Life insurance policies comes in many forms. Some of the typical policies include: ?Term Life: the insured is covered while the policy is in e%ect, usually 10-20 years. ?Whole Life: similar to term life, but allows the policyholder to borrow against the policies cash value. When the term of policy expires, the insured can get the cash value of the policy. Life Insurance Life insurance policies come in many forms. Some of the typical policies include: ?Universal Life: includes both a term life portion and a savings portion. ?Annuities: pay a bene”t to insured until death, to cover retirement years.
Life Insurance: Company Assets and Liabilities ?Life insurance companies derive funds from two sources: oThey receive premiums that must be used to payout future claims when the insured dies. oThey receive premiums paid into pension funds managed by the life insurance company. Health Insurance ?A type of insurance coverage that pays for medical and surgical expenses that are incurred by the insured. Health insurance can either reimburse the insured for expenses incurred from illness or injury or pay the care provider directly. Health insurance is often included in employer bene”t packages as a means of enticing quality employees. Property and Casualty Insurance ?
Insurance that protects against property losses to your business, home or car and/or against legal liability that may result from injury or damage to the property of others. This type of insurance can protect a person or a business with an interest in the insured physical property against losses. Property and Casualty Insurance ?Property Insurance: protects businesses and owner from the risk associated with ownership. ?
Casualty Insurance: also known as liability insurance, it protects against “nancial losses because of a claim of negligence. ?Reinsurance: allocates a portion of the risk to another company in exchange for a portion of the premium. Pension Funds ?A pension is a “xed sum to be paid regularly to a person, typically following retirement from service. There are many di%erent types of pensions, including de”ned bene”t plans, de”ned contribution plans, as well as several others. Pensions should not be confused with severance pay; the former is paid in regular installments, while the latter is paid in one lump sum.
The terms retirement plan and superannuation refer to a pension granted upon retirement of the individual. Retirement plans may be set up by employers, insurance companies, the government or other institutions such as employer associations or trade unions. The common use of the term pension is to describe the payments a person receives upon retirement, usually under pre-determined legal or contractual terms. A recipient of a retirement pension is known as a pensioner or retiree. Types of Pension Employment-based pensions (retirement plans) ?
A retirement plan is an arrangement to provide people with an income during retirement when they are no longer earning a steady income from employment. Often retirement plans require both the employer and employee to contribute money to a fund during their employment in order to receive de”ned bene”ts upon retirement. It is a tax deferred savings vehicle that allows for the tax-free accumulation of a fund for later use as a retirement income. Types of Pension Disability pensions ?
Some pension plans will provide for members in the event they su%er a disability. This may take the form of early entry into a retirement plan for a disabled member below the normal retirement age. Bene$ts ?Retirement plans may be classi”ed as de”ned bene”t or de”ned contribution according to how the bene”ts are determined.
A de”ned bene”t plan guarantees a certain payout at retirement, according to a “xed formula which usually depends on the member’s salary and the number of years’ membership in the plan. A de”ned contribution plan will provide a payout at retirement that is dependent upon the amount of money contributed and the performance of the investment vehicles utilized. Some types of retirement plans, such as cash balance plans, combine features of both de”ned bene”t and de”ned contribution plans.
De$ned bene$t pension plans ?A traditional de”ned bene”t (DB) plan is a plan in which the bene”t on retirement is determined by a set formula, rather than depending on investment returns. The bene”t in a de”ned bene”t pension plan is determined by a formula that can incorporate the employee’s pay, years of employment, age at retirement, and other factors. Funding ?De”ned bene”t plans may be either funded or unfunded. ?In an unfunded de”ned bene”t pension, no assets are set aside and the bene”ts are paid for by the employer or other pension sponsor as and when they are paid.
In a funded plan, contributions from the employer, and sometimes also from plan members, are invested in a fund towards meeting the bene”ts. De$ned Contribution Funds ?In a de”ned contribution plan, contributions are paid into an individual account for each member. The contributions are invested, for example in the stock market, and the returns on the investment (which may be positive or negative) are credited to the individual’s account. On retirement, the member’s account is used to provide retirement bene”ts, sometimes through the purchase of an annuity which then provides a regular income.