ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Self-insurance is a method in risk management in which a company or person sets aside a sum of money so they can use it to mitigate an unexpected loss. By principle, one can self-insure against any type of damage, such as flood or fire.

Detailed explanation-2: -A fully-insured health plan is the traditional model of structuring an employer-sponsored health plan and is the most familiar option to employees. On the other hand, self-insured plans are funded and managed by an employer, often to reduce health insurance costs.

Detailed explanation-3: -Insurance contracts are created solely as a means to provide protection from unexpected events, not as a means to make a profit from a loss. Therefore, the insured is protected from losses by the principle of indemnity, but through stipulations that keep him or her from being able to scam and make a profit.

Detailed explanation-4: -Self-insurance (a.k.a., self-funding) is the process of personally bearing financial losses arising from the risk of negative life events such as disability, long-term care, and property damage.