Subaccount Charge

Subaccount Charge

It is the fee paid to the bank in order to manage a sub-account. To be more elaborate, subaccount charge is the fee for an option for an investment on variable products that is separate from the general account of the accountholder. Each subaccount is managed by an investment specialist, or team of specialists, who make buy and sell decisions based on the subaccount’s objective and their analysts’ research.

What are subaccounts?
Sub accounts are segregated accounts maintained under the safekeeping of the bank. Funds in a sub account can only be used according to the terms of the agreement though it may be useful as long as these terms can be met in times of need or rather due to the fact that it can be used only in certain terms the funds can only be used on specific financial crisis or catastrophic situations. To put it simply, funds in a subaccount may be available only to a certain person, or may be used only for a certain purpose.

The subaccount may be used only if specific terms are met, though it may not be used to set off the accountholder’s loan with the bank. It is because the bank has no legal rights to seize a borrower’s sub-account balance in the same bank to use it to apply for the borrower’s loan, though it is still possible for these banks to seize the accountholders balance for the same purpose.

Subaccounts are useful because they are handy accounts and can even help you in times of need, though those times of need must be specific to what the subaccounts are for. While it is true that there is still a price to pay for the subaccounts, there will be more expenses for you if you come across a crisis without having preparations like subaccounts. They may be limited, but they can still help shoulder unexpected situations.

Subaccounts, as investments, are also worth the fees if you do manage to get subaccounts with good professional managers and reasonable fees. To make the most out of your subaccounts, in the process of choosing which to invest in, try comparing different contracts to decide which to purchase. Among the factors to consider are the variety of subaccounts each contract offers, the past performance of those subaccounts, the experience of the professional manager, and the fees. You can get really good benefits from subaccounts with good specialists and analysts, but you can really go wrong with the bad ones, so be careful and always make a good research about the investments you are interested in. Quality important, so even if the subaccount charge is quite too expensive for your liking consider how you can benefit from it before going for the low-quality lower-priced ones that might only give you headaches.

Stop Loss

Stop Loss

In the world financial industry, stop loss is one of the most important variables that are taken into account by businesses. The term is defined as a set limit towards a loss that has occurred due to certain price movements. On the other hand, stop loss in the insurance industry is referred to as the provision written in the policy that shows the limit of the insurer’s losses towards a certain point. The purpose of stop loss is to control losses to the company and the investors from any changes in the industry prices. Through a stop loss, the company and the investors would be able to take control on the specific amount of possible losses.

Another set of major advantages is that the investors may possibly gain major benefits which will include the capability to minimize loss and control potential losses, lesser need to monitor investments manually and the method checking provisions in the settling of the price indicated as cases may occur. With stop loss, there are no additional charges that will be bestowed above or beyond the indicated amount as to the premium in insurance and to the stock market of the investors. Prior to these benefits, stop loss is highly recommended to be utilized first and foremost in any financial institutions to prevent and reduce these potential losses.

Aside from limiting losses, stop loss can also be a good tool to lock in some profit. If the investor had already bought a share with affixed price, and the stock price keeps on increasing its value, then profits are already gained. In terms of the insurance policy, once a policyholder had already a stop loss on its policy, then the insurer is said to be responsible only on that said limit. For instance, if one of the policyholder’s unfortunately met and strangled an unfortunate accident which involved major losses on the vehicle and the people surrounding the accident, the coverage of losses and damage of that said event, depending on what type of insurance, will vary from the stop loss indicated on the insurance policy agreed upon between the insured and the insurer. Beyond that stop loss is already a gain to the insurer in terms of the earned premium coming from the premiums paid by the insured.

However, there are certain disadvantages and restrictions that the stop loss may provide and that investors might possibly encounter. It is significant that these investors will be aware of the short term changes in terms of their shares that are most likely to be encountered to be able to sustain the investment in a longer term. The same as the insurance policy, the insurer and the insured should both be aware of this stop loss. Insurance providers should always lay all the facts to the client and the client should be clever and be a keen observer enough to be able to avoid misunderstanding that might end up suing the company for the felt fraud.

Stock Insurance Company

Stock Insurance Company

A stock insurance company as described in the insurance industry is a trade firm which includes the public. The insurance company offers shares that are made available to the public in order to raise the capital at its heights. In this manner, the stock insurance company would be able to use and utilize the resources added to the capital that will be a key to help the firm grow in a large perspective greater than the mutual insurance company.

