Insurance policies covering multiple risk scenarios which have been pre-packaged and are less expensive than having multiple individual policies.
Let's say a Caribbean tour company offers a scuba diving, spelunking, and ATV package for a family of eager tourists on their island. Dad falls to the bottom of a cave, mom flies off the ATV and lands in a den of rabid, carnivorous platypuses, and little Timmy get carried off by a flotilla of sea turtles in an act of turtle protest against all the tourist boats disturbing their sea turtle peace and quiet.
Basket retention, in this case, will be used by the insurance company as an excess indemnity insurance contract to combine the several crazy risks found on this island in one insurance package.
Related or Semi-related Video
Finance: What is Capital Gains Distribut...21 Views
Finance a la shmoop what are capital gains distributions? cap gains app
hap-happy day.. your mutual fund invested a hundred grand in whatever.com it then [Mutual fund appears]
was bought by Google for three hundred grand
three years after you invested at least that was your portion that three hundred
grand well you had a gain of two hundred grand
on your investment and because Google paid cash not stock in acquiring
whatever.com on your books the gain was realized ie turned into cash so then the
mutual fund has to distribute to you that capital gains ie the cash it [Capital gains definition appears]
realized in selling the company to the kindly loving people at Google whose
motto is do only a little bit of evil right so one more time for the people in
the back how does this capital gains distribution thing work well the fund
manager looking out for your mutual fund may sell or buy some of the stocks or [Fund manager appears with stocks and bonds]
bonds in your fund if she sells and makes a profit well then that profit or
the proportionate gains part of it has to be distributed to the fund holder and
that's you and then of course you got to pay taxes
on that distribution if your fund is held in a normal account like it's in a
401k or an IRA you'll pay taxes on it later but not right away and if you own
it personally well you'll pay at that year yeah Uncle Sam always needs to get [Uncle Sam appears]
his cut when there's capital gains distribution if he doesn't he gets angry
and you know you wouldn't like Uncle Sam when he's angry [Uncle Sam turns into Hulk]
Up Next
What is a Country Basket (Index Fund)? Investing internationally can be a challenge, as foreign exchange, different accounting rules, time zones an...
Who invests in stocks? 401k plans, pension funds, institutional investors, banks, traders, clients of Schwab, Fidelity, and Franklin. Joe Blow buys...
What is a pension? Pensions are just retirement plans. Employers provide them and pay into funds as an investment for their employees. Once employe...
What rights does a public stockholder have? Common shareholders elect the board of directors. They vote. They have the right to quarterly financial...