Insurance

Insurance, legal contract that protects people from the financial costs that result from loss of life, loss of health, lawsuits, or property damage. Insurance provides a means for individuals and societies to cope with some of the risks faced in everyday life. People purchase contracts of insurance, called policies, from a variety of insurance organizations.

Almost everyone living in modern, industrialized countries buys insurance. For instance, laws in most states require people who own a car to buy insurance before driving it on public roads. Lenders require anyone who finances the purchase of a home or car with borrowed money to insure that property. Business partners take out life insurance on each other to make sure the business will succeed even if one of the partners dies.

Insurance makes up part of the broader financial services industry (see Finance). In the United States in the late-1990s, more than 5500 insurance companies offered a wide range of policies and services. Some large companies sell virtually every type of insurance available in the marketplace. Smaller companies may specialize in a specific geographic region or type of insurance. In 1997 more than 300 Canadian companies sold some form of insurance.

Reason for Insurance

In life, losses are sometimes unavoidable. People may become ill and lose income or savings to pay off medical bills. Individuals or their relatives may die of illness or accidents. People’s homes or other property may suffer damage or theft. People also may accidentally cause injury to others or damage to the property of others.

No one knows in advance when a loss will occur or how serious that loss will be. The uncertainty surrounding potential losses is known as risk. Insurance offers a way for people to replace risk with known costs—the costs of buying and maintaining insurance policies.

Assume a person buys a new car for $25,000. Its owner faces the possibility that, at some point, the car will suffer damage in an accident. But how could the owner budget in advance for a loss of unknown cost? The cost to repair or replace the car in the event of an accident could range from the price of a bottle of touch-up paint to as much as $25,000. If the accident injures someone, the costs of medical care could be much higher. Through the mechanism of insurance, however, the car owner can share the risk of an accident with others who face the same risk.

Insurance pools (combines) risks shared by many people, thereby reducing the risks faced by a group. People pay to buy insurance coverage (protection from risk). In exchange, all policyholders (people who own insurance policies) receive a promise that the group of policyholders—as represented by the insurance organization—will pay when any policyholder experiences a covered loss.

The reduction in risk brought by insurance relies on a mathematical concept called the law of large numbers. That law states that the ability to predict losses improves with larger groups. Using calculations based on statistics, experts known as actuaries can accurately predict the losses of a large population, even without knowing when or how any one individual will experience loss.

Insurers distinguish between two types of risk: speculative risk and pure risk. Speculative risk offers both the potential for gain and the potential for loss. People who invest in the stock of companies, for example, take speculative risk. An increase in stock prices produces a gain, while a decline in stock prices produces a loss. Pure risk, by contrast, creates the potential only for loss. Although pure risks do not necessarily result in losses, they never result in gains.

Historically, insurance dealt only with pure risks, and most people still buy insurance to cover pure risks. No one, for instance, experiences a gain when they go a full year without an auto accident. However, some insurance companies now help businesses finance large losses including those incurred on speculative risks, such as the international exchange of currency. Also, in the 1990s financial markets and some professions outside insurance, such as the field of environmental impact and damage assessment, began to expand into risk management for the first time.

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More Regulatory Action Needed To Boost Islamic Banking In East Asia

Islamic banking in East Asia is slowly developing, but needs more action by regulators to establish legal and regulatory frameworks in order to emerge as a significant segment across the region, according to an analyst.

Aside from Malaysia, where the industry’s assets now account for 15.4 percent or about US$62 billion of the country’s banking system assets, its market penetration across the region has been somewhat patchy, said Christine Kuo, vice president and senior analyst of Moody’s Investors Service.

For instance, she said, while Islamic banking has achieved relatively high market penetration in Brunei and asset growth in Indonesia has been rapid (though off a low base), Islamic banking services available in the Philippines, Singapore and Thailand remained very small in terms of asset size.

“In Malaysia, there exists a natural business potential for Islamic banking services as approximately 60 percent of its population is Muslim, but it is government reforms during the past 20 to 30 years which have really helped develop the necessary legal and regulatory framework and institutions for the industry to flourish,” Kuo said in a report.

