insurer can claim the (insured) right over that third party. In return, the insurer pays for the financial damages in case of any harm to the insured person or object. Through insurance, society is able to Each stood to lose only a small portion. 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. all of the above. A reward clause new drug therapies a. Myers-Briggs indicator. Please sign in to access member exclusive content. As with other financial products, insurance products can be complex and come with fees, so it pays to do your homework before you buy. However, different insurers may charge different premiums for similar policies. 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. b. the probate court 1. c. Adverse selection What's the difference between term life and whole life? Claims processing begins when a healthcare provider has submitted a claim request to the insurance company. a. continuous premium Insurance is when a third-party promises to idenmify another party for losses they might suffer in the future in exchange for agreed upon payments. Simply put, most permanent life insurance policies have the ability to build cash value over time. A grace period permits the policyholder to retain full protection for usually _____ after missing a payment. &2016 &2015\\ As a result, Watkins was informed that changes would have to be made-and quickly; otherwise, he would be fired. b. a level premium. Madan Bahsin concludes in her research paper that examined the fraud at Satyam that the scandal brought to light the importance of ethics and its relevance to corporate culture. Explain what you believe Bahsin meant by linking the ethical reasoning methods discussed in the text to corporate governance, using the Satyam fraud to illustrate your points. $100,000 each to Mimi and Ann Under which circumstance would someone need disability insurance? \text{Payment of cash dividends}& (11,000)\\ a. term Marketing Essentials: The Deca Connection, Carl A. Woloszyk, Grady Kimbrell, Lois Schneider Farese, Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield. Transfer of risk also is referred to as spreading the risk: because the large losses of a few are distributed through an insurer to a large number of premium payers, each of whom pays a relatively small amount. Kurt purchased a policy with an initial premium of $3,000 and may elect how much he desires to pay in premiums from now on. He was required to pay the first $500 of his repair costs, and then the insurance company covered the rest. 8 Tips for Securing Your Financial Accounts. 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. Using EDGAR or another source, obtain the most recent proxy for Caterpillar Inc. or a different company. 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{ e. variable life. You surrender your rights over the third party to the insurer. \hline \text{Addition (subtraction) to retained earnings}& & && (171,176)\\ . Insurance Ensures Family and Business Stability Insurance is a safety net for when risks go wrong. B. homeowners insurance. a. settlement options. d. Extraversion. Why does insurance often provide "peace of mind"? e. Annual. a. protection only. \text{Increase in long-term debt}& 400,000\\ Term is valid for a certain number of years (5,10, 15, 20, etc.) 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. Insurance is a contract in which an insurer indemnifies another against losses from specific contingencies or perils. Assume that you are Jamison's assistant. damaging actions and/or violations of contract provisions are not covered by liability insurance. a. transferred to the life of another person. They are doing well financially but their life insurance needs are high and their budget is tight. Life insurance is a contract in which an insurer, in exchange for a premium, guarantees payment to an insureds beneficiaries when the insured dies. \text{Long-term debt} &723,432 &323,432\\ c. limited pay 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. a. 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. b. the value of the loss. The FDIC, for example, claims in its mission statement to "maintain stability and public confidence in the nation's financial system." Decreasing term insurance usually has a decreasing face value and c. limited payment PERSONAL PROPERTY due to catastrophe and calamity. Consumer Financial Protection Bureau. : the business of insuring persons or property b : a contract by which someone guarantees for a fee to pay someone else for the value of property if it is lost or damaged (as through theft or fire) or to pay usually a specified amount for injury or death c : the amount for which something is insured 2 : a means of guaranteeing protection technological improvements A policys premium is its price, typically expressed as a monthly cost. Therefore the answer is. The insurance policy must be in place. d. special needs of dependents. b. death benefits for survivors. c. whole life insurance. In this agreement, the insurer promises to help with the losses of the insured on the happening contingency. Long before it celebrated its three hundredth anniversary in 1988, Lloyds had grown into a major force on the global insurance scene. \text{Accounts payable} &\$ 524,160 &\$ 145,600\\ d. transfer risk to an insurance company. Credit life; mortgage life Pure risk generally includes potential gains and losses of value and is insurable while speculative risk generally is not. hi good Advertisement LexiG2148 Answer: 3. 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. Prepare a schedule of cash receipts for July and August. A person was in a car accident and cannot work for several months. a. 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. 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