How do premium pricing models help mitigate adverse selection?

Insurers use risk-based pricing, where premiums are set according to individual risk levels. This discourages high-risk individuals from underpaying for coverage while making insurance more attractive to low-risk customers.

Can home-based businesses get business interruption insurance?

Home-based businesses may obtain coverage, but they need a specialized business policy rather than relying solely on a standard homeowner’s insurance policy.

Is whole life insurance better than term life insurance?

Whole life insurance is better for long-term financial planning, while term life insurance is ideal for temporary needs. If you want permanent coverage, cash value growth, and estate planning benefits, whole life insurance is a better option despite its higher cost.

What responsibilities does the insured have?

The insured must comply with policy terms, such as reporting claims promptly, maintaining accurate information, and mitigating risks when possible. Failure to meet these responsibilities could result in denied claims or policy cancellation by the insurer.

What is travel insurance and when is it necessary?

Travel insurance covers trip cancellations, medical emergencies, lost luggage, travel delays, and accidents abroad, providing financial protection for travelers facing unexpected disruptions.

What tax implications arise from a beneficiary's choice of receiving life insurance benefits?

Beneficiaries can usually choose between a lump-sum payout, an annuity, or periodic payments. Lump-sum payments are typically not taxable, but annuity and periodic payments may have taxable income depending on the interest earned or the policy's value.

Does employer liability insurance cover mental health claims?

Some policies may cover mental health claims if work conditions contribute to psychological distress. However, coverage varies, and proof of employer negligence may be required.

What is coinsurance in private health insurance?

Coinsurance is the percentage of medical costs a policyholder pays after meeting the deductible, with the insurer covering the remaining amount.