In: Finance
1. Private insurance provides numerous coverages that can be used to meet specific loss situations. For each of the following situations, identify a private insurance coverage that would provide the desired protection:
John, age 32, is a single parent with one dependent child. He recently purchased a house for €200,000. He received half of that amount as mortgage loan. He wants to make certain that he will be able to pay the loan in case of his disability.
Peter, age 36, is married with three dependents. His wife is a disabled person and is not able to work. As the only breadwinner, he wants to be sure the family will have funds in case of his premature death.
Mary, age 44, owns a small tobacco shop – the premises are rented. The total value of goods in her shop amounts €30,000. She has no savings. She wants to make certain she will be able to run her business, if her shop catches fire.
Dominic, age 15, is a talented young ski jumper. However, this sport is a risky one; accidents can happen from time to time. As his club does not pro- vide any insurance solutions, his parents want to be sure they are protected, and can cover medical expenses if Dominic suffers a bodily injury during ski jumping.
Case 1:
The type of insurance coverage will be "Payment Protection Insurance". This type of insurance coverage is also called "Loan Repayment Insurance", "Credit Insurance" or "Credit Protection Insurance". Under this insurance coverage, the insurance company ensures repayment of loan in various cases such as death of borrower, borrower becomes disabled or ill, borrower loses a job and more.
Case 2:
The type of insurance coverage will be "Term Insurance". Under this type of insurance, the beneficiary or nominee of insured person can claim economic benefits, such as surplus amount or part payments for fixed period of time, from insurance company in the case of death of insured person. The beneficiary or nominee is generally a family member of the insured person.
Case 3:
Under this case two types of insurance coverage will be used, "Property Insurance" and "Inventory and Goods Insurance"
"Property Insurance" - Under this type of insurance, the insurance company covers the buildings such as home, shop and more, including building contents such as air-conditioner and more. The insurance company insures property against eventualities such as fire, damage due to natural calamities and more.
"Inventory and Goods Insurance" - Under this type of insurance, the insurance company covers the losses of inventory and various types of goods used in business in case of fire, theft, and natural disasters. Under this insurance coverage, the insurance company repays in either as replacement cost or actual cash value.
Case 4:
Under this case, "Sports Accident Insurance" will be used. Under this insurance, the insurance company covers medical expenses of the sports person, either amateur or professional, in the case of injury or accident during sports. Some insurance companies only cover in cases where sports person gets injured during recognized sports event or while training in club.