The "Living Death" Cost of Health and Disability Risks: Defining the Insurability of Personal Insurance and the Statutory Business Classification under the Insurance Law

(II) Health Risks Health risks include disease risk and disability risk. The impact of these risks on an individual's or family's economy manifests in two main ways: firstly, the risk of medical expenses-unexpected illnesses and injuries can impose a catastrophic medical burden on individuals and their families; secondly, the risk of income loss-illness or disability does not reduce a person's need for income; in fact, the need for income inevitably increases during illness or disability. 1. Disease Risk Disease risk can be divided into two levels: narrow disease risk and broad disease risk. Narrowly defined, disease risk refers to the risk of contracting a disease within the body; broadly defined, disease risk includes risks arising from factors beyond disease itself, such as childbirth and accidental injuries. Among the various personal risks faced by humanity, disease risk is a special risk that is serious, wide-ranging, complex, and directly related to the basic survival interests of every member of society. First, the harm caused by disease risk is severe. After a disease risk occurs, it can bring difficulties, losses, and even misfortune to people's lives and work. Disease risk targets people, harming their health and causing temporary or permanent loss or even elimination of their ability to work. The losses are not only economic but also include loss of health and life, as well as psychological damage, which cannot be compensated for with money. Secondly, disease risk is universal. It is unavoidable for every individual and family, and its frequency is high. Thirdly, disease risk is complex. There are numerous known diseases, each manifesting differently due to individual variations. Furthermore, diseases caused by environmental pollution, social factors, lifestyle, work stress, and psychological factors, as well as the uncontrolled spread of unknown diseases, potential diseases, and sub-health conditions, make disease risk difficult to mitigate. General risk assessment techniques are also inapplicable, making disease prevention particularly challenging. Finally, disease risk has a social aspect. Because some diseases are contagious, this type of disease risk not only directly harms individual health but also affects the entire region and even society. 2. Disability Risk Disability risk refers to the risk of bodily injury, organ loss, or functional impairment due to disease, accidents, or other accidents. From an economic perspective, the problems caused by disability, a form of "living death," can be more severe than actual death. If the primary earner of a family dies, the outcome is merely the cessation of a portion of the family's income. However, if the primary earner becomes disabled, not only does that income cease, but the family's overall consumption level remains unchanged, while their income needs typically increase (e.g., medical expenses for the disabled, purchase of assistive devices for daily living). Therefore, the economic problems caused by disability are clearly more serious than those caused by disability. Strictly speaking, a disabled person is someone whose ability to work is impaired and who must rely on income sources outside of work. Therefore, if other members of the disabled person's family depend on this lost income source, the situation becomes even worse, and the financial burden of disability on the individual and family is greater. The probability of becoming disabled at any age is generally greater than the probability of death. Table 9-1 contains excerpts from the 1980 US death and disability tables, listing the probabilities of death and disability at different ages. As the data in the table shows, at every working age, the probability of disability lasting at least 90 days is significantly higher than the probability of death. For example, among people who are 35 years old, almost half will be in a state of disability for at least three months before the age of 65.

II. Personal Insurance (I) Concept of Personal Insurance Personal insurance is a type of insurance that uses human life or body as the insured object and considers birth, aging, illness, disability, and death as insured events. Its basic content is: the policyholder and the insurer enter into an insurance contract to establish their respective rights and obligations; the policyholder pays a certain amount of premium to the insurer; during the insurance period, when the insured suffers death, disability, illness, or other insured events, or when the insured's life expires, the insurer pays a certain amount of insurance money to the insured or their beneficiary. Therefore, any form of commercial insurance directly related to the continuation or termination of human life and the degree of human health or well-being can be called personal insurance. (II) Insurable Risks of Personal Insurance 1. The occurrence of personal risks is accidental and unexpected. The accidental nature of the occurrence of personal risks refers to the individual risk subject, meaning that the occurrence and extent of the risk are unknowable, accidental, and random. At the same time, the occurrence of personal risks should be caused by unforeseen events or events unintentionally caused by the insured. 2. Personal risk loss must be clearly defined. For most types of insurance, insurable risk loss must be clearly defined in both time and amount. That is, the insurer must clearly specify the insured amount and the timing of payment. Death, illness, disability, and old age are usually easy to identify, but the resulting economic losses are difficult to quantify in monetary terms. In life insurance, the insurer determines this by negotiating with the insured and specifying the amount of insurance money the insurer is responsible for paying after the insured risk occurs in the insurance contract. 3. Personal risk must involve the possibility of loss for a large number of insured objects. Insurance uses the law of large numbers as the mathematical basis for insurers to establish insurance funds. Insurers collect extensive data to understand the patterns of past personal risk losses for specific groups. This basis is insufficient for risks involving only a single or a small number of insured objects. Therefore, the occurrence of risk for a single insured person is unpredictable; we cannot know when someone will die, become disabled, or require hospitalization. However, for a sufficiently large group of insured individuals, insurers can, based on a large number of risks, use the law of large numbers to more accurately predict the probability of death, disability, or hospitalization, as well as the loss rate, and compile life tables, morbidity tables, or disability rate tables. Based on this, they can conduct insurance business and determine premiums. 4. Personal risks should involve the possibility of significant loss. The personal risks covered by insurance are typically those that may cause significant loss to an individual. If the potential loss is minor, there is no need to obtain coverage through insurance, because the management costs of covering minor loss risks are very high, resulting in a serious asymmetry between insurance costs and the potential loss of the risk, making it economically unfeasible. Only personal risks that would lead to severe financial hardship for an individual, family, or group are considered insurable.

Section 2 Classification of Personal Insurance I. Classification According to my country's Insurance Law Currently, there is no fixed principle or strict standard for classifying insurance internationally. Different countries adopt different methods based on their needs. my country's Insurance Law classifies all business into two main categories based on the attributes of the insured object: property insurance and personal insurance. This method is relatively general and represents the most basic classification, essentially dividing all insurance business into insurance for persons and insurance for property. Regarding personal insurance, Article 91 of my country's Insurance Law stipulates that "personal insurance business includes life insurance, health insurance, accident insurance, and other insurance businesses." This classification is, of course, based on the scope of protection covered by the insured object.