Bank

History

Main article: History of banking

Banks have influenced economies and politics for centuries. Historically, the primary purpose of a bank was to provide loans to trading companies. Banks provided funds to allow businesses to purchase inventory, and collected those funds back with interest when the goods were sold. For centuries, the banking industry only dealt with businesses, not consumers. Banking services have expanded to include services directed at individuals, and risk in these much smaller transactions are pooled.

Origin of the word

The name bank derives from the Italian word banco "desk/bench", used during the Renaissance by Florentines bankers, who used to make their transactions above a desk covered by a green tablecloth.^[1] However, there are traces of banking activity even in ancient times.

In fact, the word traces its origins back to the Ancient Roman Empire, where moneylenders would set up their stalls in the middle of enclosed courtyards called macella on a long bench called a bancu, from which the words banco and bank are derived. As a moneychanger, the merchant at the bancu did not so much invest money as merely convert the foreign currency into the only legal tender in Rome—that of the Imperial Mint.^[2]

Traditional banking activities

Banks act as payment agents by conducting checking or current accounts for customers, paying cheques drawn by customers on the bank, and collecting cheques deposited to customers' current accounts. Banks also enable customer payments via other payment methods such as telegraphic transfer, EFTPOS, and ATM.

Banks borrow money by accepting funds deposited on current account, accepting term deposits and by issuing debt securities such as banknotes and bonds. Banks lend money by making advances to customers on current account, by making installment loans, and by investing in marketable debt securities and other forms of money lending.

Banks provide almost all payment services, and a bank account is considered indispensable by most businesses, individuals and governments. Non-banks that provide payment services such as remittance companies are not normally considered an adequate substitute for having a bank account.

Banks borrow most funds from households and non-financial businesses, and lend most funds to households and non-financial businesses, but non-bank lenders provide a significant and in many cases adequate substitute for bank loans, and money market funds, cash management trusts and other non-bank financial institutions in many cases provide an adequate substitute to banks for lending savings to.

Definition

Cathay Bank in Boston's Chinatown

The definition of a bank varies from country to country.

Under English common law, a banker is defined as a person who carries on the business of banking, which is specified as:^[3]

• conducting current accounts for his customers
• paying cheques drawn on him, and
• collecting cheques for his customers.

In most English common law jurisdictions there is a Bills of Exchange Act that codifies the law in relation to negotiable instruments, including cheques, and this Act contains a statutory definition of the term banker: banker includes a body of persons, whether incorporated or not, who carry on the business of banking' (Section 2, Interpretation). Although this definition seems circular, it is actually functional, because it ensures that the legal basis for bank transactions such as cheques do not depend on how the bank is organised or regulated.

The business of banking is in many English common law countries not defined by statute but by common law, the definition above. In other English common law jurisdictions there are statutory definitions of the business of banking or banking business. When looking at these definitions it is important to keep in mind that they are defining the business of banking for the purposes of the legislation, and not necessarily in general. In particular, most of the definitions are from legislation that has the purposes of entry regulating and supervising banks rather than regulating the actual business of banking. However, in many cases the statutory definition closely mirrors the common law one. Examples of statutory definitions:

• "banking business" means the business of receiving money on current or deposit account, paying and collecting cheques drawn by or paid in by customers, the making of advances to customers, and includes such other business as the Authority may prescribe for the purposes of this Act; (Banking Act (Singapore), Section 2, Interpretation).

• "banking business" means the business of either or both of the following:

1. receiving from the general public money on current, deposit, savings or other similar account repayable on demand or within less than [3 months] ... or with a period of call or notice of less than that period;
2. paying or collecting cheques drawn by or paid in by customers^[4]

Since the advent of EFTPOS (Electronic Funds Transfer at Point Of Sale), direct credit, direct debit and internet banking, the cheque has lost its primacy in most banking systems as a payment instrument. This has lead legal theorists to suggest that the cheque based definition should be broadened to include financial institutions that conduct current accounts for customers and enable customers to pay and be paid by third parties, even if they do not pay and collect cheques.^[5]

Accounting for bank accounts

Suburban branch bank

Bank statements are accounting records produced by banks under the various accounting standards of the world. Under GAAP and IFRES there are two kinds of accounts: debit and credit. Credit accounts are Revenue, Equity and Liabilities. Debit Accounts are Assets and Expenses. This means you credit credit accounts to increase their balances and you debit debit accounts to increase their balances. ^[6]

This also means you debit your savings account every time you deposit money into it (and the account is normally in deficit) and you credit your credit card account every time you spend money from it (and the account is normally in credit).