“The adoption of various incentives, including tax breaks, has also proven critical to nourishing the business,” she said. “In fact, the Malaysian experience over the last three decades demonstrates how instrumental regulators can and need to be in order to grow the Islamic banking sector,” she added.

This compares to Indonesia, where the industry’s market share is still less than two percent (about US$3 billion) despite rapid growth in recent years, Kuo said. “The low penetration in Moody’s opinion can largely be attributed to the slow pace of change to related regulations and institutions, although a few important changes seem to be gathering momentum,” she said. However, over the long term, Indonesia has huge potential as it is home to more than 200 million Muslims, the largest Muslim population in the world, Kuo said.

“The growing acceptance of Islamic banking even among non-Muslims, combined with announcements from Singapore, Tokyo and Hong Kong that they are to increase their participation in Islamic finance, have also underlined the industry’s potential,” she said.

However, as Islamic banks expand they will need to deal with the twin challenges of managing their rapid growth while competing against conventional banks, Kuo said. “The former includes addressing risk issues specific to Islamic financial institutions, such as concentration risk due to a limited scope of eligible asset classes, higher costs for managing liquidity and concentration of liabilities,” she said. “These can best be dealt with if the banks are not under undue pressure to grow assets too quickly,” she added.

At the same time, the average bank financial strength ratings (BFSRs) of Islamic banks in East Asia are likely to be lower than their conventional banking peers in the same country because of higher Syariah law-related compliance costs and lack of economies of scale, according to Kuo. “Nonetheless, the deposit and debt ratings of Islamic banks could be significantly higher than the levels indicated by their BFSRs, thanks to support from parents and regulators,” she said.

Source: Bernama – Kualal Lumpur (Malaysia)

Credit card application for starters

“Plastic money” is a term dubbed by the people of the world in reference to the wondrous item called the “credit card.” And at the rate the economy is going and with the pace of life that we have right now we want everything done the express way. That’s why a lot of businessmen, young professionals, big bankers and even well-off students are lining up inside their trusted banks, credit card application in one hand and the need to have instant credit on the other.

Of credit, cards and credit card application
Credit card applications have taken over the need to have cold cash and a lot of people are trading in their hard-earned green bucks for a shot of having the charge-it-card. But along with your credit card application is the responsibility that we are mainly unaware of. So when you are thinking about falling in line to get started with your credit card account and before you start filling up the fields necessary to get up and running with your credit card application know all the precautions and the counter measures for you to be protected by the federal law.

Credit card application, as we all know takes a lot of time with regards to the verification of the identity of the person on top of the credit card application. Because of the US Patriotic Act that requires further verification of anyone applying for anything on the United States, that includes credit card application, getting anything in the US has become quite a chore. But since the importance of having a credit card is top priority in the US many are still willing to go to immense amount of trouble that is coupled with it.

The importance of having a credit card is very imminent; take for example the average American. An average American from the middle class bracket owns about eight to ten different credit cards and uses all of them at an average if once a day. With this number it’s not surprising that there are about a hundred thousand credit card applications being processed in a single day. And the rate of credit card applications are still expected to rise within the next quarter.

The need for credit cards and debit cards is for real and the market should be open for more credit card applications that is expectedly going to flood their way. There will be a great need for more people to look into the responsibility of educating other people on how and when to use their credit cards, because it’s hard earned greenbacks that we are throwing away when we buy online porno and junk like that only profit a few people. So whenever you’re ready grab a pen and paper and get ready to fill up that credit card application form and take one step in the express charging the way you buy.

Most of the time, although your credit card application is mailed to that states that you have been pre-approved, you will still be asked to fill out a credit card application or the ‘acceptance form’. The reason behind this is the need of the bank or the company to verify the identification of the person they have sent the card to. Since most companies offer online credit card application, you may go online to fill out the form so the processing will be convenient and easier.