Generally, the insurance company will be the one who will issue the significant shares in a common stock form. This is one type of security which forms an equal corporate ownership which is unlike the preferred stock which usually provides priority in terms of dividend payments when it comes to liquidation. Common stocks supply the stakeholders with each voting rights. In this manner, the individuals who are holding these stocks will be able to influence the agreement and the decision making made by the insurance company including the election of the members of the board of directors. Some of the companies also allow these common stakeholders to be at hand in establishing the company’s policy and objectives including the different events that are scheduled for approval when it comes to stock split.

Stock insurance companies usually pay their stockholders through capital appreciation or dividends. One the company was able to profit and found out an additional surplus, the amount or cash may either be paid to the stakeholders through dividend in a form of cash, stock and property or it can be retained as reinvestment in the company to boost more profit. Likewise, appreciation payments will be paid to investors once a particular asset of the company gains value. This is the reason why stock insurance companies are more profitable in terms of business venture in the investing field.

The policyholders are in fact may be considered as the stockholders in the insurance company however, it is now really necessary. Most of the policyholders find investing in a certain business like insurance company while acquiring an insurance policy to the same business a very significant act. In this manner, the policyholder is doing two benefits at the same time, as an investor of the business of his portfolio and an insured.

The main advantage of stock insurance company compared to mutual insurance company is that it mingles and transacts with the pool of financial market in order to acquire additional funds. Mutual insurance companies with the fact that the holders are all paying to a huge fund that enables the payments to the valid customers possible. The big challenge with this kind of framework is the inability of to make better of the capital standing. Most of the companies who are using this model are now moving to the stock model in order to remain in the market share. By moving in this business model, the assets will be evaluated and a public issue offering on raising more capital will be endorsed to keep the company growing.

Statutory Reserve

Statutory Reserve

Statutory reserve is defined as the amount of monetary unit in any financial institution including insurance company, bank and the credit union, must have on hand in order to cater the liabilities and obligations vested through the paid premiums and the deposits made. In the bank and credit union industry, the required statutory reserves are set and mandated by the Central Bank of the nation while in the insurance industry, it is set and regulated by the state of national government or by the designated regulatory authority. Computed in different ways, the statutory reserves basically are required to give assurance that the financial institutions are able in terms of the payment of the claims even in the event of calamities.

Financial institutions such as insurance companies, banks and credit unions acquire profits from investments and loans they were able to make coming from the made deposits to them. In some type of financial institutions such as brokerages, acquire their profits through charging commissions to their clients in every transaction made though they do not have full access on the loan and investment of the clients thus they are not subject to the reserve of the requirements.

Insurance companies, banks and credit unions therefore must always take into account a balance among their varied obligations to the shareholders- to the premiums and deposits they received and accepted- to maximize the profits through lending and investing their numerous assets and their liability to their clients and depositors to maintain a good enough liquidity that will meet the rising demands.

Aside from fact that the statutory reserve requirements is one of the factors that will provide information in liquidity issues, it also reflects the perception of how stable the banking industry in the nation is and also pictures on how the economy of the nation be moderated. If in the event the requirement of the reserve is intensely raised, the particular amount of money that is made available for lending will subsequently be reduced that will adversely affect the nation’s economic activity. On the other hand, a reduction of the requirement can possibly increase the available amount of money for lending. While the statutory reserve requirements are in a stable state in many countries, there are some nations which include United States, United Kingdom, Turkey and Germany reduced the reserve requirements on the 20th century and worst cases fall out dramatically.

In terms of statutory reserves in the insurance industry, the requirements are usually set and promulgated by the state. The very common formula used in the setting of the reserves is through the Commissioner’s Reserve Valuation Method which is a very complex formula that includes several factors such as the holder’s sex and age, the mortality table and the type of policy one acquired. Thus in order to meet the reserve requirements, the company should utilize the values as a result of the complex formula bestowed to every policy and keep aside enough liquid reserve that will be used in the policy’s sum reserves.

State of Domicile

State of Domicile

State of domicile can be defined as the state in which the insurance company is chartered and licensed to operate under the state’s insurance regulations and statutes. A company is permitted by its state of domicile to operate for the lines of business for which it is certified.