However, if you read your bank statement, it will say the opposite- that you have credited your account when you deposit money, and you debit when you withdraw it. If you have cash in your account you have a positive or credit balance and if you are overdrawn it will say you have a negative or a deficit balance.

The reason for this is because the bank, and not you, has produced the bank statement. Your savings might be your assets, but it is the bank's liability, so your savings account is a liability account which is a credit account and should have a positive credit balance. Your loans are your liabilities but the bank's assets so they are debit accounts which should have a negative balance.

Below where bank transactions, balances, credits and debits are discussed, they are done so from the viewpoint of the account holder which is traditionally what most people are used to seeing.

Banking channels

Banks offer many different channels to access their banking and other services:

• A branch, banking centre or financial centre is a retail location where a bank or financial institution offers a wide array of face-to-face service to its customers
• ATM is a computerised telecommunications device that provides a financial institution's customers a method of financial transactions in a public space without the need for a human clerk or bank teller. Most banks now have more ATMs than branches, and ATMs are providing a wider range of services to a wider range of users. For example in Hong Kong, most ATMs enable anyone to deposit cash to any customer of the bank's account by feeding in the notes and entering the account number to be credited. Also, most ATMs enable card holders from other banks to get their account balance and withdraw cash, even if the card is issued by a foreign bank.
• Mail is part of the postal system which itself is a system wherein written documents typically enclosed in envelopes, and also small packages containing other matter, are delivered to destinations around the world. This can be used to deposit cheques and to send orders to the bank to pay money to third parties. Banks also normally use mail to deliver periodic account statements to customers.
• Telephone banking is a service provided by a financial institution which allows its customers to perform transactions over the telephone. This normally includes bill payments for bills from major billers (e.g. for electricity).
• Online banking is a term used for performing transactions, payments etc. over the Internet through a bank, credit union or building society's secure website

Types of banks

Banks' activities can be divided into retail banking, dealing directly with individuals and small businesses; business banking, providing services to mid-market business; corporate banking, directed at large business entities; private banking, providing wealth management services to high net worth individuals and families; and investment banking, relating to activities on the financial markets. Most banks are profit-making, private enterprises. However, some are owned by government, or are non-profits.

Central banks are normally government owned banks, often charged with quasi-regulatory responsibilities, e.g. supervising commercial banks, or controlling the cash interest rate. They generally provide liquidity to the banking system and act as the lender of last resort in event of a crisis.

Types of retail banks

National Bank of the Republic, Salt Lake City 1908

National Copper Bank, Salt Lake City 1911

• Commercial bank: the term used for a normal bank to distinguish it from an investment bank. After the Great Depression, the U.S. Congress required that banks only engage in banking activities, whereas investment banks were limited to capital market activities. Since the two no longer have to be under separate ownership, some use the term "commercial bank" to refer to a bank or a division of a bank that mostly deals with deposits and loans from corporations or large businesses.
• Community Banks: locally operated financial institutions that empower employees to make local decisions to serve their customers and the partners
• Community development banks: regulated banks that provide financial services and credit to under-served markets or populations.
• Postal savings banks: savings banks associated with national postal systems.
• Private banks: manage the assets of high net worth individuals.
• Offshore banks: banks located in jurisdictions with low taxation and regulation. Many offshore banks are essentially private banks.
• Savings bank: in Europe, savings banks take their roots in the 19th or sometimes even 18th century. Their original objective was to provide easily accessible savings products to all strata of the population. In some countries, savings banks were created on public initiative, while in others socially committed individuals created foundations to put in place the necessary infrastructure. Nowadays, European savings banks have kept their focus on retail banking: payments, savings products, credits and insurances for individuals or small and medium-sized enterprises. Apart from this retail focus, they also differ from commercial banks by their broadly decentralised distribution network, providing local and regional outreach and by their socially responsible approach to business and society.
• Building societies and Landesbanks: conduct retail banking.
• Ethical banks: banks that prioritize the transparency of all operations and make only what they consider to be socially-responsible investments.
• Islamic banks: Banks that transact according to Islamic principles.

