Saving the Sinking Ship
Some Thoughts on
Insurance
by Lin Stone
(c) copyright 1999 by Browzer Books.
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The concept of Insurance is the most fascinating subject I've ever studied, and I hope to put that enthusiasm to work for you to make learning the trade an absorbing subject for you too. This book has been dedicated to the new life and health agent and anyone with a thirst for knowledge who comes to these pages. It was written AS I LEARNED, so likely there are some mistakes sprinkled throughout. As you discover them, please let me know. Thank you. Lin Stone. "We can't save the sinking ship, New to the web? Click here for some basic navigation tips I will tell you in advance that most insurance companies are good NOW. |
A lot of people think, well it doesn't make any difference, I'll just get more insurance. You just try to get cheap insurance from strangers when you lose your job or your health deteriorates. I have people right now asking me for pregnancy insurance, already 6 months pregnant. It ain't gonna happen. Except for the bottom-of-the-line SHAX policy generously put out by United American, Insurance is bought when you don't need it. NOTE, I have no affiliation whatsoever with United American.
Ever tried to just pay cash at the hospital door? That ain't gonna happen
either. The SHAX plan and any plans similar to it, only pays a very bare minimum of anything but it will get you
in that door; it is designed for people who CAN'T get other insurance, or are capable of
self-insurance and simply want access to a hospital.
To protect the general public
the Insurance Industry is fraught
with rules, laws and strict guidelines.
I'll start you off with the most important one.
Rule #1
The
(state) Insurance Commissioner
has the power and the authority
to examine and investigate
the affairs of every person
engaged in the insurance business
in the state of (which) in order to determine
whether such person
ever has been
or is now engaged in
ANY unfair method of competion
or ANY unfair
or deceptive act
or practice
prohibited by the Insurance Code.
Rule #2
If you have ever have any questions
about who's in charge of
the Insurance industry in (state)
see Rule #1
You will find the answers to FILL-IN
questions
in the BLANK AREA left for the answer
using Lin Stone's Reverse Answer Worksheet.
To access the answers you aren't sure of
Just highlight the empty space to be filled in and
The answer will appear in reverse, and disappear
when you move on to the next question.
| Some thoughts on insurance
Insurance Questions for Agents Life Insurance Questions for Agents |
Medicare Insurance
Questions for Agents Laws, Regulations and Cautions Just How Healthy ARE you? |
If you are an agent looking for FRESH leads, Click
HERE.
Click HERE for the main menu.
| What's the toll free phone number for the Oklahoma Insurance Commissioner? | 1-800 522 0071 |
| Where can I find approval ratings for insurance companies? | Right here. |
| What uncertainties or risks does insurance protect against? | Loss of life, limb, property, income, Loss is a reduction in the value of one of these assets. To be paid for a loss, the insuring party must make a CLAIM with the insurer. A CLAIM is a DEMAND for payment of the insurance benefit to the BENEFICIARY named in the POLICY |
| What is the term used to describe the individual who is covered by the insurance policy? | The INSURED |
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Use a LEAVE BEHIND DISK for those who ALMOST sign on the dotted line. For example, a computer disk with valuable gifts inside it. Your label could say something like "As THANKS for sharing your home with me I am giving you 42 family friendly books you can download from the web for free." Click HERE to download a free sample.
For just $25 the "front page" can be tailored with YOUR full color picture, a recap of what you are selling, how to reach you, and an invitation to PASS IT ON. Every time they do, you'll get more advertising, for free. You can make as many duplicates of the file as you wish and it will fit right on a 3.5" computer disk.
How did insurance originate?
The concept of insurance rose with the steam of coffee houses in the 13th century.
Shipowners wanted to insure their ships and cargo against loss at sea. The concept
was to spread the chance of financial loss among a large number. If 200 ships go out
and 180 come back, premiums from the 180 are used
to help reimburse the 20 that didn't quite make it. "We can't save
the sinking ship, but we can help keep the company from going under with it."
Interestingly enough, CARGO owners were assessed first for damage
to or loss of ships. If your cargo damaged the ship, you paid for the damage.
If a reef was struck, or something equally hazardous happened to the ship, all of the
cargo shippers paid to get another ship floating.
By the 17th century Lloyd's of London evolved from the leading coffee house.
In 1752 Benjamin Franklin launched the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire. Unwilling to see the new concept go up in smoke, Ben also invented the lightning rod to reduce the risk of having to pay off claims.
Insurance companies (known hereafter as INSURERS) receive PREMIUMS (which is just another word for the monetary contributions made by the buyer) from a large number of people buying insurance. The more customers an insurer has, the lower the premiums can be, and the less likely that insurer is to take a loss that wipes everyone out.
It takes about 3 years for an insurer to begin getting a handle on how much premiums should be readjusted to policy holders for them to come out ahead.
These readjustments are known as RATE HIKES. Some new insurers occasionally start clients off with low premiums, only to discover a dire need to have a rate hike each year or so to bump the premiums up to a healthy profit plateau.
Even established insurers lose the battle contending with government manipulation and cost-of-living increases so the overall yearly average rate increase in the health insurance field turns out to be nearly 12%.