Every state is responsible on regulating and controlling all aspects of insurance. It is committed to ensuring that the consumers are protected and that the insurance companies keep the promises stipulated in the policy contract. Part of the insurance regulation is to make sure that all insurance companies domiciled in the state adhere and uphold the insurance laws governing the state. Company licensing, consumer services, producer licensing, product regulation, financial regulation and market conduct are among the main functions which are included in the insurance regulation structure. All business which caters insurance products and services are required to make policies and terms and condition in accordance with the insurance regulation in their state of domicile.

An insurance company cannot legally operate in a state without obtaining a license first. Individual state laws mandate that all insurance providers as well as insurance-related businesses must be licensed first before selling and providing their products and services to the public. There are an estimated number of 7,200 insurance companies licensed to operate in different areas of the United States. All of these businesses are subject to the laws and regulations of the state where they are licensed to sell insurance. In the event that an insurer, in any manner and for whatever reason fails to comply with the mandated insurance regulations, its license will be a subject to suspension or revocation. The states also impose fines to those who violate insurance regulations in their state of domicile. In 2000, there was a recorded of almost 300 companies in the United States who had their license suspended or revoked. A company licensing system of the National Association of Insurance Commissioners called the Uniform Certificate of Authority Application (UCAA) helps each state in speeding up the review process of releasing new company licenses. There is also a NAIC database developed to assist insurance regulators in maintaining a cost-efficient regulatory process.

Insurance Companies as mentioned are not just required to obtain a license but also to comply with the individual state regulations and laws governing their operations or activities. The state of domicile of all insurance companies ensure that everything in the policy contract and all matters relating to the products and services which insurers provide are offered for the benefit of the consumers. The insurance departments in all states safeguard the interests of the consumers before and after every insurance transaction.

The insurance company’s state of domicile, through its state regulators protects consumers by ascertaining that all provision are unequivocally stated in the contract policy and do not leave any space for misinterpretation that might leave consumers unprotected. The state insurance regulators ensure that the insurance benefits will commensurate to the premiums paid by consumers and that everything in the policy contract is reasonable and fair to the consumers. The regulatory powers exercised by each state may not be uniform because state regulations may vary from one state to another. However, these powers are there not just to protect consumers but also safeguard the condition of every insurance company. The state of domicile ensures that insurance companies are financially sound to be able to provide the benefits promised. If an insurer is experiencing financial trouble, the state will then assist in the process of rehabilitation to restore the former financial condition of the company.

Standard Auto

Standard Auto

The auto policy is similar to every insurance contract which will include as always the insuring agreement, the declarations page, the definitions, the exclusions and the conditions. These divisions will explain, limit and define the kinds of exposure being provided. For insurance is controlled on a formal level and specified laws or designations of exposure (coverage) which may vary from one state to another. However, the kinds of exposure are moderately uniform transversely in state stream lines.

In New Jersey, auto insurance is mandatory as well as a necessity. Whether one is purchasing a new insurance contract policy or renewing the present policy, an individual should make a lot of decisions with regards to the coverage one may need and how much he or she can pay The “Standard Auto Insurance Policy” offers a lot of different coverage preference and the chance to avail additional protection. The standard contract policy is the kind of contract policy being chosen by majority of New Jersey automobile operators.

Hence, it is very imperative to understand a person’s needs. If one rents or owns a home, if a person possessed assets to watch over including income from a job. If a person’s health insurance cover up auto accident damages or how much insurance exposure coverage w person can afford to pay with. These are just a number of questions a person must ask before selecting a specific coverage program.

In contrast, the “Basic Policy” typically costs considerably lesser than the “Standard Policy”, but offers restricted benefits. Yet, it is not for every person, but it does offer sufficient coverage so as to meet the least amount of insurance requirements under the New Jersey bylaws. The basic policy can be an alternative for those with a small number of family obligations and little assets to watch over including income from a job.

What is the distinction between non-standard auto insurance and standard insurance policy?
At the outset, standard insurance policy is for automobile operators with the least violations, cancellations or claims of the previous policies. Nearly all cases, these auto drivers do have improved insurance or credit scores.

Based on these acknowledged uniqueness, standard insurance payment are much lesser than the non-standard insurance payment (premium). On the other hand, the non-standard insurance policy is for those having loads of violations, prior claims, prior cancellations, no prior insurance exposure (coverage) among other things. These insurance contract policies are most likely for the least minimum coverage.

