RMI-4115 Study Guide - Spring 2019, Comprehensive Final Exam Notes - Medicaid, Life Insurance, Inflation
8 May 2019
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Risk: what is risk, not one singular, broadly accepted definition, take on many forms, sickness, accidents, death, living, loss in investments, types of risk, speculative risk. Involves situations in which a gain or a loss is possible: typically requires a choice to be made to engage in a risky activity, pure risk. Is when no possibility of a gain exists. Illness, premature death, property damage: people do not take these by choice. Spreading risk: people don"t choose to engage in pure risk, so ways to protect these people from risk have been developed, different ways to protect from risk. Insurance is based on a simple idea that if a large enough group of people face similar risks then a pool can be created, so that the risk of the peril can be spread across the pool. Some basic components of insurance: contract the document that lays out the provision of the contract, written and earned premiums.
