For example, simplified issue insurance usually does not require a medical exam. The time it takes to underwrite a simplified issue policy is greatly reduced. Standard Risk - Person who, according to a company's underwriting standards, is entitled to insurance protection without extra rating or special restrictions. Term of Policy - Period for which the policy is in force. Transfer of Risk - An insurance contract is designed to transfer risk.
Individuals face the risk of monetary losses resulting from a death, disability or illness.
An individual can ensure that they will not have to bear the complete monetary loss due to these factors by purchasing an insurance policy, which transfers the risk of loss to the insurance company. If a death, disability or illness occurs, the insurance company will pay proceeds that will compensate for the loss. Beneficiaries have equitable title to the trust property. Underwriting - Process of assigning people to different risk classes. Insurance companies use underwriting to determine whether, and on what basis, an insurance policy will be issued.