Fin 3440 Final

In 2018m statistics cited above indicates a dramatically different story, with less than ____% enrollment of covered workers in traditional free for service plans, and with more than _____% enrollment of covered workers in managed care plans (HMOs, PPOs, and other)

1, 99

Advantage of Permanent Insurance include: 1. The level premiums for a permanent life policy offer lifetime protection to age ____, and are usually fixed for life, commencing at the age when you begin the policy. The benefits are guaranteed for as long as you live. If the insured is still alive at age ____, the face amount may be paid to the insured at that time. 2. Premiums paid during the early years of the policy _____ the amounts necessary to pay current death claims. 3. The permanent life policy accumulated cash surrender value, an amount policy holders receive if they terminate their coverage. The average voluntary termination rate based upon face value at the end of 2017 was about _____% 4. Policy holders can borrow against the cash-surrender value through the policy loan. Loan rates may be fixed, typically 6-8% or they may be variable. The amount of the loan plus unpaid interest is deducted from the death benefit if the policy holder dies while the loan is outstanding. 5. Some whole life policies may pay _____ annually based upon a company's investment earnings, death benefits paid, and other expenses.

1. 100 2. exceed 3. 5.7% 5. Dividends

In 1899, _____ and ______ offered benefits for temporary disability "occasioned by all diseases except tuberculosis, venereal disease, insanity, or disabilities due to alcohol or narcotics.

Aetna and Travelers

Defined benefit plans have declined in importance and use by private companies in recent years for a number of reasons, but one is clear: they are more _____ and ____ for employers to administer and fund than DC plans.

Complicated and Expensive

In the defined _____ plan, the employer does not promise retirees pre calculated benefits, but instead arranges for predetermined contributions to individual employee accounts.

Contribution

From the introduction of the 401(k) plans in the early 1980s, defined ______ plans have accounted for most of the growth in private sector retirement plans, which corporate use of defined _____ plans have declined

Contribution Benefit

______ term allows the policy holder to convert the term policy to a permanent policy.

Convertible

Other types of term insurance include ______ term, ______ term, and ______ term

Convertible, Decreasing, and Increasing

Several approaches may be used to assess what levels of life insurance, if any, are required for individuals or families, but a practical and accurate method is the _____ approach.

Needs

The _____ _____ technique estimates the present value of future income and expense cash flows to the surviving spouse and compares that value to the current value of his/her assets to determine adequacy of life insurance coverage.

Needs Approach

Even though most americans with health insurance today are covered under group health insurance, _____-_____ coverage are also important particularly for the individuals that purchased or are covered as a dependent by non group insurance

Non-Group

The most popular term product is the ____ ____ policy with 96% of new term policies issued in 2017

Level Term

With a ____ ____ policy, the premiums you pay are generally fixed or level for a specific period, typically 5-10 years.

Level Term

Pension funds invest primarily in ____-____ securities because payouts are relatively predictable and are among the largest investors in the stock market

Long-Term

In 1863, ______ ____ Company started offering benefits in the case of death or permanent disability

Travelers Insurance Company

The first health care plan was the U.S. _____ ____ ____ in _____, which called for compulsory salary deductions to pay for hospitalization for the seamen.

U.S. Marine Hospital Service in 1798

In the ____ ____, _____ countries, ______, _____ and _____, healthcare delivery is largely state ran, with funding provided through general taxation.

United Kingdom, Nordic, Italy, Spain, Canada

Disadvantages of term insurance include: 1. Term insurance does not provide a savings feature called _____ ____, because term policies pay benefits only if you die while the policy is in force. 2. Premiums _____ each time a policy is renewed because premiums are determined by death rates at each attained age. 3. You may ______ your coverage because term insurance is generally not renewable in your 70s.

1. Cash Vale 2. Increase 3. Outlive

Key characteristics of social insurance programs that differentiate them from other insurance forms include: 1. ______ enrollment 2. "_____ ____" or floor of income basis, 3. _____ right to benefits if eligibility requirements of the plan are met.

1. Compulsory 2. Safety Net 3. Statutory

Disadvantages of Permanent Insurance include: 1. Much more _____ than term insurance 2. Insurance companies invest ______, so you may be able to earn better risk-adjusted rates of return yourself, or through an investment professional.

