INSURANCE TO PROBABILITY: In Insurance, What Is the Role of Compound Probabi...

INSURANCE TO PROBABILITY: In Insurance, What Is the Role of Compound Probabi...: "Two events are considered to be independent if the outcome of one has no impact on the output of another. For instance, rolling a die twice ..."

In Insurance, What Is the Role of Compound Probability?

Two events are considered to be independent if the outcome of one has no impact on the output of another. For instance, rolling a die twice results in two independent outcomes. Coming up with a five on the first roll does not make the second roll any more or less likely to be a three, for example. In insurance, many events are assumed to be independent, such as the paths of two separate hurricanes or the likelihood that two different subscribers will have a car accident. In order to calculate the compound probability of two independent events, the probability  of the first event is multiplied by the second event.

As an example, consider that two subscribers with life insurance policies at the same company will both die this year. The first, Harry, has a 20% chance of dying this year, and the second, Larry, has a 10% chance of dying this year. The compound probability that Harry and Larry will both die during the year is 0.10*0.20 = .02 or 2%. The fact that Harry dies has no effect on Larry dying and vice versa.

In contrast, the probability of dependent events occurring simultaneously is found using conditional probability. The occurrence of one dependent event will have an effect on the likelihood of another dependent event. For instance, rolling a five on the first roll of the dice will make it impossible for the sum of two rolls to be four. In casualty insurance, the likelihood of a fire in one subscriber’s house is increased if the next door neighbor’s house is on fire. Conditional probability is calculated using Bayes’ Theorem.

Insurance companies are very interested in analyzing the likelihood that any number of all their subscribers will make a claim during the year because they payout indemnities. An actuary uses compound and conditional probabilities to calculate the likelihood of payouts for each policy. Then an insurance underwriter will use the expected payout value to come up with a competitive premium rate.

How Does Life Insurance Work?

Insurance works on the best commercial principles like any other commercial venture. The basic business model of an insurance firm can be described thus:

(Premium collected + Profit on investments made from the premium collected) - (Administrative costs + Investment costs + Payout on insurance claims)

Insurance companies should have the following traits to succeed:

1. To find a large number of homogeneous group of people who can be insured

2. The premium payable should be affordable to the large group.

3. The loss to the group insuring on account of the contingency occurring should be definitely huge compared to the premium payable, capable of exact calculations.

If the risk covered conforms to the above norms, insurance companies will be able to make profit by taking proper planned action.

There is another kind of insurance business - indemnity. For example, consider the risk of paying damages to a third party if an accident occurs. If no accident, no payment and premium is profit for the insurer.

The insurance company recovers premium and invests them in markets getting good return (like equity, government debt instruments) with adequate liquidity base. They employ actuaries who work out the investment angle as well as calculate the probabilities of occurring of the risks covered. Actuaries work out and calculate the probability of risk and the appropriate premium for covering the risk. Based on the actuarial calculations, premium is fixed. These are all revised constantly in accordance with the actual reality. Insurance companies will also underwrite their risk. Underwriting reduces the probability of huge loss occurring to the particular company.

The Importance of Medical Insurance

A medical policy is an essential product to be considered in managing risk in lives. Anyone can be a victim of critical illness/dread disease and it can happen at the most unexpected time and the person can be in deep trouble, not knowing what to do and whether something can be done about it and if so, how much it will cost.

More and more people are seeking treatment and care from private hospitals and the rising medical expenses is of utmost concern to these patients and their families. It is a known fact that hospitalization and surgical costs have risen tremendously throughout the years. Medicare costs do not only involve medication but also a host of other related services/equipment such as surgery, diagnostic tests, physiotherapy, purchase or rental of medical equipment, ambulance services etc.

These can exhaust a person's savings or retirement fund in no time at all, depending on how costly it is for that particular need. It is well beyond many people to obtain a large sum of money for surgery, hospitalization and medical attention, of which they might resort to "charity" that could be the most uncomfortable and undignified way. Therefore, it is of utmost concern for every one to realize the importance of medical insurance not only to assume their risk and to protect them against financial burden and even poverty, but to also preserve and maintain their current lifestyle.

A look at the family medical history may be good as some diseases may be inherited. Early action taken to apply for coverage will be recommended as the premiums will be lower and before his health deteriorates so as to render the applicant uninsurable.

If you are under employment, it is always advisable to check with your company whether your group insurance policy covers for critical illnesses, medical as well as hospital and surgical, and how comprehensive their coverage are, especially in cases where one has no other insurance policies.

Medical Insurance is one of the numerous insurance policies that cater for different type of risks and insurable interests. Should any unfortunate event occur, the financial benefits derived from the policy would definitely be more than adequately compensate the premiums paid. It is best to transfer the risk to an insurance company who has the capability to assume the risk. One can still retain a portion or whole of the risk if the probability of certain risk happening is remote. One has to assess the situation and not fall in the trap of "Penny wise, Pound foolish". By neglecting or saving on purchasing a medical insurance policy, one is left exposed to high probability of risks occurring resulting in a financial loss that can be substantial.

The Differences Between Insurance Policy and Option Contract

Options are attractive to the private trader due to their special advantages. By buying options, you are given the opportunity to participating in the market with limited known risk. Besides, the capital that you need to invest is just a small fraction of the price of the underlying shares. Option buyer need to pay a premium when buying options, which is very much less than the stock prices.

For those who are not familiar how actually options work, it may be a little bit confusing in the beginning. Options actually share a lot of same characteristics like insurance policies, which most people should be able to understand. We will get a clearer picture of how literally options work by checking through the features that options and insurance policies have.

For an insurance policy, the policy is actually a contract between the purchaser and the underwriter of the insurance policy. Underwriter of the insurance policy is the company, whose sells the policy. Whereas; option is a contract between the option buyer and seller when there is an initial transaction taking place. Stated in the contract, option buyer has the right to buy an amount of stock from the seller at an agree price within a specific period of time; whereas, seller has to obligate to sell an amount of stock to the buyer at an agree price within a specific period of time. This agreed price is called strike price.

For insurance policy, purchaser pays a premium to the insurance underwriter. The probability payout is influenced by a number of factors, which the premium is dependent. Premium will be charged higher if the risk payout is higher. Whereas for option; purchaser of the option contract pays premium to the writer of the option. A number of factors, which will affect the overall likelihood of a particular stock price being reached, will also affect the amount that needed to be paid as a premium. When the premium for the option is higher, the likelihood of a stock price can reached also higher.

