MTHEL131 Lecture : MTHEL131Ch1.pdf
9 May 2014
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Document Summary
Economic security and the nature of life and health insurance. An economic overview of life and health insurance markets. The economic basis for life and health insurance. Groups can provide security where a lone individual would face insecurity (risk sharing = mennonites) Insurance does not stop these or even change their probability. Does change small probability for large loss to certainty of small cost (premium) From a legal standpoint, insurance is a contract between the. Economically insurance is a mechanism to pool risk. Policyowner is sometimes other than the insured (e. g. juvenile. Person to whom the benefit is paid is the beneficiary. Most social insurance redistributes wealth in some way (e. g. employment insurance) In private insurance, the emphasis is on individual equity (e. g. each policyholder"s premium reflects the expected value of his/her loss) Participation in social insurance is normally compulsory with mandated premiums/contributions/taxes. Accident and sickness insurance (e. g. extended health insurance)
