How does reinsurance impact the solvency ratio?

Reinsurance helps insurers transfer some of their risks to another company, reducing their liabilities and improving their solvency ratio. By spreading risk, insurers can maintain financial stability and continue to meet their policyholder obligations, even in the event of large claims or catastrophic losses.

What types of risks are typically covered by an auto insurance policy?

Auto insurance typically covers risks such as accidents, theft, vandalism, natural disasters, liability for injuries to others, and damage to your own vehicle through collision or comprehensive coverage.

What role do mutual life insurance companies play?

Mutual companies are owned by policyholders and reinvest profits to benefit members through dividends and stable premium rates.

What is a policy lapse in insurance?

A policy lapse occurs when a policyholder fails to pay the premium by the end of the grace period. Once lapsed, the insurance company is no longer obligated to provide coverage, and any benefits or claims may be denied.

Do independent contractors need workers' compensation insurance?

Independent contractors are generally not covered by workers' compensation, but some states require certain contractors in high-risk industries to carry their own coverage.

How do I choose the right term length for my policy?

Choose a term length based on your financial responsibilities. If you have a 20-year mortgage, a 20-year policy ensures coverage until the loan is paid off. If you have young children, a 25- or 30-year term might be best to cover their education and living expenses until they are financially independent.

What happens if I don’t have insurance?

Without insurance, you are fully responsible for any losses, damages, or medical expenses. This can result in significant financial hardship, legal penalties (such as fines for driving uninsured), or the inability to recover from major accidents.

What are policy exclusions in insurance?

Exclusions are specific situations or risks that an insurance policy does not cover, such as pre-existing conditions in health insurance or intentional damages in property insurance.