In term of time period, the validity of the insurance policy is within a specific length of time. The passing of time works in favour to the insurance underwriter but against to the purchaser of the insurance policy. For option, it works exactly same as the insurance policy, that is option contract is valid within a specific length of time. When the time passes, it does not favour to the option buyer but favour to option writer.

Upfront is the risk for the purchaser of the insurance contract. The policy is paid by the premium. The insurance underwriter risk is open-ended depending on the terms that are insured. In options trading, the options buyer risk is also known as upfront. The option is paid by the premium. Here are the differences between insurance policy and the option. The option buyer can gain more than premium that he or she has paid for the option but not less than the premium. On the other hand, option writer has open-ended risk potential, which may cause unlimited loss.

In term of payout, if there is any event that has been stated in the insurance policy has occurred, the payout from the insurance company will be a lot more than the original premium paid. If the market direction favours the option buyer, then he or she has unlimited profit potential. The option buyer may make a lot of money, which is many times more than the premium that he or she has been paid.

Earthquake Insurance in California

As the water began to drain from New Orleans in 2005, we learned that most of the homeowners in New Orleans did not have flood insurance, since they were supposedly in "low risk" areas. The over 60% of homeowners will need to depend upon their own savings, and limited federal assistance, to rebuild New Orleans - at an uncalculated cost for homeowners and taxpayers.

Could that level of disaster, especially that level of uninsured disaster, happen in California? Less than 15% of California homeowners currently carry earthquake insurance, due to its high cost, the "can't happen to me or my house" factor, and mortgage providers not requiring coverage. The next big quake will result in billions of uninsured damage - but is earthquake insurance really worth the high cost?

How Did We Get Here?

The state of California requires that all homeowner's insurance providers to at least offer earthquake insurance (albeit, at a high cost). Until 1994, it was widely available - but the high damage costs of the Northridge earthquake resulted in 97% of homeowner's insurance providers pulling out of the state the California. In response, the California Earthquake Authority was formed by the California legislator to provide earthquake insurance.

What Is the California Earthquake Authority, and How Does It Work?

The California Earthquake Authority provides two-thirds of the earthquake policies in California, sold through their member providers, like Allstate and State Farm. A homeowner purchases the policy through their regular insurance agent, but the policy is actually a CEA policy.

The CEA currently has about $7.2 billion to pay claims, which it states is enough to pay foreseeable damages (Loma Prieta in 1989 had $6 billion in total damages). If the damage claims are more than $7.2 billion, then each claim would be paid a prorated portion of their losses - unlike a regular insurance company, which promises to pay the actual damages under the insurance policy. The state of California cannot help pay the claims out of general funds.

The policies also have a high deductible - usually 15% of the value of the dwelling. In other words, your home must be damaged more than 15% of its value before the insurance starts paying. So, this insurance is not for cracks in the driveway - it is for significant structural damage to your home. The policy also pays for limited contents (starting at $5K) and loss of use (starting at $1500).

Why Is Earthquake Insurance So Expensive?

Insurance policy premiums are calculated based on probabilities - the probability that a house like yours in a neighborhood like yours will catch fire, or a driver like you will have an accident. With data from millions of homes, these probabilities can be calculated with reasonable accuracy. But, no one can reliably predict the probability that there will be an earthquake strong enough to damage your home.

And, as you can imagine, damages from an earthquake, flood, or hurricane, are widespread, over potentially thousands of square miles - instead of one or a few dozen homes, as in a fire. As such, the insurer would have to pay either zero claims, or billions of dollars of claims - too much variance to reasonably plan for or price accurately.

Are We Really At Risk Here in San Jose?

According to the USGS, there is a 62% probability that there will be an earthquake of 6.7 or greater (like the Northridge quake) in the Bay Area in the next 30 years. In my zip code (San Jose 95126), USGS calculates a 80% chance of a 6.0 earthquake and a 20% chance of a 7.0, in the next 30 years. Whether you consider that to be a high risk depends on your risk tolerance for earthquakes - I consider that a high risk of a moderate earthquake and a somewhat low risk of a terrible earthquake, over the next 30 years.

But like any issue involving real estate - it is all local. Where your home is actually located significantly affects your risk - bedrock, reclaimed land from the bay, soil type, nearby streams, actual distance from the epicenter - all can affect potential damage.

But of course, many earthquakes occur where the USGS was not even aware of a fault line - and we never know when or where it will happen, until it happens.

Should I Obtain Earthquake Insurance?

Factors to Consider:

    * Could you afford to pay for the rebuilding your home from your own savings & investments?
    * Can you afford to pay the high cost of insurance, indefinitely?
    * Could make payments on your current mortgage and on a new loan to rebuild?
    * Can you mitigate your potential losses by bolting your roof to the walls and the walls to the foundation, for example?
    * What is your tolerance for the risk of an earthquake?
    * What is the risks of your current home construction (type, age, foundation)?
    * What are the risks of your specific location (soil type, distance to known faults)?


Are the Costs Worth It?

Let's assume that you have a home that would cost $250K to rebuild, you will own the home for the next 30 years, and your earthquake premiums are $1200 per year. Over the next 30 years, that would be a total of $36,000 in premiums (assuming your premiums do not increase, to simplify calculations).

Instead of purchasing insurance, you invest the premiums in a diversified mutual fund. With an 8% annual return, you would have $135,000 (pre-tax) in year 30.* But of course, you only have that total in year 30, not in year one - meaning that if the earthquake happens tomorrow, you don't have the money.

The deductible is another big turn off for many homeowners. The insurance pays only for large structural damage, not broken dishes or cracked driveways - meaning that it is less likely you will use it. However, be aware that you will not need to come up with the cash for the deductible - you may either opt to not undertake those repair or rebuilding costs, or you can apply for an SBA loan to pay for the deductible (assuming a federal disaster area is declared).

Why Not Just Get Federal Aid, or "Walk Away" and Let the Bank Have the Property?

The federal government would probably provide access to SBA loans, if the area is declared a federal disaster area (no small business required). However, the $200K maximum SBA loan may not be enough to rebuild your home - and, it is a loan that you need to pay back (in addition to your current mortgage).

If you have refinanced your mortgage, you have a recourse mortgage - which means that not only can the bank foreclose on the property in case of non-payment, the bank can also come after your personal assets and future income in case of non-payment. So you cannot just walk away, especially if you have a good income and some personal assets. The bank may help out by deferring payments for a few months, but you still must pay back the loan.