Types of investment banks

• Investment banks "underwrite" (guarantee the sale of) stock and bond issues, trade for their own accounts, make markets, and advise corporations on capital markets activities such as mergers and acquisitions.

Banks in the economy

Size of global banking industry

Worldwide assets of the largest 1,000 banks grew 16.3% in 2006/2007 to reach a record $74.2 trillion. This follows a 5.4% increase in the previous year. EU banks held the largest share, 53%, up from 43% a decade earlier. The growth in Europe’s share was mostly at the expense of Japanese banks whose share more than halved during this period from 21% to 10%. The share of US banks remained relatively stable at around 14%. Most of the remainder was from other Asian and European countries. .^[7]

The US had by far the most banks (7,540 at end-2005) and branches (75,000) in the world. The large number of banks in the US is an indicator of its geography and regulatory structure, resulting in a large number of small to medium sized institutions in its banking system. Japan had 129 banks and 12,000 branches. In 2004, Germany, France, and Italy had more than 30,000 branches each—more than double the 15,000 branches in the UK.^[8]

Games

The Winter Olympic Games are a winter multi-sport event held every four years. They feature winter sports held on snow or ice, such as Alpine skiing, cross-country skiing, ice skating, bobsledding, and ice hockey.

Each National Olympic Committee (NOC), as with the Summer Olympics, enters athletes to compete against other NOC's athletes for gold, silver, and bronze medals. Fewer countries participate in the Winter Olympics than the Summer Olympics, due largely to the reduced availability of winter sports in many countries nearer to the Equator, and where access to winter sport training facilities are quite limited or non-existent. Also areas in which the Winter Olympics are usually held, are required to be near a mountain range where it snows - for the Alpine skiing events. Outdoor natural snow is also a necessity for cross-country skiing.

Early years

When the International Olympic Committee (IOC) was established in 1894, one of the sports proposed for the program was ice skating. However, no skating was conducted at the Olympics until the 1908 Summer Olympics in London, which featured four figure skating events. Ulrich Salchow (10 time World champion) and Madge Syers (first competitive woman figure skater) won the individual titles with ease.

Poster advertising the International Winter Sports Week, later dubbed the 1924 Winter Olympics.

Three years later, Italian count Eugenio Brunetta d'Usseaux proposed that the IOC stage a week with winter sports as part of the 1912 Summer Olympics in Stockholm. The organizers opposed this idea, wanting to promote the Nordic Games, a winter sports competition held every four years.^{[citation needed]} However, this same idea was again proposed for the 1916 Games, which were to be held in Berlin. A winter sports week with speed skating, figure skating, ice hockey and Nordic skiing was planned, but the 1916 Olympics were cancelled after the outbreak of World War I in 1914

The first Olympics after the war, the 1920 Games in Antwerp, again, featured figure skating, while ice hockey made its Olympic debut. At the IOC Congress held the following year, it was decided that the organizers of the 1924 Olympics (France) would also host a separate "International Winter Sports Week", under the patronage of the IOC. This "week" (it actually lasted 11 days) of events in Chamonix proved to be a great success, attracting more than 200 athletes from 16 nations, competing in 16 events. The first event on the program was 500 m speed skating won by U.S. athlete Charlie Jewtraw, who thereby became the first Olympic Winter Games champion, though not the first winter Olympic champion, since figure skating and ice hockey were held in 1908 and 1920. Overall, in 1924, Finnish and Norwegian athletes dominated events.

