When an insurance company needs to provide a payout, the money is removed from: the consumer's income. ____ can be both an advantage and a disadvantage of universal life insurance. a. age. Insurance is a contract (policy) in which an insurer indemnifies another against losses from specific contingencies or perils. 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. c. Convertible Which type of insurance policy would someone get to protect others only? c. change of policy. d. Renewable \textbf{Liabilities and Equity}\\ And repeatedly, insurers have found a way to deal with the highly specialized insurance demands of advancing technologythe airplane, nuclear energy, offshore oil rigs, spacecraft. The needs approach to evaluate the right amount of life insurance is the most accurate method to determine the proper amount of death benefits. b. the value of the loss. What is insurance? \end{array} a. term : 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 When you buy insurance, you purchase protection against unexpected financial losses. d. special needs of dependents. d. substitute for fixed-dollar insurance protection. &&&\textbf{Retained} &\textbf{Total Stockholders}\\ Which questions about risk should someone ask before making a big purchase? As we respire, we release CO2. a. avoid risk 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 basic purpose of insurance is to provide protection. Most people prefer to pay health insurance premiums rather than pay out-of-pocket for medical expenses because: Medical costs can be extremely high, and insurance is more affordable than paying out-of-pocket for a hospital stay. a. reduce costs. Balances,December31,20152016NetincomeCashdividendsAddition(subtraction)toretainedearningsBalances,December31,2016Shares100,000100,000CommonStockAmount$460,000$460,000RetainedEarnings$203,768(160,176)(11,000)$32,592TotalStockholdersEquity$663,768(171,176)$492,592, 20162015AssetsCash$7,282$57,600Accountsreceivable632,160351,200Inventories1,287,360715,200Totalcurrentassets$1,926,802$1,124,000Grossfixedassets1,202,950491,000Lessaccumulateddepreciation263,160146,200Netfixedassets$939,790$344,800Totalassets$2,866,592$1,468,800LiabilitiesandEquityAccountspayable$524,160$145,600Accruals489,600136,000Notespayable636,808200,000Totalcurrentliabilities$1,650,568$481,600Long-termdebt723,432323,432Commonstock(100,000shares)460,000460,000Retainedearnings32,592203,768Totalequity$492,592$663,768Totalliabilitiesandequity$2,866,592$1,468,800\small{ Many types of life insurance are available. a. risk observance. Example. Insurance Regulatory and Development Authority of India (IRDAI), is a statutory body formed under an Act of Parliament, i.e., Insurance Regulatory and Development Authority Act, 1999 (IRDAI Act 1999) for overall supervision and development of the Insurance sector in India. decrease), what will be the operating margin percentage if sales increase by 25%? A marine policy adapted to accommodate him probably was the first policy issued to insure an automobile as property. The following information was taken from Logsden Manufacturings trial balances as of \text{Total liabilities and equity} &\$2,866,592 &\$1,468,800\\ \text { Income from operations } & 25,000 & 16,000 \\ protection from creditors and lawsuits. c. Option A level death benefit The insurance company finds that a homeowner intentionally caused damage. If a life insurance policy pays dividends, it is said to be. a. lump sum. This is an example of a(n) _______ policy. b. is a form of endowment insurance. Survivorship (last-to-die) insurance is used primarily to help pay estate taxes. \hline Increasing the deductible is likely to lower the premium on a comprehensive major medical policy. all of the above. \end{array}} What Is Insurance?, Insurance Information Institute. \text { July } & 295,000 \\ Workers' compensation is a state program that provides benefits for, Workers suffering injury or illness on the job. Buying life insurance protects your spouse and children from the potentially devastating financial losses that could result if something happened to you. Lets look at the most important. Sometimes, claim requests are directly submitted by medical billers in the healthcare facility and sometimes, it is done through a clearing house. 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. These include white papers, government data, original reporting, and interviews with industry experts. Tax features \text { May } & 290,000 \\ The purpose of Subrogation in Insurance is to get back the money or claim paid out for damages that were caused due to a third-party's fault. The insurance company finds that a homeowner intentionally caused damage. There are many types of insurance policies. Coinsurance is the claim amount an insured must pay after meeting deductibles and is also the level at which an owner must protect property. Life insurance is a contract between an insurer and a policy owner. 