MTHEL131 Lecture Notes - Life Insurance
11 Oct 2013
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Pension: fear that your life"s savings will be insufficient. Life insurance: dying and leaving family without income. It took a long time to instill life insurance because: people didn"t want to bet on their own lives, lack of mortality tables, plagues. 1762 legislation finally passed, and it was the first life insurance company: policy would be enforced for entire life, premiums would stay level, premiums would be based on age of entry. Ability to compete with other firms reputation, ability to keep a promise. Expectations of clients to secure family fair premiums. Paying in installments raising future premiums (maybe temporarily) raising current premiums in time of crisis. Policy holders are owners of the company can cast votes can elect board members. Insurance: arrangement where any financial loss encountered will be covered by the policy. Not intended to improve financial condition, just reimburse losses.