In 1925 the IOC decided to create separate Olympic Winter Games^{[citation needed]} , and in 1926, at the 24th IOC Session in Lisbon, the 1924 events in Chamonix were retroactively designated as the first Winter Olympics.^[1]

St. Moritz was appointed by the Swiss organisers to host the second Olympic Winter Games, held from February 11 to February 19 in 1928. Curling and military patrol were no longer medal sports (although the latter was demonstrated) while skeleton made its first Olympic appearance. Warm weather conditions plagued the Olympics on the fourth day. The 10000 m speed skating was abandoned in the 5th pair, and the 50 km cross-country event ended with a temperature of 77 °F (25 °C), forcing a third of the field to abandon competition.

The next Olympics came to North America for the first time. However, fewer athletes participated than in 1928, as the journey to Lake Placid, New York was a long and expensive one for most competitors, and there was little money for sports in the midst of the Great Depression. On top of that, these games too were marred by warm weather, which eventually made it necessary to extend them for two more days. The Games opened on February 4 and closed on February 15. Eddie Eagan, who had been an Olympic champion in boxing in 1920, won the gold in the men's bobsled event during these games to become the first and so far only Olympian to have won gold medals in both the Summer and Winter Olympics.

The Bavarian twin towns of Garmisch and Partenkirchen joined to organize the 1936 edition of the Winter Games, held from February 6-16. Alpine skiing made its Olympic debut in Germany, but skiing teachers were barred from entering, as they were considered to be professionals. This decision caused the Swiss and Austrian skiers to boycott the Olympics.^[2] The cross-country relay was also held for the first time, while the military patrol and ice stock sport were demonstration sports.

[edit] World War II

The Second World War interrupted the celebration of the Winter Olympics. The 1940 Winter Olympics had originally been awarded to Sapporo, Japan, but were given back in 1938, because of the Japanese invasion of China in the Sino-Japanese War. Subsequently, St. Moritz, Switzerland was chosen by the IOC to host the 1940 Winter Olympics, but three months later the IOC withdrew St. Moritz from the Games, because of quarrels with the Swiss organizing team. Garmisch-Partenkirchen, the hosts of the previous games, stepped in to host the Games again, but the Games were cancelled in their entirety in November 1939 following Germany's invasion of Poland on September 1st.

The 1944 Winter Olympics, scheduled to take place in Cortina d'Ampezzo, Italy, were canceled in the Summer of 1941, again, due to the still-raging World War II.

[edit] Post-war

The Swiss town of St. Moritz, untouched by the war because of Switzerland's neutrality, became the first place to host the Winter Olympics for the second time in 1948. Twenty-eight countries competed in Switzerland from January 30 to February 8, although athletes from Germany and Japan were not invited. Alpine skiing events were expanded to include the slalom and downhill. Skeleton returned to the programme after 20 years, but once more, the sport disappeared after the St. Moritz games, not to return again until 2002.

In 1952, the Winter Games came to Norway, the country considered the birthplace of modern skiing. As a tribute, the Olympic Flame was lit in the fireplace of the home of skiing pioneer Sondre Nordheim. The programme in Oslo, from February 14 to February 25, was expanded with the first ever cross-country event for women, while the alpine combined was replaced with the giant slalom. Bandy, a popular sport in the Nordic countries, was held as a demonstration sport. Germany returned to the Olympic Games after 16 years, although only represented by West German athletes.

After not being able to host the Games in 1944 due to the war, Cortina d'Ampezzo, Italy was able to organise the 1956 Winter Olympics, held from January 26 to February 5. At the first Winter Games to be televised, the programme was extended with two events in cross-country skiing. The most important development was the debut of the Soviet Union at the Winter Olympics. They immediately showed their potential by winning more medals than any other nation.

In the late 1950s when the Olympics were awarded to Squaw Valley for 1960, this resort town in California founded by Alexander Cushing was a ghost town. After being awarded the games, there was a rush to construct roads, hotels, restaurants, and bridges, as well as the ice arena, the speed skating track, ski lifts, and the ski jumping hill. By 1960, everything was in place. There was a fear of lack of snow, but late snowfall prevented a disaster.^[3] The Games were held from February 18 to the 28th. While bobsleighing was absent (the organizing committee found it expensive as only 9 nations would take part), biathlon was first contested at the Olympics, and women first took part in speed skating.