Last Thoughts

We have earthquake insurance on our home. Our home was not yet built in the 1906 earthquake (so who knows if it would stand), it is 75+ years old and is not bolted to the foundation, and we have a refinanced mortgage. For my family, the insurance premiums are worth peace of mind in case of a major earthquake disaster. That's exactly what insurance is for - the "you never know."

Factors That Affect Your Car Insurance Rates

If you have ever compared insurance rates with a family member or friend, you may find that you are paying very different amounts for similar coverage. There are many factors that affect car insurance rates that can cause one person to pay two to three times more than another for the same plan. These factors range from personal characteristics to financial habits to vehicle features, but they all have one thing in common: they are considered to be indicators of risk. Insurance companies believe that these factors are indicators for the probability that you will have an accident - and the costliness of the claim when you file.

Major Factors

    * Age: Drivers under 25 have the greatest chance of being involved in an accident, while more experienced drivers between the ages of 50 and 65 have the lowest risk.
    * Gender: Statistically, women have fewer accidents than men. However, the difference between the sexes is not as great as it once was.
    * Vehicle specifics: Make, model, year, and engine size all affect your rates. Newer cars and faster, more powerful cars are considered a greater insurance risk. If you purchase an SUV, you can expect to pay more in insurance for a V8 engine than for a V6.
    * Marital status: A married individual will pay less for car insurance than someone who is single.
    * Traffic violations: The more traffic tickets you have on your driving record, the higher your rates will be.
    * Accident claims: While one minor accident may not affect your insurance much, having a history of accidents, even if they are just fender benders, can increase your premiums.
    * Geography: A person living in the city is at a higher risk of having an accident or having his or her car broken into than someone living in a rural, less densely populated area.
    * Credit rating: This may seem irrelevant to calculating car insurance, but insurers claim that there is a statistical relationship between having a good driving record and having a good credit rating. Drivers with poor credit have a higher probability of making claims, and more costly claims, than those with good credit.

What You Can Do to Lower Your Rates

If you are struggling to afford your car insurance or just want to knock off a percentage of your cost, there are steps that you can take to reduce your rates. Consider the following money saving tips:

    * Drive a less powerful, safer vehicle. Paying for insurance on a small 4-cylinder vehicle instead of a large SUV or sports car can save you a significant sum.
    * Take steps to improve your credit. Getting your spending under control and paying bills on time could improve your credit rating and lower your insurance premiums simultaneously.
    * Ask about the good student discount. Statistically, students with better grades also have better driving records. If you or someone covered under your insurance is a student, keeping those grades up can knock digits off your coverage costs.
    * Drive safely. Taking fewer risks on the road reduces your chances of getting a traffic ticket and also lowers your risk of an accident. Maintaining a good driving record could result in lower rates.

Another great way to find affordable insurance is to shop around with different companies. You are not obligated to stay with one provider for car insurance. Today there are businesses that will assist you with the comparison process and will help you find affordable coverage that meets your needs.

Marine Cargo Insurance - The Most Cost Effect Way to Insure Your Goods

Losses during transport occur daily. Containers shift and fall overboard, vessels collide and capsize, cranes puncture containers, weather damages goods and maritime piracy continues throughout the seas. All of these situations compromise the safety of goods travelling both domestically and internationally. Marine Cargo Insurance covers the loss, damage or theft of goods while in transit.

The direct loss is only the tip of the iceberg as the indirect losses are even more drastic to your company's bottom line. Managing the direct loss will help offset the effects of the indirect losses.

Determining the Probability of Loss & Economic Consequences

To determine the probability of loss, take the total number of shipments in one year and divide by the number of shipments that were compromised in that 12 month period.

Example: If 13 shipments were compromised out of 1,000 shipments. The probability of loss is 1.3%.

To determine the economic consequence associated with a loss, take the probability of loss multiplied by the average value of the shipments.

Example: The average value of the shipments is $250,000. So the economic consequence is $3,250 ($250,000 x 1.3%) for each shipment that year.

The need for marine insurance is apparent. Many cargo insurance policy holders are not insuring their goods in the most cost effective way. The market is soft, so now is the time to shop rates and compare marine insurance providers. If you already have an annual policy your rates should be dropping! If you insure shipment by shipment your charges should be dropping! Whether you purchase an annual Marine Cargo Insurance policy, self-insure, insure shipment by shipment or purchase CIF, request a quote for an annual policy will be very beneficial to your company during these hard economic times.

How to Get the Best Motorcycle Insurance Policy

The best motorcycle insurance policy is one that offers full coverage for your vehicle, regardless of what the circumstances are. Though this type of policy is usually more expensive than those that have limited coverage, it is well worth it. However, if you find that the premiums of a comprehensive insurance is too much for your finances to handle, then you can opt for one that offers coverage for theft and accidents, albeit limited, so that at least you have the incidents with the highest probability of happening covered.

If you want to get the best motorcycle insurance for you motorcycle without having to pay too much on your premiums, you can avail of some of the discounts that insurance companies have to offer. Most insurance companies offer lower premiums to those who have a good driving history. So the moment you get your motorcycle, make sure to drive carefully at all times to avoid any road accidents. If you do not have any history of getting involved in road accidents, the higher your chances of getting lower premiums will be. You also have to make sure to practice safety measures at all times. The more safety measures you make, the lower your premiums are likely going to be.

If you want to avail of the best motorcycle insurance in the market, you have to take your time to look for one. If you do extensive research, chances are you are going to come across a company that offers the best deals for relatively lower prices. You have to ask for insurance quotes first and you have to be patient. Keep in mind that insurance companies are a dime a dozen; so take your time to study each insurance company you come across. Study all their insurance policies and make sure that they offer the coverage you want.

You also have to know how to give the right answers, especially when you are applying for an insurance policy. Giving the right answers, especially to safety questions, would increase your chances of getting lower premiums for your insurance policy. Be confident in answering questions so that the insurance company would find you eligible for lower insurance policies. Remember that the cost of a policy depends highly on the probability of the driver getting into a road accident. To get the best motorcycle insurance in the market, you have to know what you are looking for so it would help a lot if you have sufficient information on insurance policies.

Principles of Insurance

Insurance is a cover used for protecting a person from the financial losses. Financial losses can take many forms. There are risks to our investments, liabilities for our actions, and risks to our ability to earn income.

The insurer and the insured are the main two parties involved in insurance. The insurer is the insurance company which will provide the cover to the insured against any financial losses. The insured may be an individual person or a group of people like an employer, members of a society, etc.

