Why do insurance policies have deductibles?

July 7, 2024 No Comments

A: Insurance policies have deductibles for behavioral and financial reasons. Moral Hazards Deductibles mitigate the behavioral risk of moral hazards. A moral hazard describes the risk that two parties to an agreement or contract may not act in good faith. Because insurance policies protect the

Why is my insurance premium so high/low?

July 7, 2024 No Comments

Insurance premiums can be affected by many factors including: type and amount of risk size of deductible amount of coverage age of the applicant applicant’s medical history applicant’s past and current lifestyle Insurance policies can be issued at the group or individual level. When group

What are the tax implications of a life insurance policy loan?

July 7, 2024 No Comments

A: Taking out a loan against your life insurance policy does not count as taxable income, according to the IRS. However, if you surrender your policy or your policy lapses, the IRS is notified of this taxable event and you have to pay tax on

What barriers to entry exist in the financial services sector?

July 7, 2024 No Comments

A: Barriers to entry in financial services markets include licensure laws, capital requirements, access to financing, regulatory compliance and security concerns. Among different market sectors, the financial services sector has a uniquely complicated relationship with competition and barriers to entry. This is largely owed to

What countries represent the largest portion of the global banking sector?

July 7, 2024 No Comments

A: China, the United Kingdom, France and the United States represent the largest portions of the global banking sector. China’s two largest banks, the ICBC and CCB, control nearly $6 trillion worth of the global banking sector. In fact, all four of China’s major banks

What does the underwriter do in a new stock offering?

July 7, 2024 No Comments

A: The underwriter in a new stock offering serves as the intermediary between the company seeking to issue shares in an initial public offering (IPO) and investors. The underwriter helps the company prepare for the IPO, considering issues such as the amount of money sought

What effect did the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 have on debtors?

July 7, 2024 No Comments

A: Credit card companies and banks hate deadbeats who take from their bottom lines. They especially dislike the Chapter 7 bankruptcy that discharges a debtor and, if he or she has no saleable assets, eliminates their chances of reclaiming even a portion of the debt.

What impact have terrorist attacks had on the insurance industry?

July 7, 2024 No Comments

A: Terrorism has led to massive losses for the insurance industry. The attacks on Sept. 11, 2001 totaled $31.6 billion in costs for the insurance industry when taking all claims into account. Stemming from this incident, the Terrorism Risk Insurance Act was passed to share

What is a “force majeure”?

July 7, 2024 No Comments

A: A force majeure is derived from the French term meaning “greater force” and refers to any natural and unavoidable catastrophe. A force majeure clause is included in contracts to remove liability when such events restrict participants from fulfilling their obligations. When negotiating these clauses,

What is a gatekeeper?

July 7, 2024 No Comments

A: There are two definitions of the term “gatekeeper,” one used in relation to health insurance and one regarding long-term care plans. When used in relation to health insurance, gatekeeper describes the person in charge of a patient’s treatment. Anyone who receives health insurance coverage in the form

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