1、Unit 6 Text:Insurance（保险）1.Key words2.Definition of insurance,uninsurable risks and insurable risks3.Guideline for determining whether a loss is insurable4.Premium and deductible clause5.Insurance institutions6.Basic conditions for shaping of insurance institutions 7.Questionsterms of the contractun
2、insurable riskinsurable riskinsurance underwriterindividual policyholderactuarial informationThe law of large numbersinsurance premiumsinsurance policydeductible clauseretirement benefitssocial securitylump-sum paymentmedicare programcompensation insurancerehabilitation servicestock companymutual co
3、mpanyfrom humble beginningsethical conductDefinition of Insurance Insurance is a written contract,taken with the insuring company,that transfers the risk of loss to the insurer according to the terms of the contract.Definition of uninsurable risks If an insurance company would have difficulty calcul
4、ating the likelihood that loss would occur because of some risk,it is reluctant to insure against that risk.Risks of this type are generally referred to as uninsurable risks.Definition of insurable risks An insurable risk is one for which likelihood of loss can be calculated and that meets the requi
5、rements set by most insurance underwriters to be insurable.3.1 The individual policyholdermust have an insurable interest3.2 The likelihood of loss needs to be predictable3.3 The amount of loss must be financially measurable3.4 The losses must be fortuitous(accidental)3.5 The risk should be disperse
6、d3.6 The insured must meet certain standards to qualifyThis simply means you must actually suffer the loss to be the beneficiary of the insurance.Insurance companies employ people called actuaries to predict the likelihood of losses.Some losses,like the loss of a life,are not easily measured.For suc
7、h losses,insurance policies are written in specific amounts.Other policies,where losses and the likelihood of losses are more easily measured,may pay for the amount of the loss.Insurance companies will not pay for losses created by the policyholder.In order to cover risks and pay for the losses incu
8、rred,insurance companies count on collecting premiums from a great number of people who suffer no losses.This is called the law of large numbers.The insurance company has the right to set standards in order to limit the risk of loss.4.1 Definition of premium4.2 Deductible clauseWhen you purchase ins
9、urance,you buy an insurance policy.This is your contract with the insurance company.It states what losses the insurance company will cover.To get this coverage,you pay the insurance company a fee,called the premium.The amount of the premium is based on the law of large numbers.Insurers use the proba
10、bility of a specific loss occurring,the likely cost of that loss,and the number of individuals covered to calculate the premium charged to each individual insured.Of course the insurance company needs to include a charge to cover its operating expenses and provide a reasonable profit.In addition to
11、charging certain policyholders higher premiums,insurance companies also use deductible clauses to help control their costs.A deductible in a policy is the amount of loss the insured assumes;the insurance company is responsible only for losses that exceed that specified amount.5.1 Federal government
12、and state agencies5.2 Private insurance companies5.1.1 Insurance provided by the federal government 5.1.2 Insurance provided by state agencies5.1.3 Other forms of insuranceSocial security is financed through a tax taken out of employees paychecks;employers pay an equal and matching amount of tax to
13、the federal government to help cover benefits.The benefits of social security include:(1)Payments for death,including a small lump-sum payment and continuing payments to spouses with dependent children;(2)Income payments for disability if the disability is expected to last at least 12 months and is
14、total;(3)Retirement benefits;(4)Hospital and medical payments for eligible persons aged 65 or over.This is the medicare program.Unemployment insurance Generally the program provides some weekly payments(usually for 26 to 39 weeks)to replace a portion of lost wages and offers job counseling,training,
15、and placement services to help workers find new jobs.These insurance programs are funded by payroll taxes paid by employers.Workers compensation insurance This insurance guarantees payment of wages and salaries(generally equal to about one half to two thirds of the employees weekly salary)as well as
16、 medical costs and rehabilitation services to employees injured in the workplace.These programs also provide benefits to the workers family in the event that worker dies from a work-related injury,accident,or condition.The employer alone pays the premiums for workers compensation insurance.Bank depo
17、sits,savings in thrift institutions,and accounts in credit unions are insured by government agencies.Other agencies,such as the Federal Housing Administration,provide insurance on mortgages and other government-insured loans.The National Flood Insurance Association offers flood insurance and federal
18、 crime insurance is provided in some high-crime areas.Private insurance companies can be either stock companies or mutual companies.A stock company is a profit-making company.The shareholders own the company,and profits are returned to them in the form of dividends.A mutual company is a nonprofit co
19、operative;it is owned by its policyholders.Profits are returned to the policyholders in the form of dividends or reduced insurance premiums.6.1 The economic system should basically be system of private property6.2 Society should be highly developed and industrialized6.3 Legal relationships should be
20、 well organized,known to all,and enforced fairly6.4 There must be an ethical environment for insurance6.5 Inflation should be no more than moderateAlthough insurance exists to some extent in countries where the tools of production are owned by the government and where basic economic decisions are ma
21、de by some central authority,it never assumes great importance there as a separate economic device to reduce risk.The governments in such countries assume most of the risks and in a sense act as one great insurance company.In a highly developed,industrialized society,productive workers are dependent
22、 on money income.Their jobs are usually specialized,so that the occurrence of some peril that interrupts their income or destroys accumulated property is often a serious economic blow.Help from neighbors is usually impossible to obtain in the degree that it might have been available in earlier times
23、,for individuals cannot take time off from their jobs at will.In the highly developed,industrialized society,standards of living are derived from trading the results of ones labor for the results of others labor.This exchange involves the shipment of goods over long distances,which gives rise to man
24、y risks not faced in a non-manufacturing environment.Consequently,in industrial societies,methods to meet risks must correspondingly be highly developed.An impartial system of justice is an absolute essential to a sound program of insurance,for the insurance device must usually be effected by means
25、of a legally enforceable contract.Where political influence,frequent wars or revolutions,or dishonesty of the people upset the judicial system or law enforcement,insurance does not flourish.Ethical conduct of the people underlies a sound legal and judicial system.Ethical conduct,however,can deterior
26、ate under a number of conditions,such as overpopulation,inflation,or too rapid advances in technology.Some degree of effective regulation of population,inflation,and technology is an additional requirement for a healthy environment for insurance.Rapid inflation can adversely influence insurance in m
27、any ways and reduce lossreductio incentive.(1)Define insurance.(2)Name some types of uninsurable risks.Why are these generally considered uninsurable?(3)What guidelines do insurance firms follow when deciding whether or not a risk is insurable?Why do you think they follow these guidelines?(4)What insurance is provided through public sources?How are employers tied in to this responsibility?(5)What are the requirements that must exist for a healthy insurance industry?
