Definition of "Hedging"
Method of transferring risk to permit the risk bearer to assume two offsetting positions at the same time so that, regardless of the outcome of an event, the risk bearer is left in a no win/no lose position. For example, in the options market, a stock owner of an underlying stock can write calls or buy puts. In the same options market, the short sellers of the underlying stock can buy calls or write puts.
Popular Insurance Terms
Same as term Coinsurance: in property insurance, when the insurance policy contains this clause, coinsurance defines the amount of each loss that the company pays according to the following ...
owner of property has an insurable interest because of the expectation of monetary loss if that property is damaged or destroyed. creditor of an insured has an insurable interest in ...
Tax charged to finance the old age, survivors, disability, and health insurance (OASDHI) plan. Both employer and employee share in the cost, making contributions on an equal basis. The ...
Legislation excluding commercial banks that are members of the Federal Reserve System from most types of investment banking activities. The coauthor of the Act, Senator Carter Glass of ...
Arrangement in which individuals serve as trustees of their own living trust and name another party (successor trustee) to manage the assets if they should become incapacitated. In this ...
Transformation of a stock insurance company into a mutual insurance company, in which the stock company buys up and retires its shares. ...
Group that monitors government health insurance programs. Authorized by the 1972 amendment to the Social Security Act, PSROs were set up to cut costs and minimize abuses by checking on the ...
Regulation set forth by the national association of insurance commissioners (naic) to govern life insurance sales illustrations. Includes the following major provisions: POLICY OWNER must ...
Extra life insurance benefit found in the family income policy, family income rider, family MAINTENANCE POLICY, and FAMILY POLICY payable to the BENEFICIARY should the insured die within a ...
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