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. Many airline passengers purchase a special life insurance policy frequently sold at the airport. b. death benefits for survivors. Bennett Inc. found that about 15%15 \%15% of its sales during the month were for cash. b. living benefits c. cash value. The cost was $7.50 per $1,000 of liability coverage. True t/f Deciding to sell a motorcycle would be an example of risk sharing. Answer the question to help you recall what you have read. The basic purpose of insurance is to protect you from losses! True False Question 10 (1 point) The need for additional life insurance can be determined by looking at the difference between available resources and family monetary needs. automobile insurance. a. income levels. The proxy contains an abundance of information the SEC believes to be necessary for stockholders to make an informed vote on the items the company presents for their voting consideration. The company pools clients' risks to make payments more affordable for the insured. c. risk assumption. It helps to protect the insured person or their family against financial loss. The purchase of insurance is a common form of which risk management technique: From the standpoint of the person buying insurance, the central purpose of insurance should be: Which of the following types of policies is most likely to allow you to switch investments? c. tax-advantaged investments. What is the definition of premium? c. Mortgage life; industrial life Journalize the write-offs and the year-end adjusting entry for 201020102010 under the allowance method, assuming that the allowance account had a beginning balance of $22,500\$22,500$22,500 on January 111, 201020102010, and the company uses the analysis of receivables method. And dont forget to consider the overall diversification of your portfolio. Can unmarried couples be on the same car insurance? A claim is the main argument of an essay. The purchase of insurance is a common form of _____ by the insured. An insured usually chooses variable life insurance in order to 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. liability Protection. b. sex. a. transferred to the life of another person. If you have no insurance and an accident happens, you may be responsible for all related costs. \textbf{Assets}\\ a. protection only. b. premium amounts related to age. You must help her answer the following questions for Campo. the amount paid for an insurance policy There are many types of insurance policies. \text{2016 Net income}& & & (160,176)\\ For the most recent year presented in your proxy, what was the total annual compensation received by the chairman and CEO of the company. the best insurance available. a. They may not have thought of their scheme as insurance, but the principle is remarkably similar to that of its modern counterpart, ocean marine insurance, as well as to that of other forms of property and casualty insurance. This preview shows page 1 - 3 out of 26 pages. 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. The basic assumptions that the company uses to compute its insurance illustrations include all except 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. You should choose ____ insurance. Subrogation allows your insurer to recoup costs (medical payments, repairs, etc. d. variable If an insured event occurs and you suffer damages, the insurance company pays you up to the agreed amount of the insurance policy. a. term c. fixed amount. \text{Total equity} &\$ 492,592 &\$ 663,768\\ d. universal Insurance is a tool that can lessen ____ risk. Fire insurance covers damage and losses caused by fire and is often purchased in addition to standard homeowners insurance. \text { Dividends } & 3,000 & 2,000 \\ At first operated single-handedly by an entrepreneur named Nicholas Barbon, in 1680 it was organized as a stock company known as the Fire Office. When choosing a policy, it is important to understand how insurance works. True False Question 9 (1 point) The basic purpose of insurance is to protect you from the results of accidental losses. a. level annual premiums throughout life. How would the policy proceeds be distributed? In the New World, the first fire insurance firm was formed in 1735 but lasted a scant five years. Please sign in to access member exclusive content. protection. The way insurance companies work, they can pay this and still make a profit. A person's house was seriously damaged during a natural disaster. a. a decreasing premium. \text { August } & 300,000 There are two main types of life insurance: term and permanent. OperatingActivitiesNetincomeDepreciationandamortizationIncreaseinaccountspayableIncreaseinaccrualsIncreaseinaccountsreceivableIncreaseininventoriesNetcashprovidedbyoperatingactivitiesLong-TermInvestingActivitiesAdditionstoproperty,plant,andequipmentNetcashusedininvestingactivitiesFinancingActivitiesIncreaseinnotespayableIncreaseinlong-termdebtPaymentofcashdividendsNetcashprovidedbyfinancingactivitiesSummaryNetdecreaseincashCashatbeginningofyearCashatendofyear($160,176)116,960378,560353,600(280,960)(572,160)($164,176)($711,950)($711,950)$436,808400,000(11,000)$825,808($50,318)57,600$7,282, 20162015Sales$6,034,000$3,432,000Costofgoodssold5,528,0002,864,000Otherexpenses519,988358,672Totaloperatingcostsexcludingdepreciationandamortization$6,047,988$3,222,672Depreciationandamortization116,96018,900EBIT($130,948)$190,428Interestexpense136,01243,828EBT($266,960)$146,600Taxes(40%)(106,784)58,640Netincome($160,176)$87,960EPS($1.602)$0.880DPS$0.110$0.220Bookvaluepershare$4.926$6.638Stockprice$2.25$8.50Sharesoutstanding100,000100,000Taxrate40.00%40.00%Leasepayments$40,000$40,000Sinkingfundpayments00\small{ False t/f Spreading risk among a large number of people is a major principle of insurance. d. high-yield investments. 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