IM_22 - Chapter 22 Insurance Companies and Pension Funds...

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Chapter 22 Insurance Companies and Pension Funds Insurance Companies Fundamentals of Insurance Adverse Selection and Moral Hazard in Insurance Selling Insurance Growth and Organization of Insurance Companies Types of Insurance Mini Case: Insurance Agent: The Customer’s Ally Life Insurance Global: The Woes of Lloyd’s of London Health Insurance Property and Casualty Insurance Insurance Regulation Conflicts of Interest: Insurance Behemoth Charged with Conflicts of Interest Violations The Practicing Financial Institution Manager: Insurance Management Pensions Types of Pensions Defined-Benefit Pension Plans Defined-Contribution Pension Plans Private and Public Pension Plans Mini Case: Power to the Pensions? Regulation of Pension Plans Employee Retirement Income Security Act Individual Retirement Accounts The Future of Pension Funds T Overview and Teaching Tips Insurance companies and pensions are two ways people are saving in nonbank institutions. Since most people are risk-averse, they prefer to buy insurance and take the risk away from themselves. The chapter explains the fundamentals of insurance by discussing several basic principles. Life insurance and property and casualty insurance are the two most common types of insurance. The section on life insurance provides an in-depth look at the different types and parts of life insurance. One must decide what type they desire to have either for their retirement, death, or both. The largest health insurance company in the nation is Blue Cross/Blue Shield which covers hospital care and doctor services. Property and casualty insurance protect against losses from fire, theft, storm, explosion, and neglect. This type of policy is short term compared to life insurance which is long term. The characteristics of property and casualty insurance are laid out in detail.
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154 Part 6 The Financial Institutions Industry People are retiring earlier and living longer, so pension plans have become a growing investment vehicle. Pension plans can either be defined-benefit or defined-contribution plans and either public or private. Social Security is the largest public pension plan. All plans must follow a set of standards called the Employee Retirement Income Security Act. The Pension Benefit Guarantee Corporation insures most private pension plans.
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