Understanding how insurance works Insurance policies are a common form of risk restruction or risk trander in which a third party comes some or all of the risks pened by certains dangers. Why would the company be willing to assume these risker? A-Z Consider amplified example in which all 30,000 residents in a particular town pay $100 a month to the insurance company SecureSure for medical insurance coverage. The insurance company cannot predict whether a given resident will need hospitalization or how much an individ's care will cost. Suppose, however, it has data that on average 10% of the chiens require care each month, costing an average of $1,000 each. The expected werage cost of monthly care will be 200.000 per person. If the invece company sets the monthly pre equal to this amourt, it would break even on average). In reality, the rates that an individual pays each month vary based on a process known as underwriting in which the inwards are divided into four insurance danes. The das, which is based on an moured person's Income determines the amount he or she pays Consider the following comple: An Insurance policy in Action Manuel is over man who recently openenced what he thought were strede symptoms and went to the emergency room at nearby hospital. Although it turned out to be a severe case of heartburn, not a stroke his medical for the hospitalization and tests totaled 34,106. Manuel has an insurance policy with a $300 hospital stay deductible and a constance rate od 20%. He can therefore expecta reimbursement from the insurance company of (Note: Round your neer to the nearest dollar) Complete each statement that follows with the appropriate instance term. Hooverage and history of heart attacks ncrease this chances of suffering an orbielou. This is an example of . It is easier for the insurance company to predict the risk associated with an entre town than to predict the risks of a given individual. This reflects the principle of indemnity Because Manuel is older and shtory of heart attack, he is a part of the dast fired Understanding how insurance works Insurance policies are a common form of risk restruction or risk trander in which a third party comes some or all of the risks pened by certains dangers. Why would the company be willing to assume these risker? A-Z Consider amplified example in which all 30,000 residents in a particular town pay $100 a month to the insurance company SecureSure for medical insurance coverage. The insurance company cannot predict whether a given resident will need hospitalization or how much an individ's care will cost. Suppose, however, it has data that on average 10% of the chiens require care each month, costing an average of $1,000 each. The expected werage cost of monthly care will be 200.000 per person. If the invece company sets the monthly pre equal to this amourt, it would break even on average). In reality, the rates that an individual pays each month vary based on a process known as underwriting in which the inwards are divided into four insurance danes. The das, which is based on an moured person's Income determines the amount he or she pays Consider the following comple: An Insurance policy in Action Manuel is over man who recently openenced what he thought were strede symptoms and went to the emergency room at nearby hospital. Although it turned out to be a severe case of heartburn, not a stroke his medical for the hospitalization and tests totaled 34,106. Manuel has an insurance policy with a $300 hospital stay deductible and a constance rate od 20%. He can therefore expecta reimbursement from the insurance company of (Note: Round your neer to the nearest dollar) Complete each statement that follows with the appropriate instance term. Hooverage and history of heart attacks ncrease this chances of suffering an orbielou. This is an example of . It is easier for the insurance company to predict the risk associated with an entre town than to predict the risks of a given individual. This reflects the principle of indemnity Because Manuel is older and shtory of heart attack, he is a part of the dast fired