Actuarial science is a branch of knowledge dealing with the mathematics of insurance, including probabilities. It is used in ensuring that risks are carefully evaluated, that adequate premiums are charged for risks underwritten, and that adequate provision is made for future payments of benefits.
Adverse selection refers to a scenario in the insurance industry where individuals more prone to filing claims are more likely to seek insurance coverage, leading to potential imbalances for insurance providers.
In a tax return, applies to an expense that may be subtracted from income, and in insurance, signifies the initial amount the insured must pay before insurance reimbursement is made for a claim.
Employee contributions refer to the workers' premiums or payments toward a contributory employee benefit plan. These contributions are often made to plans such as health insurance, retirement funds, and other employer-sponsored benefits.
Insurance is a system whereby individuals and companies concerned about potential hazards pay premiums to an insurance company, which reimburses (in whole or part) them in the event of loss. The insurer profits by investing the premiums it receives. Some common forms of insurance cover business risks, automobiles, homes, boats, worker's compensation, and health. Life insurance guarantees payment to the beneficiaries when the insured person dies. In a broad economic sense, insurance transfers risk from individuals to a larger group, which is better able to pay for losses.
An insurance company is a business entity that provides coverage, by contract, wherein the insurer agrees to compensate or indemnify another party (the insured) for specified loss or damage arising from certain risks.
An insurance policy is a contract between an insured person or entity and an insurance company, specifying the risks covered and the premiums that must be paid to maintain the policy. It serves as the reference document to determine coverage eligibility for claims.
Liability insurance provides protection from claims arising from injuries or damage to other people or property. It is essential for motor vehicle, home, and business owners. Business liability insurance premiums are deductible.
Life insurance is a policy that pays a death benefit to beneficiaries upon the insured's death in return for premiums.
The loss ratio measures the ratio of losses incurred (or loans losses for banks) to either total premiums earned by an insurer or the overall receivables or debts for a corporation within a specific period, often one year.
An insurance coverage type that allows the insured to receive dividends based on the company's earnings, which can be used to reduce premium payments.
A rated policy is an insurance policy where the applicant is charged a higher-than-standard premium due to unique factors such as health impairments, hazardous occupations, or risky hobbies.
The surrender value is the sum of money given by an insurance company to the insured on a life policy that is canceled before it has run its full term. The amount is calculated approximately by deducting from the total value of the premiums paid any costs, administration expenses, and charges for life-assurance cover up to the cancellation date.
In the contexts of insurance and investments, underwriting involves assuming risk in exchange for a premium or facilitating the issuance and resale of securities, respectively.
Whole life insurance is a form of life insurance policy that offers both protection in the event of the insured’s death and builds cash surrender value at a guaranteed rate, which can be borrowed against. The policy remains in force for the lifetime of the insured, given that it is neither canceled nor lapses. The policyholder pays a fixed annual premium that does not increase with age.