1. Expensive 2. Conservatively

They key difference with HMO and PPO is: 1. PPO providers do not provide services on a prepaid basis, but instead are paid on a _____-____-_____ basis at the time of service is delivered, even though these discounted fees are less than the provider's normal fees. 2. Patients are not required to use a preferred provider, but deductibles and co-payments are _____ if a preferred provider is used 3. Most PPOs do not use a ______ physician, and employees do not have to get permission for him/her to see a specialist.

1. Free for service 2. lower 3. gatekeeper

Defined Benefit plans have the major advantages of: 1. ______ the worker's retirement benefit 2. Usually noncontributory meaning that only the ______ contributes to the plan 3. the investment risk falling on the ______ 4. Favor employees who enter at ____ ages because the employer must contribute a relatively larger amount for older employees than for younger employees

1. Guaranteed 2. Employer 3. Employer 4. Older

Both political parties tended to agree on 4 important health care issues that needed resolution: 1. Increasing ____ ____ Costs 2. Large ______ population 3. Varying _____ of Medical Care 4. ______

1. Health Care 2. Uninsured 3. Quality 4. Inefficiency

Social Insurance has evolved in the U.S. for a number of reasons: 1. To address major _____ problems such as the economic insecurities associated with the Great Depression in the 1930s or the tragic events of September 11, 2001 2. To address risks that are difficult to insure in the _____ sector such as unemployment 3. TO provide a minimal base of economic _____ to the population for premature death, old age, disability, and unemployment

1. Social 2. Private 3. Security

Group Health insurance is preferable for a number of reasons: 1. ______ of plans offered to employees 2. breadth of coverage is usually _____ than individual policies 3. employers usually pay a _____ part of monthly premiums 4. Employees enjoy a significant _____ advantage

1. Variety 2. Larger 3. Larger 4. Tax

Some advantages of term life insurance is: 1. Most term policies are renewable which means that no evidence of ______ (physical exam) is required to renew a term policy. 2. Premiums for term insurance are ____ than for permanent insurance, resulting in more insurance for less money. 3. Term insurance provides coverage for specific period of time, therefore it is ideally suited for meeting specific financial needs such as getting children through college or retiring a mortgage in the event of your death

1. insurability 2. Lower

As of 2018, HMOs enrolled about _____% of covered workers in the U.S., down from its peak of 31% in 1996, due to several factors including ongoing _______ in recent years that the quality of care was being compromised due to heavy emphasis on cost control.

16%, Criticism

The first payroll taxes were collected in _____ and the first retirement benefit payment was made on January 31, _____ to Miss Ida Mae Fuller

1937, 1940

In _____, the first Blue Shield plan was organized by physicians in California to offer prepaid surgical expense coverage

1939

Nearly _____s of all personal bankruptcies have been linked to medical expenses.

2/3s

The Affordable Care Act (ACA) was enacted by congress in early _____ and ruled by the U.S. supreme court to be constitutional in June of ____

2010 2012

Under the health care law, if your plan covers children, you can now add or keep children on your health insurance policy until they turn ____ years old.

26

Of the number of new individual life policies purchased in 2017, _____% were term insurance that made up _____% of the individual life face amount issued

40, 70

Most defined contribution plan assets for private firms today are in ______ plans, which were named after the section of U.S. tax law that allowed private sector employees to contribute a portion of their wages to their individual accounts on a pretax basis.

401K

A whole life policy may be appropriate for people starting families in their ____s or ____s who need coverage late in life when term insurance will not be necessarily more economical, or for those who want coverage throughout their lifetimes, not just for certain periods.

40s or 50s

Lack of affordable health insurance made the U.S. an international anomaly and contributed to _____ Americans dying prematurely each year

45,000

According to the Kaiser foundation survey in 2018, employers provided health care coverage for about _____% of Americans, Medicare and Medicaid _____%, other public (military, non elderly medicare) ____%, other private (non group policies) _____%, and about ______% of Americans were unisured

49, 35, 1, 7, 9

Estimates vary, but one popular rule of thumb is that qualified retirement plan and social security retirement benefits combines should replenish _____ to ____ percent of an employee's gross earnings made prior to retirement.

