MRI - Module Overview

Managing Risk and Insurance

Introduction

Risk is all around us. It is, in fact, a part of life. We can deal with risk by avoiding it, reducing it, ignoring it, or transferring it. Avoiding risk may not be practical. Reducing risk isn't foolproof. Ignoring risk can be foolhardy. Not all risks can be transferred. So, as best as we can, we must learn to manage risk. As early as 2100 B.C., insurance has helped individuals and companies transfer some of the risks. Back then, caravans were insured against weather, theft, and camel breakdowns. Today, we insure our property, our health, our businesses, and our lives. Insurance companies provide us with that intangible security against financial loss, should we face injury, illness, damage to property, or even death.

Essential Questions

What is the risk?
How can risk be managed?
What is insurance?

Key Terms

Claim text annotation indicator : A formal request to an insurance company asking for a payment based on the terms of the insurance policy.

Coverage text annotation indicator : the total amount and type of insurance carried

Deductible text annotation indicator : A specified amount of money that the insured must pay before an insurance company will pay a claim.

Insurability text annotation indicator : (1) the quality of being insurable (2) the conditions under which an insurance company will issue insurance to an applicant (based on standards set by the insurance company)

Insurance text annotation indicator : A practice by which a company provides a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a premium.

Policy text annotation indicator : An insurance policy is a legally binding contract between an insurance company and the person who buys the policy, commonly called the "policyholder", who also is often the person insured.

Insured text annotation indicator : The person, group, or property for which an insurance policy is issued. The condition of having insurance.

Insurer text annotation indicator : (1) A person or company that underwrites an insurance risk, (2) the party in an insurance contract undertaking to pay compensation

Liability text annotation indicator : The state of being responsible for something, especially by law

Premium text annotation indicator : An amount to be paid for an insurance policy

Risk text annotation indicator : The potential that a chosen action or activity (including the choice of inaction) will lead to a loss (an undesirable outcome).

Lesson Preview

In this module, we will study the following topics.

What is Risk
How Can I Manage Risk?
Types of Insurance

IMAGES CREATED BY GAVS