exam 3

1. Basics of affordable care act

1, to reform the private insurance market. 2, to expand medicaid to the working poor with income up to 133% of the federal poverty level. 3, to change the way that medical decisions are made.

research-based approach steps for a motor vehicle

1. Pre shopping activities: problem identification, information gathering. 2. Evaluating alternatives: selecting vehicle options, comparing used vehicles, leasing a vehicle. 3. Determining purchase price: used-car price negotiations, price bargaining for new cars, comparing financing alternatives. 4. Post purchase activities: automobile operation costs, motor vehicle maintenance.

Calculate PITI

1. annul income / 12 = monthly gross income 2. Monthly gross income x .33, or monthly gross income x .38 for PITI plus other debt payment. 3. Subtract other debt payment 4. Divide 3 with current mortgage rates and X 1000 5. Divide 4 by (1- % down payment)

1. Explain the home-buying process--Budget & location

1. determine home ownership needs 2. Find and evaluate a property to purchase 3. Price the property 4. Obtain financing 5. Close the purchase transaction

Misleading pricing:

1. more store convenience usually means higher prices. 2. Ready-to-use products have higher prices 3. Large packages are usually the best buy; but compare unit pricing 4. "sale" may not always mean saving money

leasing Cons:

1. no ownership interest in the vehicle 2. A need to meet requirements similar to qualifying for credit. 3. Possible additional costs for extra mileage, repairs, early turning.

11-3:

1. not reached deductible, patient pays all. 2. reaches the deductible, co-insurance begins. 3. reaches out-of-pocket limit, insurance pays all.

Leasing pros:

1. only a small cash outflow may be required for the security deposit. 2. Lower monthly lease payments than monthly financing payments. 3. The lease agreement provides detailed records for business purposes 4. Have more chances to obtain more vehicle

Risk management methods:

1. risk avoidance: avoid risk of driving by not driving or being a passenger. 2. Risk reduction: reduce the risk of injury in an auto accident by wearing a seat belt. 3. Risk assumption: taking on responsibility for the loss or injury that may result from a risk. (self-insurance) 4. Risk shifting: transfer it to an insurance company or some other organization.

1. Renting - Advantages & disadvantages

Advantages: mobility, fewer responsibilities, lower initial costs. Disadvantages: few financial benefits, restricted lifestyle, legal details

1. Home equity loans

Are also known as second mortgages. They use the equity in the house as collateral on the loan. It allows a homeowner to borrow on the paid-up value of the property.

Mortgage types

Conventional usually best. Government ok (FHA/VA). ARMS can be ok sometime. Avoid interest only, negative amortization, anything "exotic". 15 year loans pay off faster and therefore build equity faster.

Auto insurance is mandatory.

Covers bodily injury: cover the risk of financial loss due to legal expenses, medical expenses, lose wages, and other expenses associated with injuries caused by an auto accident for which you were responsible. Property damage: protects a person against financial loss when that person damages the property of others.

Benefits

Equity (increase in home value and decrease in loan amount) and Taxes (in some years)

Know the three limits on auto coverage (100/300/100 as an example)

First two number are the limit for bodily injury liability, last number is the limit for property damage liability.

Full coverage:

Insurance protection should be based on the amount needed to rebuild or repair your house, not the amount you paid for it.

Homeowners (and renters) insurances coverages

Insurances coverages: house and other structures, personal property, loss of use/additional living expenses while home is uninhabitable, personal liability and related coverages.

1. Refinancing a mortgage

It can sometimes be helpful if you can get a lower interest rate. This generally happens when interest rates fall.

definition of term life

Life insurance protection for a specified period of time. sometimes called temporary

1. Factors that impact homeowners insurance cost

Location of the home, the type of structure, the coverage amount and policy type, discounts, and differences among insurance companies.

Medicare vs. Medicaid

Medicare: established in 1965, is a federal health insurance program for people 65 or older, people of any age with permanent kidney failure, and people with certain disabilities. Medicaid: a program of medical assistance to low-income individuals and families.

Pros and cons - housing alternatives (single family most common)

New house: pros: no previous owner, pride of ownership, tax benefits. Cons: financial commitment, higher living expenses than renting, limited mobility. Used house: pros: pride of ownership, established neighborhood, tax benefits. Cons: financial commitment, possibility of repairs or replacements, limited mobility.

Know ways to gather car information online and the impact of the internet on car buying

Online: websites, apps: edmunds, caranddriver, autoweb, consumers union, etc. Impact of internet: easier, faster

PMI/LTV

PMI required when down payment less than 20%, which means LTV above 80

Insurance includes insurance the property/asset and liability

Potential property losses: houses, automobiles, clothing, and other personal belongings. Physical damage caused by hazards such as fire, wind, water, and smoke. Loss of use: robbery, burglary, vandalism, or arson. Liability in this context is legal responsibility for another person's losses or injuries

1. Understand premium factors and discounts

Premium factors: vehicle type, rating territory, and driver classification. Discounts: establish and maintain a safe driving record. Installing security devices. Increasing the amount of deductibles.

Disability insurance basics

Provides payments to replace income when an insured person is unable to work.

Purpose of life insurance is to protect a dependent from financial loss (Who usually needs life insurance?)

Purpose: protect a dependent from financial loss Who: nonworking spouse and children of a single-income family.

Know what a deductible is

The set amount a policyholder must pay per loss on an insurance policy.

Understand "buy term and invest the rest"

Using the amount that it would cost to buy a permanent life insurance policy and comparing it to the cost of a term policy for the same face amount(death benefit) just for the period of time or term it's needed.

Overriding theme:

We need to buy/have "things", but many people buy more than they need, leading to debt.

