| Insurance is a cover used for protecting
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| | - Huge Loss - Insurance - The size of
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| a person from the financial losses.
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| | the loss must be meaningful from the
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| Financial losses can take many forms.
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| | perspective of the insured. Insurance
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| There are risks to our investments,
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| | premiums need to cover both the expected
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| liabilities for our actions, and risks to
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| | cost of losses, plus the cost of issuing
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| our ability to earn income.
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| | and administering the policy, adjusting
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| The insurer and the insured are the main
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| | losses, and supplying the capital needed
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| two parties involved in insurance. The
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| | to rationally assure that the insurer
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| insurer is the insurance company which
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| | will be able to pay claims.
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| will provide the cover to the insured
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| | - Affordable Premium - Insurance - If
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| against any financial losses. The insured
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| | the probability of an insured event is so
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| may be an individual person or a group of
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| | high, or the cost of the event is so
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| people like an employer, members of a
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| | large, that the resulting premium is
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| society, etc.
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| | large relative to the amount of
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| Basic categorization of Insurance
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| | protection offered, it is not likely that
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| There are mainly two broad categories of
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| | anyone will buy insurance, even if on
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| insurance
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| | offer.
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| - Life insurance
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| | - A large number of identical coverage
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| - Non-life insurance Life insurance
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| | units - Insurance - The vast majority of
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| products include Life term policies,
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| | insurance policies are provided for
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| which give clean risk coverage of only
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| | individual members of very large classes.
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| the death benefit, whereas endowment or
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| | The existence of a large number of
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| money back policies have a risk as well
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| | identical coverage units allows insurers
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| as savings component i.e. death as well
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| | to benefit from the so-called "law of
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| as maturity benefit. The life insurance
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| | large numbers," which in effect states
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| also includes Unit - Linked Policies in
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| | that as the number of coverage units
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| which there is a risk component and a
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| | increases, the actual results are
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| savings component, which is invested in
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| | increasingly likely to become close to
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| equity, debt or gilt funds, depending on
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| | expected results.
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| the insurance company.
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| | - Measurable Loss - Insurance - There
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| Non Life insurance products include
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| | are two elements that must be at least
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| property or casualty, health insurance or
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| | estimatable, if not formally calculable:
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| house, fire, marine insurance etc. This
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| | the probability of loss, and the
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| insurance category deals with all the
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| | attendant cost. Probability of loss is
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| non-life aspects of an insured like their
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| | generally an empirical exercise, while
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| house, health, land, office, etc which
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| | cost has more to do with the ability of a
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| might bring financial loss. There are few
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| | reasonable person in possession of a copy
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| principles of insurance, such as:
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| | of the insurance policy and a proof of
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| - Definite Loss - Insurance - The event
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| | loss associated with a claim presented
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| that gives rise to the loss that is
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| | under that policy to make a reasonably
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| subject to insurance should, at least in
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| | definite and objective evaluation of the
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| principle, take place at a known time, in
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| | amount of the loss recoverable as a
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| a known place, and from a known cause.
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| | result of the claim.
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| The classic example is death of an
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| | - Limited risk of terribly large losses
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| insured on a life insurance policy.
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| | - Insurance - If the same event can cause
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| - Unintentional or Accidental Loss -
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| | losses to numerous policyholders of the
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| Insurance - The event that comprises the
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| | same insurer, the ability of that insurer
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| trigger of a claim should be accidental,
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| | to issue policies becomes constrained,
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| or at least outside the control of the
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| | not by factors surrounding the individual
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| beneficiary of the insurance. The loss
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| | characteristics of a given policyholder,
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| should be 'pure,' in the sense that it
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| | but by the factors surrounding the sum of
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| results from an event for which there is
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| | all policyholders so exposed.
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| only the opportunity for cost.
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