Basic categorization of Insurance

There are mainly two broad categories of insurance

    * Life insurance
    * Non-life insurance

Life insurance products include Life term policies, which give clean risk coverage of only the death benefit, whereas endowment or money back policies have a risk as well as savings component i.e. death as well as maturity benefit. The life insurance also includes Unit - Linked Policies in which there is a risk component and a savings component, which is invested in equity, debt or gilt funds, depending on the insurance company.

Non Life insurance products include property or casualty, health insurance or house, fire, marine insurance etc. This insurance category deals with all the non-life aspects of an insured like their house, health, land, office, etc which might bring financial loss.

There are few principles of insurance, such as:

    * Definite Loss - Insurance - The event that gives rise to the loss that is subject to insurance should, at least in principle, take place at a known time, in a known place, and from a known cause. The classic example is death of an insured on a life insurance policy.
    * Unintentional or Accidental Loss - Insurance - The event that comprises the trigger of a claim should be accidental, or at least outside the control of the beneficiary of the insurance The loss should be 'pure,' in the sense that it results from an event for which there is only the opportunity for cost.
    * Huge Loss - Insurance - The size of the loss must be meaningful from the perspective of the insured. Insurance premiums need to cover both the expected cost of losses, plus the cost of issuing and administering the policy, adjusting losses, and supplying the capital needed to rationally assure that the insurer will be able to pay claims.
    * Affordable Premium - Insurance - If the probability of an insured event is so high, or the cost of the event is so large, that the resulting premium is large relative to the amount of protection offered, it is not likely that anyone will buy insurance, even if on offer.
    * A large number of identical coverage units - Insurance - The vast majority of insurance policies are provided for individual members of very large classes. The existence of a large number of identical coverage units allows insurers to benefit from the so-called "law of large numbers," which in effect states that as the number of coverage units increases, the actual results are increasingly likely to become close to expected results.
    * Measurable Loss - Insurance - There are two elements that must be at least estimatable, if not formally calculable: the probability of loss, and the attendant cost. Probability of loss is generally an empirical exercise, while cost has more to do with the ability of a reasonable person in possession of a copy of the insurance policy and a proof of loss associated with a claim presented under that policy to make a reasonably definite and objective evaluation of the amount of the loss recoverable as a result of the claim.
    * Limited risk of terribly large losses - Insurance - If the same event can cause losses to numerous policyholders of the same insurer, the ability of that insurer to issue policies becomes constrained, not by factors surrounding the individual characteristics of a given policyholder, but by the factors surrounding the sum of all policyholders so exposed.

Most Common Variables Considered When Calculating Car Insurance Rates

Car insurance is necessary for every person who owns and drives a vehicle.  In just about every jurisdiction, the law requires that you own car insurance.  It protects both you and other drivers from loss that may arise due to the negligence or actions of others.

Some people believe that price is the most important factor when considering car insurance.  Although the price of the policy is an important factor, it is not necessarily the most important factor.  What you pay as a rate is based on the risk assessment that the insurance company performs during underwriting.  The assessment involves a process of evaluating you as a driver and making a determination of the probability that you will cause a loss.

Insurance is a contract of indemnity.  What this means is its purpose is to indemnify, or restore you to your original value at the time of loss.  The principle of indemnity means that the policy covers the insurable interest you have as policy owner, namely the vehicle you drive.  Without this insurable interest, there would be nothing to insure.  For example, a person that is involved in an automobile accident who is in no way related to you does not create a situation where you are exposed to loss.  Therefore, no insurable interest exists and there is no need for insurance.

Based on the concept of indemnity and risk assessment, the insurance company wants to know some things about you.  How old are you?  What is your driving record?  What are your driving habits?  How far and how often do you travel by car?  All of these factors, as well as others are important for the insurer to consider as they consider your premium rate.  They are also the most common rating factors used to calculate your premium.

Insurance companies employ actuaries whose job it is to mathematically determine the probability of loss.  Another concept regarding insurance is that it is an aleatory contract.  This word is derived from a Latin word 'aleator' which literally means 'dice thrower' or 'chance.'  This means that your premium is a hedge against a probability or the chance that a loss may occur.  It also means that if that loss occurs, as long as you have met all of the conditions of the contract, the insurance company must pay the claim.

The more times that you are exposed to loss, the higher the chance that loss will occur.  It is like determining the likelihood of drawing a queen out of a standard deck of 52 cards, which is a 1 in 13 or 8% chance.  If you were going to draw a queen out of a deck of two cards, that probability jumps to 50% or 1 in 2.  The greater the probability of something happening, the less ideal it becomes as an insurable risk.

The more you drive, the longer you drive, coupled with having a lot of speeding tickets indicates that you are a larger risk to the insurance company - a 1 in 2 as oppose to a 1 in 13 - and will be charged more premium.  There are other factors that go into premium calculation, but understanding loss exposure gives you an ideal as to why an insurance company charges what it does.

Why Mobile Home Insurance is Expensive

A lot of people fear that manufactured homes, or commonly referred to as mobile or park homes, will have skyrocketing insurance costs. They are definitely correct and more often than not, that prevents many people from buying manufactured homes because it is required to have mobile home insurance if you want to own one.

On the other hand, the manufactured home is normally lower in value than a permanent one thus, the cost of having one, disregarding insurance, is definitely lower. For some unique reasons, the insurance cost of these kinds of homes is disproportional as the insurance is extremely costly.

Top three reasons why mobile home insurance will cost more than the average home insurance:

High Probability of Theft

An insurance company is very particular with the risk factors. When an issuer provides you with a quote, it is already considering the odds of getting a claim. Normally, stolen contents in your home are covered but one should keep in mind that failure to secure or lock the doors will nullify the claim as it is not covered due to negligence.

Not surprisingly, manufactured homes are generally not as secure as permanent houses maybe due to the tendency that these homes are often found on areas with high density of population and anonymity. Add to the fact that mobile or park homes are not really as sturdy and burglars can break in with relative ease. Most manufactured homes are not equipped with security system as well.

In other words, mobile homes are situated in locations where there is a high propensity of theft and the structure itself is more inviting for burglars. This is one of the main reasons why insurance of mobile home owners are more expensive

High Probability of Damage

Let's face it. Mobile homes are more easily damaged than permanent homes. Firstly, mobile homes do not have anchored foundations. They are susceptible to damage when it is hit by weather phenomena like hurricanes and tornadoes. The probability of getting a mobile home lifted out of location is very high.

