When you have finished this chapter, you should be able to
We begin our study of specific types of insurance by looking at personal risks and insurance coverages designed to deal with them. As explained in Chapter 1, personal risks relate to the loss of the ability to earn income and include premature death, dependent old age (longevity or “superannuation”), sickness or disability, and unemployment.
We treat these risks first to follow the philosophy of risk management. This entire text is designed to develop concepts that should be used in dealing with risks the individual faces. We noted in Chapter 4 that losses with the greatest potential severity merit first attention. Following this principle, we turn first to the risk with the greatest potential severity for the individual ...