Chapter 20: Insurance

variable life insurance

- an insurance plan that resembles an investment portfolio

surgical insurance

- covers all or part of the surgeon's fees for an operation - typically lists the types of operations it covers and the amount allowed for each

medical payments coverage

- covers policyholders and family members if they are injured while riding in their car or another car - may also cover them if they are walking and are hit by car - also protects guests in car - pays for regardless who is at fault

permanent life insurance

- has cash value - investment feature

homeowners policy

- insures real and personal property - most common form of home and property insurance policy - HO- 3, 4, 5, 6, 7

under-insured motorist coverage

- insures you for losses caused by another driver whose coverage is insufficient

PPO

- involves several health care providers - providers charge set fees for services - medical treatment significant discount

financial responsibility law

- laws the protect the public from financial loss caused by drivers - make you legally responsible for any injuries you cause to people and for damage to the property of others

universal life insurance

- provides both insurance protection and a substantial savings plan - the investment portion of the policy earns a variable rate of return, which is usually higher than is paid on other types of cash value life insurance

individual health insurance

- rather expensive - require a physical exam and have a waiting period before the policy takes effect

Medicare

- social security law - designed to help people aged 65 and older and some disabled people pay for health care 1) hospital insurance 2) medical insurance

group health insurance

- the most popular way to buy health insurance - some companies sponsor

Medicaid

- to some low-income individuals and families

uninsured motorist coverage

-protects against hit-and-run / insurance-less drivers who cause injuries - only available to people who carry bodily injury liability insurance - covers guests, family, and insured - can not be at fault!! - also offers under-insured motorist coverage

major elements of a life insurance policy

1) Name of the insured 2) Amount of coverage (face value / death benefit) 3) Cost of the insurance AKA premium amount 4) Name of the beneficiary

two kinds of economic loss that home and property insurance protects you against

1) damage to your home or property 2) expenses you must pay to live somewhere else if your home is damaged and must be repaired or rebuilt 3) liability losses related to your property

cost of health insurance factors

1) extent of coverage 2) number of claims filed 3) age of the policyholder 4) number of dependents

health insurance sources

1) group 2) individual 3) HMO 4) PPO 5) govt programs

medical insurance classifications

1) hospital insurance 2) surgical insurance 3) regular medical insurance 4) major medical insurance 5) a comprehensive medical policy

two main categories of auto insurance protection

1) personal injury coverage 2) property damage coverage

three types of property damage coverage

1) property damage liability 2) collision 3) comprehensive damage

HO-5

Comprehensive Form: Expands HO-3 to include replacement cost coverage

HO-6

Condominium Form: covers personal belongings for condominium owners

HO-7

Country Home Form: provides coverage for agricultural buildings and equipment for non-farm business rural residents

HO-3

Special Form: covers all perils

HO-4

Tenants Form: covers personal belongings of renters

inventory

a list of personal property that you have insured - includes: brand name and description of each item, purchase price, date and place of the puchase

dependent

a person who must rely on another for financial support

assigned-risk plan

a plan where every automobile insurance company in the state is assigned a certain number of high-risk drivers, based on the amount of insurance each company sells

renters policy

a property and liability policy suitable for renters - covers household goods and personal belongings.. NOT real property

ordinary life policy

a type of whole life insurance where premiums for ordinary life insurance remain the same each year as long as the policyholder lives

insurance rates factors

age, record, marital status, credit rating, academic standing, purpose for car, number of miles driven, value and type of car, community of residency, amount of coverage and deductibles

renewable term insurance

allows the policyholder to continue term insurance for one or more terms without taking another physical examination

deductible clause

an amount you must pay before the insurance company pays a claim - reduces the premium cost

additional living expenses

an insurance feature that helps to pay for the living costs you would incur if something happened to your home

group life insurance

an insurance policy that covers a group of people

personal injury coverage

bodily injury liability, medical payments, uninsured motorist protection

comprehensive medical policy

combines the features of hospital, surgical, regular, and major medical insurance - one deductible

HMO

commonly consists of a staffed medical clinic to serve members - fixed monthly fee - entitled to a wide range of prepaid health car services - emphasize preventive health care, so do not cover treatment or care

personal liability coverage

covers claims from injuries to people or damage to property caused by you, your family, or even your pets

regular medical insurance

covers feeds for nonsurgical care given in the doctor's office, patient's home, or a hospital - policy states the amount payable for each visit/call - max number of visits covered - usually combined with hospital and surgical insurance

depreciation

decrease in value --> may affect the amount an insurance company will pay if the property is destroyed

limited-payment policies

designated by the number of years the policyholder agrees to pay on them - like ordinary life policies except that premiums are paid for a limited number of years or until a person reaches a certain age

long-term care insurance

fastest growing type of protection - provides long term care AKA daily assistance needed from illness or disability

compulsory insurance

insurance being mandatory to register a car, get a license, etc

workers' compensation

insurance plan that provides medical and survivor benefits for people injured, disabled, or killed on the job

bodily injury liability

insurance that covers people in other cars, passengers riding with the insured, and pedestrians - the insured and their immediate family are NOT covered

collision coverage

insurance that protects a car owner against financial loss resulting from a collision or rollover - does not cover injuries or damage - usually written with a deductible clause

property damage liability

insurance that protects a driver against claims if the insured's car damages someone else's property and the insured is at fault - does not cover damage to the insured's car

property insurance

insurance that protects you from the financial loss you would incur if some of your property were lost or destroyed due to fire, theft, vandalism, other hazards

term life insurance

insurance that provides financial protection from losses resulting from a death during a definite period/term - least expensive form of life insurance - ONLY form of PURE life insurance (not savings or investment features)

replacement insurance

insurance where the insurance company actually replaces an item that has been destroyed

cost containment

keeping costs down through coinsurance and deductibles

no-fault insurance laws

laws made in an effort to reduce insurance costs and speed up claim settlements

hospital insurance

pays most or all of the charges, like room, food, medical items, etc - most popular

whole life insurance

permanent insurance that extends over the lifetime

managed health care

programs that cover more than two thirds of Americans who have insurance through their employer - often provide lower-cost, comprehensive health care through networks of medical professionals - higher monthly premiums, but low/no deductibles, low co-payments, and little/no paperwork - HMO and PPO

personal property

property not attached to the land

real property

property permanently attached to land

comprehensive coverage

protects the insured against almost all damage losses except those caused from a collision or rollover

disability income insurance

protects you against the loss of income caused by a long illness or an accident

major medical insurance

provides protection against the high costs of serious illnesses or injuries - complements the other forms of medical insurance - have a deductible clause similar to that of the automobile collision insurance

face value

the amount of insurance coverage that was originally purchased and that will be paid upon the death of the insured

cash value

the amount of money that the insurance company will pay if the policyholder decides the insurance is no longer needed - longer you keep your policy, the higher the cash value will me

level term insurance

the amount of protection and the premiums remain the same while the insurance is in effect

decreasing term insurance

the amount of protection gradually becomes smaller, but premiums remain the same during term

perils

the causes of loss (eg fire, wind, theft)

beneficiary

the person named in the policy to receive the insurance benefits - often a spouse, children, etc

basic health coverage

the protection provided by regular medical, hospital, and surgical insurance

coinsurance

the sharing of expenses by the policyholder and the insurance company

insurance premiums factors

value of property insured construction of building and material number of claims on the property type of policy distance to nearest fire department and water supply amount of deductible credit rating of the insured