Insurance Fundamentals

1. Insurance Fundamentals 19.1

2. Insurance • Insurance—contractual arrangement that protects against loss • Indemnify—make good the loss to the suffering party • Insurer—party who agrees to indemnify • Insured—party covered or protected • Beneficiary—recipient of the amount to be paid

3. Policy—written contract of insurance • Face value—stated maximum amount that could be paid if the harm a person is insured against occurs • Premium—consideration for a contract of insurance • Risk—the potential of loss

4. 7 Major Types of Insurance • Life • Fire • Casualty • Social • Marine • Inland Marine • Fidelity and Surety Bonding

5. Life insurance • Term insurance—written for a certain number of years • Whole Life Insurance—also called whole life or ordinary or straight life—requires the insured to pay premiums for as long as the insured lives or until age 100 • Limited pay life—form of whole life that policyholder pays higher premiums than under a straight whole life but for a shorter period of time (usually 10, 20, 30 years) • Endowment life—requires the insurer to pay the beneficiary the policy’s face amount if the insured dies within the period of coverage

6. Fire Insurance—indemnifies for the loss or damages of fire (usually smoke too)

7. Casualty Insurance—provides coverage for a variety of specific situations in which the intentional, negligent, or accidental acts of others may result in loss • Insurance against criminal activity • Automobile insurance • Liability insurance—negligence, torts • Disability, Accident, or Health insurance

8. Social Insurance—insurance against unemployment, disability, poverty, and medical expense problems

9. Marine Insurance—indemnifies for loss of or damage to vessels, cargo and other property at sea

10. Inland marine insurance—personal property while being transported and stored

11. Fidelity and surety bonding insurance • Coverage against financial loss caused by dishonesty (embezzlement)

12. Insurable interest—potential to sustain loss • Insurable interest in property • Insurable interest in life • Would be beneficiaries seeking to take out a policy on another person’s life • must demonstrate that there is a reasonable expectation they would suffer direct financial loss if the insured died.

13. Insurance Agents Career Research • Either type a two page paper with works cited or create a brochure in Microsoft Publisher • The following information needs to be included: • What is insurance? • Types of insurance? • Insurance agents career • Job description • Salary • Job outlook for the future • Training and education required • Typical day • Additional facts • Insurance Companies & short description of that company