Understanding Risk
Risk is uncertainty. Risk is the variability around an expected outcome. The larger the variability, the higher the uncertainty, the larger the risk. Risk is pervasive. Most activities involve some sort of risk. Our goal is the minimize the cost of risk.
Indemnity vs. Non-Indemnity
Insurance can be divided into two groups, indemnity and non-indemnity. Learn the difference between these two groups of insurance.
Insolvency Risk
Insolvency risk refers to the possibility that an insurance company is unable to meet its financial obligations.
Participating vs. Non-Participating Policies
Both types of insurance policies, term and cash value, can act as either participating or non-participating (par or non-par, respectively). Most policies are par policies.
The Value Of Human Life
We’ve mentioned that we cannot place a value on human life. It is important to understand that though we cannot readily assess the value of a human life, we do put a price on it in different ways, some more direct than others.