The materials used to build these manufactured homes are not sturdy and durable. Unlike permanent structures, they are not made of bricks, concrete, or cement. Permanent homes will also have more weather-resistant roofing than the ones in mobile homes.

Claims are more likely because of these factors. And you know the drill, high likelihood of claims means more cost to the insurance.

One must understand that insurance companies are masters of measuring risks and likelihood. Oftentimes, they do it for their benefit but don't let it prevent you from purchasing a mobile home and having it insured.

The Early Days of the Insurance Industry - Reasons Why it Came About and Why You Should Have It

Many people have a life insurance policy so that they are ready for the unexpected, should it occur. This insurance has existed in some type of form for several centuries.

Early Days Of Insurance - Babylon

In fact, it's thought that the insurance idea originated during the 13th century in Babylon when the wealthy inhabitants paid for wrecked/damaged ships on behalf of the owners. With this type of "payment", the trade commerce continued. It enabled ship captains to deliver their goods while risking their ship and promoted a flourishing economy for everyone who was involved. Captains who didn't have this guarantee were less likely to travel further distances or take the risks needed to do long-distance trading.

Early Days of Insurance - Rome

Now what was seen in Rome might resemble today's insurance companies. It wasn't uncommon to have burial clubs. Those who joined these burial clubs were certain to get the burial they wanted even when they weren't able to afford it. Those who usually joined these clubs were military men and even common citizens. It was considered important by non-elite society members to join these types of clubs. Dues were usually paid for with wine. Meetings were generally held once a month and would include festivals and feasts; something members would pay for and donate wine to.

Early Days of Insurance - New World (America)

The insurance industry made its debut in America during the 18th century; South Carolina first introduced fire insurance thanks to the efforts provided by Benjamin Franklin. The first ever fire insurance company opened its doors in 1735, specializing solely in fire insurance. The probability of having a fire was quite high and many people saw the outcome of not having fire insurance. With it, the insurance would help them to replace their assets.

Life Insurance and Your Family

Insurance gives you the protection for unexpected losses of property and assets; however, it's also a security measure for your family. When your property and loved ones are protected, you can rest easier at night. With life insurance, your family will not be forced to come up with money to pay for your burial and feel a financial pinch after you have passed away. Life insurance will cover the funeral expenses.

When you have life insurance, it's your way of taking care of your family after you die. When you have a policy that will cover your loved ones, you can enjoy the money you make presently. You don't have to save up the money you earn, hoping you'll have enough before you pass away. You'll rest easy at night knowing that your family is taken care of when the enviable happens. Your beneficiaries will obtain this money tax free, allowing them to use it for paying off any old debts, their education, retirement or their everyday living expenses. Life insurance is the best financial plan for any person.

How to Get Low Cost Long Term Care Insurance?

Most people rant on how pricey long term care insurance is; no doubt why they are indecisive in getting coverage for themselves and would rather take the more complicated alternatives to pinch pennies. For most people, it's not the quality of services they worry about but the expenses for prolonged care that could bust their savings.

If long term care costs were only less expensive, more elders would get LTC insurance. But, it is quite fair that insurance industry nowadays is coming up with new framework to lower the prices of long term care policies and to make it more affordable. The state governments are helping people avail partnership policies to shy away from catastrophic financial risks.

So How Can I Get Inexpensive LTCi?

This is a one million dollar worth question. You don't want to appear as if you are low-balling the costs of insurance, and probably that's not the real thing, right?

The often overlooked and misunderstood way of getting nominal LTC policies is buying policies for the maximum length of three or five years. The Genworth Financial, one of the leading insurance companies, stated that the average claim is two and a half years. The American Association for Long Term Care surveyed insurance companies throughout the country and revealed that policyholders with three-year benefit period file claim and do not exhaust their benefits. That is a good point why three to five year coverage is already sufficient.

Some people develop chronic illness, such as Alzheimer's or dementia, which would require them to heighten their premiums to cope with the expenses. However, that is not a good idea because there are ways to confront the problem without increasing your premiums and blowing up your expenditures. Most of the states nowadays are offering partnership programs that help you qualify for Medicaid without exhausting your benefits one you lose your LTCi benefits. The rules for qualifying on partnership policies vary from state to state, but the standard is this: For instance, the insurance company pays $20,000 worth of benefits, you can keep $200,000 assets from Medicaid regardless of what the law requires. The partnership program prevents people from becoming impoverished due to Medicaid asset requirements.

Don't worry too much in getting low premiums, but pay attention in your insurance company's reputation to avoid some worst case scenarios. Some people are looking after the lowest possible LTC policies only to end up in the wrong company. There's no point negotiating for long term care insurance in a company who evades from paying claims and raises rates unreasonably so policyholders won't be able to afford them. Always go with a broker who differentiates the sweet spots of several insurance companies

Keep in mind that premiums are not guaranteed fixed, so expect the rates would go up. The price of LTC is very much uncertain, so the only way is to decide when to purchase your insurance. LTC experts recommend the best time to purchase insurance is in your fifties because the premiums are much lower.

Some people prefer to cover the entire possible scenario for maximum protection. However, that is not a particular solution because modern long-term care policies allow you to balance coverage and costs.

Protecting Yourself With Motorcycle GAP Insurance

Imagine you just purchased a brand new Suzuki GSX-R1000 motorcycle two months ago, and it was stolen right before your eyes as you were eating in your favorite restaurant. Not to worry, you are fully protected by the full coverage motorcycle insurance policy your motorcycle lender required you to get. Right?

In most cases, not exactly, if you look into the details of the motorcycle insurance policy you purchased. The reason is that most full coverage motorcycle insurance policies will cover for total loss such as theft, accident or natural disaster, but these policies typically only cover the depreciated market value of the motorcycle not the outstanding value of your motorcycle loan.

Therefore, if you opted for a zero down payment motorcycle loan or perhaps a low payment credit card motorcycle loan, your Suzuki GSX-R1000 may have depreciated faster than you have paid down the value on your motorcycle loan. Since your motorcycle insurance policy will most likely only cover the depreciated market value of your Suzuki GSX-R1000, you are responsible for the difference in the value the insurance company pays you for your stolen or totaled motorcycle and what you actually owe on your motorcycle loan.

In the event a motorcycle is stolen or totaled, motorcycle buyers in the first two years of a motorcycle loan are the most susceptible to not being reimbursed enough from their motorcycle insurance policy to cover the value of their motorcycle loan. So what is a motorcycle buyer to do to protect against the outstanding value of their motorcycle loan?

