Test Your Knowledge of Legally Binding Insurance Contracts

Requirements and Elements of a Legally Binding Insurance Contract

• An insurance contract must be based on an offer and acceptance between the insurer and the insured.
• Consideration, or the price paid by each party, is required for a legally binding insurance contract.
• Insurance contracts must have a legal purpose and not be contrary to public policy.
• Both parties involved in the contract must have the legal capacity to enter into the agreement.
• Endorsements and riders are often included in insurance contracts to supplement and modify the original policy.
• Endorsements in property and casualty insurance supplement, delete, or change terms in the original contract.
• Riders in life and health insurance modify or alter the original policy.
• Endorsements and riders can cover gaps in coverage for expensive items such as antiques, jewelry, and electronics.
• Riders and endorsements can be added to the policy at any time to increase coverage.
• Riders and endorsements remain valid as long as the insurance policy is in force.
• Riders and endorsements can be removed from the policy if no longer needed.
• The main advantage of riders and endorsements is that they offer full coverage and can be added at any time without waiting for policy renewal.

Financial Management and Analysis in Organizations and Banks

• Organizations require funding from capital markets through debt or equity, obtained directly or through intermediaries like banks.
• Funds raised are invested in assets, which can be current or fixed assets, determined by factors like the industry and objectives.
• Accounting statements like Balance Sheet, Profit and Loss Account, and Cash Flow Statements reflect the organization's financial activities.
• Financial statements are further examined to assess the performance of the organization and its divisions.
• Banks face credit and market risks due to asset-liability transformation, and require strategic management to balance profitability and viability.
• Banks implement comprehensive risk management systems to address interest rate, currency, and liquidity risks.
• Financial analysis is carried out by investors, management, lenders, suppliers, and customers to determine profitability, liquidity, and solvency.
• Financial analysis inputs are frequently employed in creating budgets and planning processes.
• Linkages between operating and funding activities are provided by financial analysis.
• More activity requires the addition of new assets and funds, determined by financial analysis.
• Financial analysis shows how different financial components have been linked historically, helpful in financial planning.
• Financial planning requires financial analysis to determine the organization's financial objectives and requirements.