A motorist who is considered as a high risk driver is anybody which has a severe violation, like for example a DUI in their driving documentation. It may be hard for a driver to uncover a standard auto insurance contract policy of and when they have been engaged in a grave accident.

In conclusion, a person does not inevitably need to be one non-standard auto driver in order to purchase insurance form from a non-standard business insurance company. Often times, this area of expertise insurers are capable to provide a much more reasonable price. A number of large distinguished insurance business companies own less significant non-standard insurance business companies and provide non-standard contract policies throughout their brokers or agents.



In the world of business and finance, the stability of the company is determined through its solvency.

Solvency is described as the degree that is used to refer the recent level of the individual or the company’s financial stability. This describes the proportion of the current assets that should be more than the liabilities of the company. The term may be also applied in the particular areas of finance status including property, insurance and cash flow. For the company to be solvent is to be within a position of where current financial responsibilities can be possibly honored provided by the terms and conditions associated to every debt at the same time having available assets that will be used for another set of purposes.

Financial Solvency has always been very significant either be in a household operation or in the business. Families and individuals usually seek to come up with reserves that will provide the ability of the household to be stable, even if sometimes the primary income source may be distracted for a certain time or may disappear altogether in one time. A household in solvent state will be better or in operation even without undone obligations and would still have enough resources left even after the obligations are already settled in a certain period of time.

In the same manner, in the world of business, it seeks to secure the position where all the assets are on hand to be off grip to handle any debt of the company in an efficient manner. For any business, the concept of solvency is very significant. This would mean that the company has enough cash in hand or assets that can be converted to cash without affecting the function of the business in paying for the laid obligations. In case the company will reach to insolvency and is not able to renegotiate the current debt into manageable terms, the company might be at stake to possible state of being dissolved and be sold.

Most of the businesses typically pay a very close attention to what is referred to as margin or solvency ratio. This ratio describes the direct relationship between assets and debts which includes cash or stocks that can be easily converted to cash. A good margin or solvency ratio is those businesses that have enough or more cash in hand to pay the current remaining debts without affecting the other necessary functions of the business. There are several ways for computing the margin and solvency ratio. Most of them consider involving the significant factors involved in the specific industry that company is most likely be associated with.

Two of the most important devices in assessing margins or solvency ratio are time and concise financial accounting. Through keeping track of all the financial records of up to the current date, it is but easier to recognize trends that may include business or household that is mowing towards insolvency and to take necessary steps and action to revive the former financial stability level.

Separate Account

Separate Account

In the insurance industry, the clients will always be given the options on what account to have and what to do about it. These accounts may be general or separate depending on the account holders.

What does separate account means?
Separate account is an account that has separate reporting and accounting from coverage of the general account. It is usually for the purpose acquiring new assets for investments. This type of account allows the clients to participate and choose from any of the pooled investment the insurance company provides depending on the client’s desire of performance and risk tolerance. The client with a separate account is always guided with a broker or an adviser that will take advantage of the numerous resources to establish a profitable and manageable account. Sine this account is for the client’s advantage, the generated and invested proceeds of the account will be separated from the client’s general account in the insurance company.

One major advantage of a separate account is that the client is allowed to have his own choices of his investment method by choosing the laid categories provided by the insurance company which means that a client who is somehow conservative with his money investment can choose to be a part of the pooled investment that includes stable investments that provides small but continuously stable in making returns. These clients who are more than willing to invest and assume to a higher degree of risk can opt to choose any category that is potential enough to come up with high returns caused by increasing rate of instability and potentially dangerous.

Separate account is most likely similar to the functions of a mutual fund. However, these two have essential differences. First, the funds involved in this type are most likely will require minimum investment that is bigger than the funds needed in a mutual fund. The second difference has got to do in the ownership. In a separate account there is no ownership of the investor on the portion of the whole pool of investments but instead the investor owns securities directly.

The separate account in US is characterized either as non-managed or managed account. Non-managed accounts are managed through a passive approach and are checked and evaluated in a less often basis. On of this type is not really superior compared to another since values of the two depends on the great deal of the desired outcome and the whole financial goals of the client’s investment based on the returns. On the other hand, managed account gives an aggressive and proactive management that is included in the process to get the highest return earnings as possible.

Sometimes there is also confusion between an investment strategy called Separately Managed Account and the Separate Account. Although both have similarities, SMA or Separately Managed Account is managed privately by a broker instead of an insurance company offering while being involved in the account management. Both are good strategies to generate returns if the accounts are handled properly.