The Tyrolean city of Innsbruck was the host in 1964. Despite being a traditional winter sports resort, there was a lack of snow and ice during the Games and the Austrian army was called in to bring snow and ice to the sport venues.^[4] Bobsleigh returned to the Olympics, while a new event was added to ski jumping and women's cross-country skiing. Luge was first contested in the Olympics, although the sport received bad publicity when a competitor was killed in a pre-Olympic training run.

Held in the French town of Grenoble, the 1968 Winter Olympics were the first Olympic Games in which East and West Germany participated as separate countries.^[5] Until 1964, they had competed in a combined German team. One new event was added for the Grenoble Games: the 4 × 10 km relay in biathlon. Another first in these Olympics were doping and sex tests.^[6]

The 1972 Winter Games, held in Sapporo, Japan, were the first to be held outside North America or Europe. These Games were surrounded by several professionalism issues. Three days before the Olympics, IOC president Avery Brundage threatened to bar a large number of top alpine skiers from competing because they did not comply with the amateurism rules. Eventually, only Austrian star Karl Schranz, who earned most of all skiers, was not allowed to compete. On a historical note, the 1972 Games were the last Olympic Winter Games where a skier would win the gold medal using all-wooden skis. After this, all top-level cross-country skiing would take place with the athletes using skis made mostly of fibreglass synthetics.

Originally, the 1976 Winter Games had been awarded to Denver, but in 1972 the residents of Denver and of Colorado expressed unwillingness to host the Games through a city plebiscite and a state referendum. Whistler, British Columbia was also offered the Games as they had bid earlier, but the new government there rejected the offer. Innsbruck, which still had the venues of 1964 in good shape, was chosen in 1973 to replace Denver.^[7] Because it was the second time the Austrian town hosted the Games, two Olympic flames were lit. New events on the programme included ice dancing and the men's 1000 m in speed skating. The 1976 Games also featured the first combination bobsleigh and luge track in neighboring Igls.

[edit] 1980 - 1998

The Olympic Winter Games returned to Lake Placid, which had earlier hosted the 1932 edition. The People's Republic of China made its debut at the Winter Olympics. Because of this, the Republic of China (Taiwan) was forced by the IOC to compete under the name of Chinese Taipei. The Taiwanese refused, and thus became the only nation to boycott the Olympic Winter Games. The threat of the American boycott of the 1980 Summer Olympics was also clouding these Olympics, as much of the debate about doing so fell during the Winter Games. Fortunately, there were also many sporting highlights. Speed skater Eric Heiden set world records in each of the 5 events he competed in. For the Americans, however, the highlight of the Games was the Olympic ice hockey tournament. In a match later dubbed the "Miracle on Ice", the home team upset the favoured Soviet Union, and went on to win the title.

Sarajevo was quite a surprising choice for the 1984 Winter Olympics, as no Yugoslavian athlete had ever won an Olympic medal in the Winter Games. This gap was filled by alpine skier Jure Franko, who won a silver medal in the giant slalom. There was only one new event at the Sarajevo Games, a 20 km cross-country event for women.

The city of Calgary, Alberta hosted the first Winter Olympics to span 16 days, in 1988. New events were added in ski jumping and speed skating, while future Olympic sports curling, short track speed skating and freestyle skiing made their appearance as demonstration sports. In alpine skiing, the Super G was added for the first time, while the combined event was reinstated after a 40-year absence from the Olympics. For the first time, the speed skating events were held indoors, on the Olympic Oval. Dutch skater Yvonne van Gennip beat the favoured East German, winning three gold medals and setting two new world records. Her total was equalled by Finnish ski jumper Matti Nykänen, who won all events in his sport. Not all athletes making the headlines were winning medals: British ski jumper Eddie 'the Eagle' Edwards, who came in last, and Jamaica's first ever bobsleigh team also received plenty of attention, including being the subject of the film Cool Runnings starring actor John Candy.