The answer for some motorcycle buyers lies in a little known policy called gap insurance. Gap insurance is a total loss insurance policy that will pay the difference of the amount your motorcycle insurance company pay's you for a total loss on your motorcycle and the value of your motorcycle loan.

Here is a quick example. Let's say your Suzuki GSX-R1000 has a going depreciated market value of $7500, yet you owe $9,500 on your motorcycle loan for it. In the event of total loss such as theft or an accident, your motorcycle insurance policy will likely only pay you the used market value of $7500. However, you still owe your motorcycle lender $9500 so you have a gap of $2,000 ($9500-$7500=$2000). Gap insurance covers the $2000 gap that you still owe to the motorcycle lender since the motorcycle insurance company only paid you $7500 for your stolen or totaled Suzuki GSX-R1000.

Is gap insurance for everyone? Not exactly, it really depends on your financing arrangement. Here are some tips in deciding if gap insurance is right for you.

1. If you entered a zero down payment motorcycle loan especially for an extended term like 48-84 months gap insurance is probably a good idea for you. On the other hand, if you put a large down payment down with your motorcycle loan your probably better without
gap insurance.

2. If you are getting a motorcycle loan on a motorcycle model that has a history of depreciating very fast, gap insurance is likely a good alternative for you. To determine this, compare the depreciation rate of your motorcycle with the pay down of the principal on your motorcycle loan. This will give you an indication if you would be upside down if your motorcycle was stolen or totaled.

3. Check all of the details of your full coverage motorcycle insurance policy to make sure that it does not cover the gap between the market value of your motorcycle and the value of your motorcycle loan. A very small percentage of motorcycle insurance policies cover the value of your motorcycle for the first year without considering depreciation. If you are lucky and your full coverage insurance policy covers 100% of the motorcycle without considering depreciation there is little need for gap insurance.

4. Are you purchasing a used motorcycle? If so there is probably not an option for you to purchase gap insurance because most gap insurance policies are only good on brand new motorcycles. As a result, used motorcycle buyers are advised to place down a decent size down payment and opt to pay of the loans in the shortest possible time.

5. What is the cost of the gap insurance policy? Does this cost justify the benefit?

Overall, depending on the financing situation gap insurance can provide some excellent financial security to motorcycle buyers purchasing their motorcycle with a motorcycle loan. However, each motorcycle buyer's situation is different and the above five factors can be helpful in determining if gap insurance is the right decision.

Disability Insurance - How it Works

If you work in a sedentary occupation and are young and healthy, insurance and especially disability insurance is probably not at the top of your list of things to investigate. Would you be able to pay your bills should you be out of work for 90 days? Most people look at the odds of something happening to them and discount themselves as part of the statistics but at least 30% of people 35-65 suffer a disability lasting 90 days. It could be broken bones from any number of accidents or a problem pregnancy or any of many possibilities.

Disability Insurance was created with the intention of replacing approximately 45-60% of your gross income tax free should you become sick or ill enough that it prevents you from working and earning a living in your occupation. Most Disability insurance is geared toward white collar occupations. Blue/Gray collar disability insurance is available through some insurance carriers. If you are a fireman, policeman or a roofer or any the other occupations considered blue collar you will need to do more research for basic information beyond this site.

Different insurance companies offer disability insurance policies but they are not the same. Do not assume they are and go for the lowest cost. Do not buy the cheapest disability insurance policy you find. Doing this would lower your odds of getting paid a monthly benefit and the benefits could be significantly lower than what you would receive from a better contract. If you are in the initial stages of investigation of such policies know that they are not easy to shop and just compare prices, you need to compare the following to truly get what you need.

Disability insurance policies have a definition of total disability written in the policy. You should understand this before you buy. There are three basic types of policies.

* Own Occupation - "Unable to perform duties of your regular occupation." If you are not severely disabled and you can do work in some other occupation you will still be considered totally disabled in your own occupation but you will not be penalized while on claim for working in another occupation.

* Modified own occupation (Income Replacement Insurance) - This is the most common definition in the industry today. "Unable to perform duties of your regular occupation, and are NOT engaged in any other occupation." In other words if you go back to work in some other capacity you will be penalized during a claim. The insurance company MAY offset your monthly benefit check.

* Gainful Occupation - This is the common definition for a policy written for an employer sponsored group.

"Unable to perform duties of your regular occupation, or any occupation for which you are deemed qualified." This definition leaves the determination of your disability up to the insurance company. It is not clear what would happen should you become disabled. Avoid this type of policy if you are buying disability insurance on your own. If you receive it through your employer look into supplementing it with a better policy.

Renewability is another aspect that you should understand when buying a disability policy. Review the following three types available.

* Non-Cancellable and Guaranteed Renewable - Guarantees that after purchasing this policy they will not change your premium schedule, your monthly benefits or your policy benefits to age 65 or whatever age you agreed to. Even if your income goes down later in life and you become totally disabled the insurance company will pay you the total disability benefit you originally placed in force. Even if you changed jobs from a white collar to a more risky occupation later on. As long as you kept your policy in force they can not change anything. This is the best and really only way to go. Make sure the exact words "Non-Cancellable and Guaranteed Renewable" are written into the policy.

* Guaranteed Renewable - This guarantees that they will probably not change anything about the policy, but they can. They can change the policy year, occupation class and the premium with approval from the state. Be very careful of this type of policy.

* Conditionally Renewable - You get no guarantees with this type of policy. Different companies may offer you different conditions for you to renew each year and these conditions may be very hard to meet. Avoid this completely.

Many disability claims involve a residual claim. This means a person can still perform the duties of their occupation but they have a loss of income of at least 20% or they have suffered what is called a loss of time and duties. On a loss of time and duties claim they normally stop paying a residual claim once you are back at work full time. But, your income may not be back to what it was before you were disabled. A residual provision based on loss of income would appear to protect you for an unlimited amount of recovery time. The loss of time and duties portion of a policy may have a recovery benefit portion but may only pay out for a limited time. A person may be residually disabled longer than totally disabled.

Presumptive disability protects against drastic disabilities that occur. Presumptive disability varies. This covers for loss of sight, hearing, speech, and limbs. This coverage is built into most contracts but not all. The wording maybe different and they use words like, Total, Irrecoverable and Permanent. An irrecoverable loss or disability is permanent and that is what they will pay on. Total loss means if you have a total loss and it is permanent it covers you. Total loss also covers broken bones and temporary loses of sight, hearing, and speech etc. Make sure you understand their meaning.