Secondary Market

Secondary Market

Secondary Market, also referred to as aftermarket is described as a financial market wherein the investors are geared towards buy and sell of financial products among each other directly instead of purchasing from the companies and organizations that issue financial products. Moreover, the term is used as well to refer on any market where people would buy and sell products that are already previously hold on sale. For example, books in the secondary market are usually found worldwide in used bookstores.

In contrast, primary market is described as buying products by the customers towards direct purchasing in a certain company that issues them. For instance, if a certain company would make initial stock opening to be able to increase capital, the investors can directly buy the stocks from the enterprise. A potential investor can opt to turn around the stock and resell it after purchasing the stock in the second market while gaining profits. Therefore, the primary markets are geared towards raising the capital on the other hand; the secondary markets are geared towards helping the investors in keeping their whole assets to be more liquid.

Secondary markets are established with a wide array of different financial products. This includes mortgages, stocks and bonds. One disadvantage of secondary markets is the fact that the products have been handed down from one owner to another that it is hard to identify who owned the product first. This issue is a huge problem for mortgages in secondary markets, which generally includes the bulk packages on sale of mortgages. The borrowers may tend to be confused on where to pay and who really owns their mortgages while holders of the mortgages might have the tendency of loosing physical proof proving that they are the owner of a mortgage.

Another popular example of secondary market is the stock exchanges. In the world of stock exchange the numerous investors are directly trading among each other. Stock prices on the other hand may tend to rise and fall due the changes in the supply and demand. This pictures the fact that the stock’s value traded directly will reflect the company’s value as well but generally the company doesn’t lose or profit from the stock’s sale. For instance, a merchant of widgets may increase its profit when a new device is introduced that will lead to an increase in the stock prices enabling the investors to feel confident with the growth but the stocks on sale involved in the secondary market will not raise any capital for the producer.

Primary markets and secondary markets are closely associated which means if a downturn occurs in the first variable, the other variable will be greatly affected and vice versa. Generally, financial trends affect in the two forms of market though primary market and secondary markets are both differently influenced in many ways. The huge size of these markets also reflects a serious problem in the business, as minute financial issues are easily magnified through panics which in turn reflects the entire value of the business market.

Risk Retention Group

Risk Retention Group

Insurance industry is a vast business world composed of individuals, partners and groups offering different types of insurance policies for continues operation. One of these is the Risk Retention Group

Risk retention group is one type of insurance enterprise that is operated and owned by the members of the group. It is created to essentially help people and businesses that have troubles in acquiring a liability insurance in a traditional insurance enterprise. The members of this group would gather together and share effectively the risks that are closely related to the business.

Risk retention groups have been authorized by the United States under Liability Risk Retention Act. This act was established in 1986 to answer the growing problems in the insurance industry by which either caused by a refusal to provide liability insurance by the company or due to high premiums.

The Risk Retention group is considered to be legal as the bear taker and the insurer of the risks the policies may indicate. In addition, the members of the risk retention group are the only group that will be insured against liability damages and losses like compensation and legal costs from claims caused by faulty products and professional mistakes. It will not cover any personal insurance which includes auto insurance for employees and directors as well as health insurance. It does not also include the coverage for property insurance like theft or fire.

Risk retention group members are obliged to be involved with the same type of insurance in general within the industry. If in case uncertainty may rise of whether the group qualifies, take a look at the liability risks it bears if it is similar or not.

Advantages and Disadvantages of Risk Retention Group
• Avoidance of licensing requirements and multiple state filing
• Member control against litigation management problems and risks
• Establishment of unchanging market for rates and coverage
• No fronting expense fees.

• Risks are solely limited to liability insurance
• Not allowed to write any business outside
• No available guarantee funds for its members

The major advantage of the risk retention group is that the firms would be able to acquire liability insurance at the most reasonable price rates as compared to getting it individually. At the same time these firms may act as both the client and the insurer which means that these firms can take control of a greater care to prevent situation that would ignite a claim and thus will improve professional standards.

Risk retention group should be registered by the state and must be governed by laws. Once this had been done, the group can now start taking on and invite and cover members all over the country. The Risk Retention group are exempted to numerous state regulations under the Liability Risk Retention Act. Generally speaking, the state’s power over this group are only limited to the collection to taxes and forcing the group to follow the basic insurance practices which includes settling any claim in a proper manner.