INSURANCE

A risk shared is a risk halved

• Putting aside sums of money to cover against

financial problems

COMMON FUNDCOMMON FUND

The pooling of risk = a large number The pooling of risk = a large number of people each pay a sum of of people each pay a sum of money/money/premiumpremium

The risk is spread/shared between The risk is spread/shared between many peoplemany people

If anyone suffers a loss, he/she will be If anyone suffers a loss, he/she will be compensated with money from the compensated with money from the fundfund

People in insurance

the insured – covered by insuranceinsurer – gives insurance coveragent – employed by one insurer (commission)broker – independent, works for a number of insurersunderwriter – estimates the risks/premiumsloss adjuster – independent person/company decides if claims are valid and how much to pay for

compensation

Common insurance terms

premium – monthly/yearly payment for a policy

comprehensive – all-inclusive, complete protection

compensation (indemnity)– money for suffering damage, loss,

injury

proposal form – application by a person/company requesting

insurance

claim – request by a policyholder for compensation under the policy

reinsurance – insuring of risk by one insurance company

with another

Types of insurance

• General insurance• Household insurance• Motor insurance • Comprehensive

insurance• Fire insurance• Insurance against

burglary• Accident insurance• Life

assurance/insurance

Contract

Insurance policy(contract of indemnity – except for life

assurance, personal accident, sickness)

the insured/the insurer

Renewal noticeInvites to renew thecover

Application process

1. Proposal form – request to cover risk

2. Premium – sum of money paid each year

3. Policy – contract4. Insurance certificate – motor

insurance5. Renewal notice

Claims process

1. The insurer takes risks >2. The insured suffers a loss/damage

> 3. The insured submits a claim >4. A loss adjuster estimates the

damage 5. Compensation - money paid for loss

Coverage and Billing

POOLOF PREMIUMS

CLAIMS

OVERHEADS

INVESTMENTS

INDUSTRY GOVERNMENT INDIVIDUALS

PROFITS

insurance pool

claimsrunning expenses

surplusproperty,business

yieldinginterest

and profits

premiums

http://www.youtube.com/watch?v=nXfGeMNnBsM

Summarize health insurance

Fill in the gaps:

Thousands of people pay ___________ to insurance companies, which use the money to pay ___________ to people who suffer loss or damage. A part of the money goes for ___________expenses. The rest of the pool of premiums can be _________in the form of lending to _________, __________, or __________ in order to earn _______. In this way insurance companies become large _____________ investors that place great sums of money in various ____________ .

Thousands of people pay premiums to insurance companies, which use the money to pay claims to people who suffer loss or damage. A part of the money goes for running expenses. The rest of the pool of premiums can be invested in the form of lending to industry, government, or individuals in order to earn profit. In this way insurance companies become large institutional investors that place great sums of money in various securities .

Pair the halves of the sentences below and write out the completed ones:

1. It is important to keep the value of your policy

2. Make sure you get insured

3. When you say what you want your insurance to cover,

4. If an accident does happen,

5. If the company agrees to your claim,

a) you make a claim to the insurance company.

b) against accidents.c) you receive

compensation.d) then the broker will tell

you which policy you should take out.

e) closely linked to the value of your property.

FILL IN THE WORDS:FILL IN THE WORDS: premium, beneficiary, claim, to cover, insurance policy, premium, beneficiary, claim, to cover, insurance policy,

assured life, broker, the assured life, broker, the insurer, settlement, accidentinsurer, settlement, accident

• If you want to take out an ______________, you can either go If you want to take out an ______________, you can either go to an insurance company or to a ________who will help you to an insurance company or to a ________who will help you decide which company has the best policy for you. First you decide which company has the best policy for you. First you say what you want your insurance __________. The broker say what you want your insurance __________. The broker will tell you how much money or ___________ you will have will tell you how much money or ___________ you will have to pay, so that you can get money back from ___________if to pay, so that you can get money back from ___________if an _________ happens. If an accident does happen, you an _________ happens. If an accident does happen, you make a __________ and if the company agrees to it, you make a __________ and if the company agrees to it, you receive money. This is the ___________ of your claim. In the receive money. This is the ___________ of your claim. In the case of a claim on an__________________, the _____________ – case of a claim on an__________________, the _____________ – the person who gets the money when someone dies – is the person who gets the money when someone dies – is usually a member of the policyholder’s family.usually a member of the policyholder’s family.

If you want to take out an If you want to take out an insurance policyinsurance policy, you can either , you can either go to an insurance company or to a go to an insurance company or to a brokerbroker who will help who will help you decide which company has the best policy for you. you decide which company has the best policy for you. First you say what you want your insurance First you say what you want your insurance to coverto cover. . The broker will tell you how much money or The broker will tell you how much money or premiumpremium you will have to pay, so that you can get money back you will have to pay, so that you can get money back from from the insurerthe insurer if an if an accidentaccident happens. If an accident happens. If an accident does happen, you make a does happen, you make a claimclaim and if the company and if the company agrees to it, you receive money. This is the agrees to it, you receive money. This is the settlementsettlement of of your claim. your claim. IIn the case of a claim on an n the case of a claim on an assured lifeassured life, the , the beneficiarybeneficiary – the person who gets the money when – the person who gets the money when someone dies – is usually a member of the someone dies – is usually a member of the policyholder’s family. policyholder’s family.

http://www.youtube.com/watch?v=nXfGeMNnBsM&feature=related

How does insurance work?_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

• RB: pp. 65-68