Recurrent disability is where you recover from one disability and then another one pops up. There is what the insurance industry calls an "elimination period". The time you wait between the onset of a disability and when you are eligible to collect benefits. Most policies are for 90 days. Recurrent disabilities should have no elimination period. Look for a policy that has at least a 12 month recurrent clause in case some new problem shows up. Make sure your elimination period can be satisfied with either a total disability or a residual. Policies that have an elimination period just for total disability or with just consecutive days of disability are not good.

Be sure to find out how long disability benefits will be paid. This benefit period is from the time you are eligible to collect benefits while on a claim and when you go back to work or if you are permanently disabled it would pay the claim until the "To Age 65" or whatever the age or time frame stated on your insurance policy. To age 65 is the most popular and most disabilities last a little over 3 years.

There are optional riders you can add to a base policy for additional protection. They may include a Cost of Living Adjustment, Automatic increase rider and other options. There are also exclusions that your insurance agent should discuss with you.

Private Health Insurance and How It Works

Type of Health Insurance Plans

The three major types of health insurance plans on the market these days are Health Maintenance Organizations, Preferred Provider Organizations, and Specified Benefit Plans. Of those three, the most common major medical health insurance is probably a preferred provider plan. Keep in mind, I am discussing health insurance plans for Americans who are under 65. The subject of medicare supplements or medicare advantage plans would belong in a different article. Let me outline the basics.

    * Health Maintenance Organization (HMO): You must use a network medical provider who has contracted with the plan in almost all cases. Exceptions may be made for cases where the insurance company does not have a contract for the type of medial provider that your primary care doctor refers you to. You will have to have that exception approved by the insurance company. Exceptions are also made for emergency situations. Almost all of the time you must choose your doctor, hospital, etc from the list of approved (network) providers. In return for this restriction, your out of pocket costs will usually be very low, and you may have very good access to normal services. You may have a lower deductible, and many services may be covered with fairly low copays.
    * Preferred Provider Organization (PPO): A PPO is less restrictive than an HMO. A PPO will have a list of preferred providers, and you will have a strong cost incentive to use that network. However, you may choose to use other doctors or hospitals, and still have insurance coverage. You will just be on a different benefit schedule, and your out of pocket costs will be much more. Again, exceptions will be considered for emergency and unique situations. A PPO plan is more flexible than an HMO, but the insurance company may expect you to pay a higher percentage of the bill. Your yearly out of pocket costs may be higher, more services will require you to pay a deductible, and you may not have doctor's visits with copays.
    * Specified Benefit Plans: This type of plan may use a network to keep costs down because network providers have agreed to charge less. The network may actually be an extra feature that you pay more to access. The plans contain a schedule of benefits that they will pay for specific events. For instance, they will pay a certain amount for a simple fracture, and another amount for a compound fracture. Deductibles maybe fairly low, or nonexistent , on plans like these. But be aware, the schedule of benefits may not be a realistic amount for major medical expenses. For serious illness, like cancers or strokes, you will probably need a critical illness supplement.


When you are Declined for Health insurance

If you have a pre-existing health condition like diabetes or a history of heart problems, you may be declined for individual health insurance. You still have options. Every state has a high risk program, and you can contact your state's insurance department for contact information. But high risk health programs can still be very expensive. Other options are county health programs or, for lower income people, medicaid.The internet is a great tool for research, or your insurance agent should be able to help you.

Buying Health Insurance - Brace Yourself and Be Prepared

Buying health insurance is probably one of the best investments that everyone should take. In fact, it is recommended for every family, especially members of the family that have previous or current health issues, as health insurance will be able to provide you with all the health benefits that you need. As the years go by, you will realize that there are several benefits that you may have actually acquired through the course of years. This is why it is probably one of the things that most aspiring employees would look for in a particular company.

However, it kind of gets hard for every employee to just walk out of a job just because of these many benefits. Everyone knows that the outside world is a tough competition, that it would usually take a lot of effort and money just to come up with the best health insurance policies. It may take months, or even years, to find the best policies that will be of service to all your future health needs. Just remember that in the real world, the world of insurance isn't very pretty to look at. So it is best that you arm yourself with the right views and the right mind in order to find the health insurance that will make up for all your future concerns.

Before buying health insurance, you have to look for several other things first. For one, you have to look for companies that offer lower rates. This is because there would be times that you won't be able to cater to all the fee demands of these companies and would consequently lead to you forfeiting the policies in the end due to negligence. Of course, you wouldn't want this to happen, as you would lose all the possible benefits that you would have supposedly acquired. What you can do instead is to initially avail of a reliable company that offers lower monthly premiums. As the years go by, you will realize that these companies are the ones worth investing upon and are worth buying health insurance from.

Since buying health insurance can be a tough job, then you have to face all the possible consequences of your choices. The best thing that you can do to ensure that you are not far-off into availing all those policies is to brace yourself first and do your assignment. Research on all the possible pros and cons of every company that you have set your eyes on. It wouldn't hurt to ask for opinions of different friends and family or other people in forums over the Internet. They wouldn't necessarily know the best companies ever, but they would at least give you the list of all the companies that you should avoid. After that, everything becomes an elimination process.

Tips For Getting Cheap Medical Insurance

Today, people seem to be spending quite a lot of money on medical insurance and hence, want to know about ways in which they could perhaps save money on it. There are quite a lot of tips and tricks that you can use in order to achieve this and depending on your comfort levels you can pick the one that is ideal for your requirements. After all, getting cheap medical insurance is not really as hard as one might have imagined it to be. With just a couple of things in mind, it is possible for you to get the best rate on your medical insurance.

Buying in bulk

Rather than buy independent insurance policies from other companies, it is possible to get a better insurance policy by combining the policies of all your family members into one and getting it from the same company. In this manner, you will be able to get a solo discount on the policy as well as a bulk discount without being too confused about it. Most people would consider this as the basic method of obtaining cheap medical insurance, as the savings are quite phenomenal. You do tend to save quite a bit of money in this manner.

Buying it from the right source

Once you know what you ought to go in for, the next thing to keep in mind would be where to get it from. This can be a little tricky, depending on a lot of factors. One of the things that you can use in this regard to help make things simple would probably be to get the insurance from an online agent. Not only will you be able to get cheap medical insurance right away, you will also be able to easily select the policy and determine what is needed and what can be avoided with ease.