When filling out your credit card application, there are some important details that should be considered aside from your name and contact information like the query should you accept every offer or not, the possibility of hidden fees that can be quite expensive and the like.

source : http://www.cardprocredit.com/44/credit-card-application-for-starters/

All About Loans, Creditors and Debtors

A person or body that provides another with a sum of money (loan) is called the creditor and the person borrowing the sum is called the debtor; this is usually finalized in a binding and legal written agreement that ensures the borrower repays the lender. Whilst just about anything, product or service can be lent out; the information below focuses on financial arrangements only. Loans are required to be paid back and this is normally within a period set at the commencement of the contract; the usual repayment method is based around monthly installments but this period can be longer.

All monetary debts consist of two elements: the sum owed and the interest charge for the time during which it is payable over; this is added to the overall amount owed. Some companies add the interest onto the repayments but make sure this is the first part to be paid so a number of monthly payments might be required before the capital repayment actually starts to be paid. The more common type of is where the interest charges are added to the capital sum then the total is divided into equal amounts with a small amount of interest being paid each month.

Whilst financial establishments can play many roles, this is the most frequent way in which they are used. Bank loans and credit are one way to increase a person’s or company’s money supply; although other money raising methods do exist.

Long term financial arrangements designed for individuals and companies to buy real estate is called a mortgage but it can only be used for this purpose. However, in this situation a form of security is needed before the money is lent and the title to the property is the normal method for financial institutions to use; releasing them once the final installment is made. Defaulting on a loan like this could mean that the bank or other lender could repossess the house and then re-sell it; to recover sums owing to them, they may place it an auction.

Although not a regular method of security, the financing company may demand that the object of the loan also becomes the security for it; where a car is purchased using this method, it becomes the security for the amount borrowed. Car loans are generally much shorter as the useful life of a car is correspondingly reduced; where cars are concerned, this term will only last a handful of years.

The average person may have a number of unsecured loans or credit facilities and not even realize it; credit cards, a bank overdraft, even a line of credit for instance, are all examples of unsecured lending. Although it is difficult to provide any interest rates as they will differ greatly from one bank to the next, if you want to lose the highest interest rate unsecured debt you have: cut up those store cards.

In some countries, predatory lenders are called loan sharks and it is where they supply money at high interest rates with the sole intention of gaining control over a person. Criticism of some credit card suppliers in a number of countries is also made as they issue cards to individuals at extremely high rates of interest in an underhand attempt to keep them paying off even small balances for a long period. You would be wise to be wary of financial arrangements that seem to good to be true because they probably are.

source : http://www.cardprocredit.com/45/all-about-loans-creditors-and-debtors/

Financial Pressure Is Everywhere

source : http://21stcenturyacademy.universalwealthcreation.com/financial-freedom/financial-pressure-is-everywhere

The point of the exercise in the last post about interviewing yourself to rewire your subconscious was not to make you feel poorly about yourself. That is not the intention of any of this, and not the intention of Jamie McIntyre or the 21st Century Academy. The only intended purpose for any of this is to help you recognize those things that are serving as barriers to wealth and financial success. Only when you understand what has been keeping you from being successful can you take steps to remedy the situation.

Money Can Pressure Anyone

If you recall, the questions I gave you, which came from the 21st Century Academy via an eBook written by Jamie McIntyre, were all focused on the pressure that you feel from money. Many who answer these questions start to feel down about the fact that money is such a controlling factor in their lives. If you have some perspective on that, though, you understand that, as we said, this is not a right or wrong proposition. It’s just an evaluation of the situation.

People from all walks of life have answered that set of four questions. And except for a small group who has found their way to financial freedom, most will realize that they do in fact feel pressured by money. Note that this is people across all income levels! Rich people, poor people, middle-income people, professionals, doctors, lawyers, school teachers, ditch diggers…anyone, almost everyone, can and will experience pressure with money as the root source.

Pressuring Perspective

It’s important to recognize that, but it’s also important to find a way to move beyond it. Money cannot continue to be a source of strife for you if you are to achieve the level of comfort that you seek in your life. Accept that this has been the situation up until now, and accept that the way to change is to start, as we’ve been discussing, rewiring your subconscious and removing the invisible roadblocks to success. I’ll be back next time with more tips from Jamie on how to do just that.

To Your Continued Financial Success

Sean Rasmussen
21st Century Academy
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