Business chapter 10 notes
Insurance:
- Insurance covers potential loss
- Gives protection against theft, storm damage ext..
- Insurance can be short term = between insurance company (insurer) and individual or
business insured.
- Insurer will provide compensation for losses suffered
- Insured pays insurance a premium to insurer
- Premium is based on the value of assets at risk
AIM: protection of assets
Assurance:
- Taken out to cover risk that is certain eg: loss of life, retirement - (long term)
AIM: to provide security, covers long term risk
- Policyholder is the person taking out cover
- Beneficiary is the person to whom the policy will pay out
TYPES OF ASSURANCE INCLUDES:
- Life assurance = covers loss of life, policy exists for as long as you are alive and paying
premium
- Term assurance = life cover for a specific period or term, taken to cover a debt period
- Endowment = investment policy paying out after specified time period eg: 10 years
- Retirement annuity (RA) = to provide an income when reaching retirement age, 55-65
, - Disability cover = insured paid out predetermined amount on disability eg: loss of limb
- Trauma cover or dread diseases = policy covering list of serious illnesses eg: cancer
- Funeral cover = to pay funeral costs
Difference between insurance and assurance:
Insurance: Assurance :
- Taken out incase something happens - Taken out for things bound to happen
- Will be put back into first economic - Eg: retirement
position - Long term - death
- Short term risks eg: fire
NON COMPULSORY INSURANCE:
INSURABLE RISKS:
1. Fire insurance = covers damage resulting from a fire to building or stock
- Covers damage from smoke and water used to put out the fire
- Excluded - volcanoes, earthquakes and rots that cause fire
- Premium depends on: Risk and value
- Risk = nature of item or building, flammable, availability of extinguishing agents
- Value - of item
- Insurance contracts have a iron safe clause - forces insufred to keep ser of stock records
in fireporss safe, to have proof of stock before fire
2. Vehicle insurance = 2 options
- Insure vehicle against theft or fire but if insured is responsible it won't be covered
- Fully comprehensive, covers all dage no matter whos is responsible
- Premium depends on value of car and risk involved ( risk is like if i is in a high crime
area)
Insurance:
- Insurance covers potential loss
- Gives protection against theft, storm damage ext..
- Insurance can be short term = between insurance company (insurer) and individual or
business insured.
- Insurer will provide compensation for losses suffered
- Insured pays insurance a premium to insurer
- Premium is based on the value of assets at risk
AIM: protection of assets
Assurance:
- Taken out to cover risk that is certain eg: loss of life, retirement - (long term)
AIM: to provide security, covers long term risk
- Policyholder is the person taking out cover
- Beneficiary is the person to whom the policy will pay out
TYPES OF ASSURANCE INCLUDES:
- Life assurance = covers loss of life, policy exists for as long as you are alive and paying
premium
- Term assurance = life cover for a specific period or term, taken to cover a debt period
- Endowment = investment policy paying out after specified time period eg: 10 years
- Retirement annuity (RA) = to provide an income when reaching retirement age, 55-65
, - Disability cover = insured paid out predetermined amount on disability eg: loss of limb
- Trauma cover or dread diseases = policy covering list of serious illnesses eg: cancer
- Funeral cover = to pay funeral costs
Difference between insurance and assurance:
Insurance: Assurance :
- Taken out incase something happens - Taken out for things bound to happen
- Will be put back into first economic - Eg: retirement
position - Long term - death
- Short term risks eg: fire
NON COMPULSORY INSURANCE:
INSURABLE RISKS:
1. Fire insurance = covers damage resulting from a fire to building or stock
- Covers damage from smoke and water used to put out the fire
- Excluded - volcanoes, earthquakes and rots that cause fire
- Premium depends on: Risk and value
- Risk = nature of item or building, flammable, availability of extinguishing agents
- Value - of item
- Insurance contracts have a iron safe clause - forces insufred to keep ser of stock records
in fireporss safe, to have proof of stock before fire
2. Vehicle insurance = 2 options
- Insure vehicle against theft or fire but if insured is responsible it won't be covered
- Fully comprehensive, covers all dage no matter whos is responsible
- Premium depends on value of car and risk involved ( risk is like if i is in a high crime
area)