Choosing the policy features

One of the other things that you can keep in mind if it is in your intention to get cheap medical insurance would probably have to deal with changing the features of the insurance. There are a lot of aspects that go into the making of the insurance and hence, if you can choose the ones that you want, it is possible to save money and ensure that you are able to get a decent and affordable policy as well. This is something that you would probably want to look into and perhaps try to get better on.

There are many other things that you can do in order to get affordable family health insurance, but you should get the hang of it by now. Depending on what your priorities are, you can decide on what aspect to focus on and how to go ahead. It is also possible that you might require additional advice in order to get the right kind of policy for your family. A good website might be able to help you out on this regard and ensure that you are able to get the right kind of advice on this regard.

Acceptance Car Insurance

What is acceptance car insurance, and do I need it? Acceptance car insurance is available all over the country, and it allows moderate- and high-risk drivers to get the auto insurance they need. Although there are many drivers out there who have never received a citation or gotten in a wreck, there are also plenty out there whose insurance rates have been suddenly spiked because they've been in accidents or received citations. There are drivers who have had licenses suspended or revoked, who now have trouble finding auto insurance. Acceptance car insurance is designed to allow auto insurance to be available to these drivers.

This doesn't mean, however, that acceptance car insurance is automatically going to give you good insurance rates. You may end up paying an arm, a leg, and a firstborn child for auto insurance if you have a bad driving history. This doesn't have to be so! While acceptance car insurance will be able to offer you an insurance policy for your vehicle, you should still be looking for ways to lower your monthly payments.

One way to lower your monthly payments on auto insurance is to drive more safely. While many of you may be rolling your eyes at that sentence, the fact remains that your insurance is probably at a ridiculous rate because of your driving record. If you're willing to take the time to drive under the speed limit and follow street signs, you'll probably be able to keep those marks off your record in the future.

Now, there are those of us whose record isn't our own fault. Perhaps you've gotten in an accident that was unavoidable, or it's been a long time since those marks were put on your record. Fortunately, your driving record will eventually clear itself over time, and you can usually clear those marks by going to driving school. While driving school can be expensive, it will still probably cost less than the amount you would spend on increased car insurance. Acceptance car insurance can get you the insurance you need, but you should still be working with your insurance provider to lower your costs. Make sure that, if you're going to driving school, you keep in touch with your insurance provider so that they know your driving record has changed. By making sure to keep good communication with your insurance company, you'll be able to pay less on auto insurance.

Probability and Life Insurance Risk

Probability as it pertains to life insurance is misunderstood. In fact, our brains not well-suited to understand the probability of certain occurrences happening. We see this in our fear of flying and our embrace of driving for example. Maybe we don't want to correctly analyze the probability of a catastrophic event occurring in an effort to somehow avoid it happening. Let's look at probability and how we can protect against the unforeseen with term life insurance.

Our brains just aren't built to correctly understand probability. There's a very interesting book called "The Drunkard's Walk" which delves into this mismatch. Unfortunately, probability is all around us and we need to protect ourselves and our loved ones from financial, medical, and other catastrophes are at their foundation, are based on probability. Let's take an example to help correctly frame our understanding of the need for purchasing term life insurance.

There are three closed doors. Behind one door is a great prize and behind the other two, nothing. You are asked to choose one door. You randomly pick Door A (which remains closed). A host then opens Door C to show there is nothing there. You are then given the choice of keeping your current choice (Door A) or switching to Door B. What should you do? The answer is counter intuitively that you should always switch. Most people will assume the odds are 50-50 now between the two remaining doors and decide that there's no reason to switch. That is incorrect and if you're like me...it will take some time and a great deal of disbelief to understand why. Computer models have randomly run this experiment and show that Door A in this example has a 1/3 chance of being correct while Door B has a 2/3 change of being correct. That's double the probability that the prize is behind Door B and you should switch. Why?? The probability that your original choice was correct is 1/3 in the beginning of the experiment. The probability that it's incorrect was (and is) 2/3. Opening Door C does not change this initial probability. The fact that the host has revealed Door C just shifts the probability for Door B to 2/3.

What does all this have to do with the need for life insurance? One reason many people put off buying life insurance is their perceived sense of the probability that something will happen. We constantly hear "I'm healthy, I don't need life insurance". That's now probability works. We all have a chance, unfortunately, of passing away early. Let's face it...it's scary. But that's the issue...we must FACE it. When people hear statistics, they tend to assume they will be on the "good" side of fate. This is especially true when it saves them money each month on life insurance premium. It's natural. Unless you have a "glass half empty" mindset, given a statistic that 4% of the people in your age band will pass away in the next 10 years, you mentally place yourself in the other 96%. I admit that I do it as well and I see the need for life insurance coverage every day with our clients! Our brains just aren't well-adapted to the world of probability and risk. In the example above, everyone (translated EVERYONE) has a 4% chance of triggering a life insurance policy. It may seem like a small percentage...one we can safely avoid or sweep under the rug...but it's still there. If it we're 50%, the life insurance rate would be $500 instead of $50 monthly.

It doesn't make sense to avoid this risk. The better move is to use a tool like affordable term life insurance to address it and THEN we can go back to the safe pastures of knowing we'll be in the 96% (while addressing that nasty 4%). Let's switch to Door B where the protection of term life and piece of mind awaits us.

Read more: http://www.articlesbase.com/finance-articles/probability-and-life-insurance-risk-1190233.html#ixzz13fVqeLXu
Under Creative Commons License: Attribution

PROBABILITY, FINANCE AND INSURANCE

This workshop was the first of its kind in bringing together researchers in probability theory, stochastic processes, insurance and finance from mainland China, Taiwan, Hong Kong, Singapore, Australia and the United States. In particular, as China has joined the WTO, there is a growing demand for expertise in actuarial sciences and quantitative finance. The strong probability research and graduate education programs in many of China's universities can be enriched by their outreach in fields that are of growing importance to the country's expanding economy, and the workshop and its proceedings can be regarded as the first step in this direction.

This book presents the most recent developments in probability, finance and actuarial sciences, especially in Chinese probability research. It focuses on the integration of probability theory with applications in finance and insurance. It also brings together academic researchers and those in industry and government. With contributions by leading authorities on probability theory — particularly limit theory and large derivations, valuation of credit derivatives, portfolio selection, dynamic protection and ruin theory — it is an essential source of ideas and information for graduate students and researchers in probability theory, mathematical finance and actuarial sciences, and thus every university should acquire a copy.