1. Home selling basics

When planning to sell a home, you must decide whether to make certain repairs and improvements, determine a selling price, an choose between the home yourself and using the services of a real estate agent.

Definition of Cash Value or Whole Life

Whole life insurance(cash-value life policy, straight life policy, ordinary life policy): An insurance plan in which the policyholder pays a specified premium each year for as long as he or she lives. 1. It builds cash value. Term life does not 2. Can take a loan against accumulated value 3. More expensive than term. Always.

Actual cash value(ACV):

a claim settlement method in which the insured receives payment based on the current replacement cost of a damaged or lost item, less depreciation.

Replacement value settlements:

a claim settlement method in which the insured receives the full cost of repairing or replacing a damaged or lost item. Not include depreciation.

Rider:

a document attached to a policy that modifies its coverage. The most common rider is waiver of premium.

Hazard:

a factor that increases the likelihood of loos through some peril. For example, defective house wiring.

PPO:

a group of doctors and hospitals that agree to provide health care at rates approved by the insurer. Premium are slightly higher than HMOs.

HMO:

a health insurance plan that provides a wide range of health care services for a fixed, prepaid monthly premium.

Stop loss(out of pocket limit, benefit limits):

a provision under which an insured pays a certain amount, after which the insurance company pays 100% of the remaining covered expenses.

Copay:

a provision under which the insured pays a flat dollar amount each time a covered medical service is received after the deductible has been met.

Health insurance:

a way people protect themselves against economic losses due to illness, accident, or disability.

umbrella policies (which exist to cover major personal liability claims)

also called a personal catastrophe policy. Supplementary personal liability coverage.

Deductible:

an amount the insured must pay before benefits become payable by the insurance company.

Warranty for Lemon Law:

apply when four attempts have been made to get the same problem corrected or when the vehicle has been out of service for more than 30 days within 12 months of purchase or the first 12,000 miles.

Buying decisions

are based on current spending vs. long term saving Daily buying decisions involve a trade-off between current spending and saving for the future.

Proceeds:

are paid out once a claim has been verified, and financially indemnify the insured for a loss that is covered under the policy. which can be used to pay for just about anything

Group plans(employers offer):

as part of an employee benefits package, and health care providers sell it to individuals.

BC/BS:

blue cross provide hospital care benefits on essentially a service-type basis. Blue shield provide benefits for surgical and medical services performed by physicians.

Brand comparisons:

brand-name products usually more expensive but offer good quality. Private-label and store-brand item can result in great savings over time.

Timing purchases:

certain items go on sale the same time each year, for example, you can buy winter clothing in mid- or late winter, or summer clothing in mid- or late summer.

Importance maintenance:

check oil changes, fluids, hoses and belts for wear, tune-up(new spark plugs fuel filter, air filter), battery, cables and terminals, tire pressures, plug wires, radiator and transmission, lights, signals, horn, muffler and pipes, tires, breakers.

FSA:

flexible spending accounts for medical expenses. Employer sponsored.

Personal factors:

gender, age, occupation, income, education, marital status, family size.

Comprehensive major medical:

has a very low deductible and is offered without a separate basic plan.

No fault system:

in which drivers involved in accidents collect medical expenses, lost wages, and related injury costs from their own insurance companies.

Economic factors

inflation, interest rate, tax rate, government regulations, product safety.

Social factors:

lifestyle, interests, hobbies, peer group, culture, advertising, media.

Private insurance:

more than 800 private insurance companies sell health insurance through either groups or individual policies.

Financing alternatives:

pay cash a vehicle or auto loans are available from banks, credit unions, consumer finance companies, and other financial institutions.

Collision:

pays for damage to the automobile regardless of fault.

Policy loan provision:

permits you to borrow any amount up too the cash value of the policy.

Coordination:

prevents you from collecting benefits from two or more group policies that would in total exceed the actual charges.

define insurance

protection against possible financial loss.

Personal liability:

protects the policyholder and household against claims resulting from injuries and damage to other people or their property.

Long-term others:

provides for the expense of daily help that you may need if you become seriously ill or disable and are unable to care for yourself.

Types of risk

pure risk: a risk in which there is only a chance of loss; also called insurable risk. Personal risks, property, and liability. Speculative risk: a risk in which there is a chance of either loss or gain. (uninsurable) for example, staring a small business that may or may not succeed, or gambling.

Lemon law:

require a refund for the vehicle after the owner has made repeated attempts to obtain servicing.

COBRA:

requires many employers to offer employees and dependents who would otherwise lose group health insurance the option to continue their group coverage for a set period of time.

Avoid impulse buying and buying on credit due to ______.

social factors

Premium:

the amount of money a policyholder is charged for an insurance policy.

Peril:

the cause of a possible loss. Such as fire, windstorms, explosions, robbery, accidents, and premature death.

Death benefit(double indemnity):

the insurance company pays twice the face amount of the policy if the insured's death results from an accident.

Depreciation:

the largest fixed expense associated with a new automobile.

HIPAA:

the law provides tax bracket for long term care insurance and authorizes various government agencies to investigate medicare/medicare fraud and abuse.

Why need insurance

the money will meet the needs of your survivors, pay medical expenses, protect your home and belongings, and cover personal or property damage caused by you when driving.

Amortization

the process of making payments, reducing the amount owed, and eventually paying off the mortgage loan

Unit pricing:

the use of a standard unit of measurement to compare the prices of packages of different sizes. Unit price = cost / the number of units

Upside down(negative equity):

the value of the car may be less than the amount you still owe. To avoid this, make a large down payment, a short-term loan less than five years, and pay off asap.

Smart buying

timing purchases, brand comparisons, unit pricing (and be able to calculate unit pricing), misleading pricing.