In 1986, the IOC decided to reschedule the Summer and Winter Games by alternating between them every 2 years: each would still be held in four-year cycles, but two years apart from one another. The 1992 Games were the last to be held in the same year as the Summer Games. They were held in the French Haute Savoie region; Albertville itself only hosted 18 events. Two new sports, short track speed skating and freestyle skiing were on the programme. Women's biathlon was also included for the first time. Curling, speed skiing and two freestyle skiing events were demonstrated. Political changes of the time were reflected in the Olympic teams appearing in France. Germany competed as a single nation for the first time since the two German countries ceased competing as a unified team following the 1964 Games, and former Yugoslavian republics Croatia and Slovenia made their debut. Most of former Soviet republics still competed as a single team, under the name of Unified Team, but the Baltic States made independent appearances, for the first time since before World War II. Finnish ski jumper Toni Nieminen made history by becoming the youngest male Winter Olympic champion. New Zealand skier Annelise Coberger made history with a silver medal in the women's slalom, becoming the first Winter Olympic medallist from the Southern Hemisphere.

The Lillehammer Games in 1994 were the first Winter Olympics to be held without the Summer Games in the same year; in a non-leap, even year. The event programme was again extended, adding two new events each in freestyle skiing and short track speed skating. After the split-up of Czechoslovakia in 1993, the Czech Republic and Slovakia made their Olympic debut in Lillehammer, as did several former Soviet republics. A lot of media attention, especially in the United States, went to the women's figure skating competition, as American skater Nancy Kerrigan had been injured on January 6 in an assault planned by the ex-husband of opponent Tonya Harding. Both skaters competed in the Games, but neither of them won the gold medal, which went to Oksana Baiul, who won Ukraine's first Olympic title. Kerrigan would ultimately win the silver medal.

For the first time, more than 2000 winter athletes competed in the 1998 Winter Olympics, held in the Japanese city of Nagano. Two new sports were conducted—snowboarding and curling—while women's ice hockey was also included. The men's ice hockey tournament was open to all players for the first time, making Canada and the United States favourites for the gold with their many NHL professionals. However, neither nation won any medals, losing to the Czech Republic. Speed skating saw a wave of new world records thanks to the use of the revolutionary clap skate.

[edit] 2002 - present

Olympic flame at Rice-Eccles Olympic Stadium during the opening ceremonies of the 19th Olympic Winter Games in Salt Lake City.

The 19th Olympic Winter Games were held in Salt Lake City, United States. Prior to the opening of the Games, it was found that Salt Lake organisers had bribed several IOC members in order to be elected. This resulted in a change of the host city election procedures and several IOC members resigned or were punished. Again, the programme was expanded. Skeleton made its return on the Olympic podium after 54 years, while new events were added in biathlon, bobsleigh, cross-country skiing, Nordic combined and short track speed skating.

All Olympics since September 11, 2001 have required a higher level of security to avoid any terrorist attack. The Olympic Games in Salt Lake City were the first Olympics since then, and thus the first to implement the new measures. During the opening ceremonies, Dr. Jacques Rogge, presiding over his first Olympics as IOC president, told the athletes of the host country that their nation was overcoming the "horrific tragedy" of that day and the IOC stands united with them in promoting the committee's ideals.^[8][9] In addition, the opening ceremonies of those games also saw signs of the aftermath of that tragic day.

Olympic flame at Torino during the 2006 Winter Olympic Games

The Winter Olympic Games are a winter multi-sport event held every four years. They feature winter

Auto insurance

Auto insurance

Main article: Vehicle insurance

A wrecked vehicle

Auto insurance protects you against financial loss if you have an accident. It is a contract between you and the insurance company. You agree to pay the premium and the insurance company agrees to pay your losses as defined in your policy. Auto insurance provides property, liability and medical coverage: (1) Property coverage pays for damage to or theft of your car. (2) Liability coverage pays for your legal responsibility to others for bodily injury or property damage. and (3) Medical coverage pays for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses. An auto insurance policy is comprised of six different kinds of coverage. Most states require you to buy some, but not all, of these coverages. If you're financing a car, your lender may also have requirements.