In spite of all the rules, regulations, insurers do go broke. 2,186 Oklahoma policyholders were recently affected by their life insurance company "losing" $13 million of its $14 million in assets. They were covering tracks real well and still taking in premiums when an investigator at the State Insurance Commission nailed them to the wall.
The Guaranty Association of Oklahoma has volunteered to pick up the tab for a few months and put the company in receivership. Ultimately, most of the 2,186 policy holders will find themselves with another company, possibly even one of their own choice -- if they are lucky!
Working something like the FDIC which protects your bank account when the bank goes under, using money from other banks, Guranty Associations will use the money assessed from other insurers to pay off claims the original insurer promised to, within limits of course -- $300,000 for death benefits, $100,000 for life, $100,000 for health, and of course, a ceiling for individuals. Don't you wish there was a similar pay off association for Multi-Level Marketing companies that go under?
Agents are responsible for the company they cover clients with. When Kaiser was having its troubles, Vermont Deputy Insurance Commissioner Frank Romano said he wasn't surprised by the announcement. "As everyone knows, Kaiser has been having difficulty not just in the Northeast but throughout the nation," he says. "I think they, as well as we, hoped they could work through it. I'm quite disappointed, but not terribly surprised." (I added the bold because quite Frankly, I was surprised!)
It isn't like insurance agents can't check their companies out. A.M. Best, Insure.com, Weiss Research, and Standard & Poor keep ratings up to date on all the players in the insurance field. If clients were smart they'd be asking you, "What's your company's rating this morning? A.M starts out at A++, A+ for Superior, comes down to A, or A- for excellent. Then there's two grades of Bs and two grades of Cs. You get down to C- and your company is wobbling on the fence. D is below minimum standards. E-rated companies are being helped by the state to even stay in business. And, F is just like in the old-timey schools when your goose was cooked for sure. If you see a "w" after ANY company's rating, that means it is on the "watch" list, and may be slipping down a notch or two any day now!
| Applying the law of large numbers enable actuaries to predict ____ | the future losses of a class or group of people. |
| Estimations of future uncertain losses are more accurate when data from ____ groups is used. | LARGE |
| What are the five conditions of insurable risk which must exist for the concept of insurance to apply? | 1: Large numbers of related units 2: Loss must be ascertainable when it happens. 3: Loss must be uncertain before it happens. 4: A future Loss must cause an economic hardship. 5: Must be an exclusion of Catastrophic Perils such as war, etc. |
| A: What type of policy is designed to protect against the
possibility of living too long? B: What type would protect from dying too early? |
A: an annuity B: Life Insurance |
| Almost $7 billion was spent last year in health-related advertising in the U.S., with $1.5 billion (18%) of that spent on prescription drug advertising. |
| Name at least 5 different types of insurers. | Stock Insurer, Mutual insurer, fraternal insurer, government insurer, self insurer |
| What 4 terms might describe an insurance company? | Broker, Exchange, Corporation, Insurer |
| What 3 terms would tell WHERE an insurance company might be based or located? | Domestic, Foreign and Alien |
| a: A MUTUAL insurance company is owned by ____ b: Profits and Losses in a MUTUAL insurance company are shared by all _____ |
a: Its policy holders b: Its policy holders |
| a: A STOCK insurance company is owned by ____ b: Profits and Losses in a STOCK insurance company are shared by all _____ |
a: Its shareholders. b: Its shareholders. |
| What does a RECIPROCAL Insurer do? | RECIPROCAL Insurers are unincorporated groups of people providing insurance for one another through individual indemnity agreements. Every time one subscriber suffers a loss then every other subscriber account is assessed an equal amount to pay the claim. |
Before an insurance company can do business in Oklahoma it must receive the authority from the State Insurance Commission to do so. Before any attempt to sell policies for an insurance company can be made the agent must receive the authority to do so from the State Insurance Commission to do so. Some insurance company must accept an Agent as a representative before they can be approved by the State.
EVERY insurance company an agent represents in the State of Oklahoma must have authority from the State of Oklahoma to transact business here. EVERY insurance company an agent represents in the State of Oklahoma must have accepted that agent as a representative before the agent can write or offer to write a policy for them.
Some policies require a REINSURER. The REINSURER accepts all or a portion of the risk covered by another insurance company. It's kind of like going to a bank for your loan. They write everything up, and sell the note to someone else. Nine times out of ten the INSURED won't even know the policy has been REINSURED, even if a claim is presented against the policy.
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You will find the answers to FILL-IN
questions
in the BLANK AREA left for the answer
using Lin Stone's Reverse Answer Worksheet.
To access the answers you aren't sure of
Just highlight the empty space to be filled in and
The answer will appear in reverse, and disappear
when you move on to the next question.
| Some thoughts on insurance
Insurance Questions for Agents Life Insurance Questions for Agents |
Medicare Insurance
Questions for Agents Laws, Regulations and Cautions Just How Healthy ARE you? |
If you are an agent looking for FRESH leads, Click
HERE.
Click HERE for the main menu.