Question

Jamie Lee and Rose Lee are both 36 years old. They have been married for six years, and they have a

son who is 3 years old and a daughter who is almost 2 years old. Rose Lee is expecting, and the family

just found out from their doctor that, instead of them being a family of three with the new baby, they

are now going to be a family of five because Rose is expecting triplets.

Jamie and Rose currently have Toyota Corolla, a compact car and they are planning to purchase a van

that can convey them to everywhere they go with the new additions.

Jamie and Rose are now worried about being able to provide for the growing family: diapers, formula,

college expenses times five. What if something happened to Jamie and Rose Lee? How would the

surviving parent be able to provide for such a large family?

Jamie and Rose Lee are your neighbors and they have approached you after learning that you are taking

Fundamental of Risk Management Course at University.

Jamie and Rose Lee got their prior auto insurance online. Among the questions Jamie and Rose Lee

were asking you were:

Please explain the following to the Lees:

a. Stock Insurers
b. Mutual Insurers
c. Blue Cross and Blue Shield Plans

d. Managed Care Plans

Answer 1

a. stock insurers- it is a insurance company that is owned by shareholders and can be publicly or privately traded. The Insurance company ( Stock Insurers) can distributes their profits in the form of dividends. Premiums from the policyholders are the main source of income for the company. The stock insures objective is to earn income for the shareholders by investing more on the riskier assets. The company also participate in stock sales for raising the funds. policyholders will not take any management decisions in stock insurers company. As there are many ways for raising the fund the stabilization is one of the advantage for stock insurers company.

b. Mutual Insurers- This Insurance company is owned by policyholders. The profits for mutual insurers company can be retained for deducting the future premiums or can be distributed in the form of dividends.Premiums from the policyholders are the main source of income for the company. the main purpose of the company is to retain the capital and focus on long term rather than the short term. The only way for a mutual company for money is by taking the money on a higher rates. Owners of the mutual Insurers company are the policyholders.

c. Blue cross and Blue shield plans- The organization or Association providing health care needs to the people. They provide healthcare insurance plans according to the needs of the person.

d. Managed Care Plans- It is also a type of healthcare plan to providing the care on a reduced costs. It can be designed in different ways like pay in your network which help you to finalize a doctor who mostly do your care etc.