Most auto policies are for six months to a year. Your insurance company should notify you by mail when it’s time to renew the policy and to pay your premium. ^[8]

[edit] Home insurance

Main article: Home insurance

What is homeowners insurance?

Homeowners insurance provides financial protection against disasters. A standard policy insures the home itself and the things you keep in it.

Homeowners insurance is a package policy. This means that it covers both damage to your property and your liability or legal responsibility for any injuries and property damage you or members of your family cause to other people. This includes damage caused by household pets.

Damage caused by most disasters is covered but there are exceptions. The most significant are damage caused by floods, earthquakes and poor maintenance. You must buy two separate policies for flood and earthquake coverage. Maintenance-related problems are the homeowners' responsibility. ^[9]

[edit] Health

Main articles: Health insurance and Dental insurance

Almost all developed countries have government-supplied insurance for health

Health insurance policies by the National Health Service in the United Kingdom

Health insurance policies by the National Health Service in the United Kingdom (NHS) or other publicly-funded health programs will cover the cost of medical treatments. Dental insurance, like medical insurance, is coverage for individuals to protect them against dental costs. In the U.S., dental insurance is often part of an employer's benefits package, along with health insurance. Most countries rely on public funding to ensure that all citizens have universal access to health care.

[edit] Disability

• Disability insurance policies provide financial support in the event the policyholder is unable to work because of disabling illness or injury. It provides monthly support to help pay such obligations as mortgages and credit cards.
• Total permanent disability insurance provides benefits when a person is permanently disabled and can no longer work in their profession, often taken as an adjunct to life insurance.
• Disability overhead insurance allows business owners to cover the overhead expenses of their business while they are unable to work.
• Workers' compensation insurance replaces all or part of a worker's wages lost and accompanying medical expenses incurred because of a job-related injury.

[edit] Casualty

Casualty insurance insures against accidents, not necessarily tied to any specific property.

Main article: Casualty insurance

• Crime insurance is a form of casualty insurance that covers the policyholder against losses arising from the criminal acts of third parties. For example, a company can obtain crime insurance to cover losses arising from theft or embezzlement.
• Political risk insurance is a form of casualty insurance that can be taken out by businesses with operations in countries in which there is a risk that revolution or other political conditions will result in a loss.

[edit] Life

Main article: Life insurance

Life insurance provides a monetary benefit to a descedent's family or other designated beneficiary, and may specifically provide for income to an insured person's family, burial, funeral and other final expenses. Life insurance policies often allow the option of having the proceeds paid to the beneficiary either in a lump sum cash payment or an annuity.

Annuities provide a stream of payments and are generally classified as insurance because they are issued by insurance companies and regulated as insurance and require the same kinds of actuarial and investment management expertise that life insurance requires. Annuities and pensions that pay a benefit for life are sometimes regarded as insurance against the possibility that a retiree will outlive his or her financial resources. In that sense, they are the complement of life insurance and, from an underwriting perspective, are the mirror image of life insurance.

Certain life insurance contracts accumulate cash values, which may be taken by the insured if the policy is surrendered or which may be borrowed against. Some policies, such as annuities and endowment policies, are financial instruments to accumulate or liquidate wealth when it is needed.

In many countries, such as the U.S. and the UK, the tax law provides that the interest on this cash value is not taxable under certain circumstances. This leads to widespread use of life insurance as a tax-efficient method of saving as well as protection in the event of early death.

In U.S., the tax on interest income on life insurance policies and annuities is generally deferred. However, in some cases the benefit derived from tax deferral may be offset by a low return. This depends upon the insuring company, the type of policy and other variables (mortality, market return, etc.). Moreover, other income tax saving vehicles (e.g., IRAs, 401(k) plans, Roth IRAs) may be better alternatives for value accumulation. A combination of low-cost term life insurance and a higher-return tax-efficient retirement account may achieve better investment return.