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Objective Present Characteristics 1. large common exposure to loss so that it may be predicted 2. loss must be measurable and definite 3. loss must be accidental 4. loss cant be catastrophic to society |
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- likelihood that parties with the greatest probability of loss are the ones seeking out insurance - insurance companies seek to avoid this |
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- a loss from dishonest angents |
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- a loss resulting from agents behaving recklessly, taking too much risk |
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- insurance contract - hold harmless and recovery of damages to make insured show insurable interes |
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- insurance contract - cant be transferred w/o insurers consent - exception life insurance |
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- insurance contract - the insurance co. prepares entire contract |
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Contract of Utmost Good Faith |
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- insurance contract - misstated facts/breach of contract will make it void |
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- insurance contract - only insurance co. promises to do anything |
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- insurance contract - valid as long as premium is paid |
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- insurance contract Unequal - nothing happens: insurer pays nothing - loss occurs: insurer pays losses which equal more than premium |
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- the largest insurance companies - wrote 14% of total premium income |
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- owned by policyholders - switched to stock ownership to raise capital & offer ESO |
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Life Insurance: Core Business |
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- remove the uncertainty of income due to death/retirement from people |
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- constituted 52% of life policies in 07 - Term Life - Whole Life - Variable Life - Universal Life |
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- no saving feature - most end with policy holder collecting nothing |
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