50-60

Of the number of new individual life policies purchased in 2017, ____% were permanent (whole life), which made up _____% of the total face amount issued

60, 30

Normal retirement age at ____ in most plans is when an employee can retire and receive a full pension benefit. Early retirement age at ____ in most plans is the earliest age than an employee can retire and receive retirement benefit. _____ retirement is when an employee works to some age beyond the normal retirement age, an exception rather than a rule today

65 55 Deferred

These traditional free for service plans enrolled about _____% of covered workers in 1988, but not account for less than _____% in 2018

73, 1

At the end of 2017, ______ life insurance companies were in the U.S., approximately _____% of all life insurance in force (face amount) was Group Life Insurance, _____% was Individual Life Insurance, and ____% was Credit Life Insurance.

781, 41%, 58%, 1%

_____ _____ Company established the first corporate pension program in the U.S. in 1875, which was followed by other industry sectors including railroads, manufacturing, banks, and utilities

American Express Company

The first health care plans in the U.S. were designed to _____ workers for loss of income when an accident or illness caused extended disability, rather than to _____ workers for medical expenses because physicians' abilities to treat or cure illness were very limited before 1900.

Compensate, Reimburse

______-_____ term policy premiums rise each year that you renew the policy. These policies are no longer a top selling insurance product.

Annual-Renewable

The _____ plan is considered to be the forerunner of the Blue Cross plans, which were organized by a group of hospitals to permit and encourage prepayment of hospital expenses. They offered subscribers contracts that promised a semiprivate room in participating hospitals when the insured was hospitalized.

Baylor

Early Retirees in Defined _____ plans receive actuarially lower benefits because the employee's full benefit at normal retirement is not reached due to early retirement and the benefits are paid for a longer period of time

Benefit

The defined _____ plan was historically the typical retirement plan in the U.S., in which employers established guaranteed benefits for retired workers. The retirement benefit is known, but the contributions will vary depending on the amount needed to fund the desired benefit

Benefit

A typical non group major medical policy has ____ ____ (all reasonable/necessary medical expenses incurred in hospital, doctor's office, or at home, ____ ____ ____ (lifetime limits of $500,000, $1 million or higher), _____ (payment required by insured prior to benefit payments by insurer) and _____(insured must pay a certain percentage of eligible medical expenses in excess of deductible)

Broad Coverage High Maximum Coverage Deductibles Coinsurance

Retirement plans meeting IRS guidelines for qualified plans receive favorable income tax treatment: for employers, contributions are tax deductible as ordinary ______ expenses, and the employer contributions are not considered to be taxable income to ______. For employees, investment earnings on retirement plan assets accumulate on a tax deferred basis; and the pension benefits are generally not taxed until ______ when the employee withdraws the funds

Business Employees Retirement

Under the _____ approach, subscribers pay an annual fee and in return receive comprehensive health care.

Capitation

Term insurance is a relatively _____ policy compared with other insurance.

Cheap

______ term allows a decrease of the death benefit over its term and a _____ term allows for an increase of the death benefit over time.

Decreasing, Increasing

______ -______ pension plans to support retired public workers such as teachers, police officers, and fire fighters date back to the 19th century.

Employer-Based

High quality non group health insurance policies are generally more _____ than group policies

Expensive

After assuming office in 1933, ____ ____ created a committee on economic security, which addressed a wide range of issues, including welfare, unemployment insurance, vocational rehab, ole age insurance, child welfare, and public health.

Franklin Roosevelt

Overtime, most people were covered under the ____ ____ ____ plan for of health insurance, Under this plan, the insured could use any medical provider (doctor or hospital) and then send the bill to the insurance company that paid all or part of it. Once the deductible was met, most indemnity plans paid a percentage of what they considered "_____ and _____" charge for covered services. The issuer generally paid 80% of the usual and customary cost and the insured paid the other 20% which was known as _______

Free for Service Usual and Customary Coinsurance

The older plans called traditional group indemnity plans and free for service plans allowed insureds a lot of _____ to select their own physicians and other health care providers. These plans paid cash benefits for covered services up to maximum limits and cost control was _____ heavily emphasized.

Freedom Not

(HMO) In return for a fixed monthly fee, the individual receives virtually all the medical care required during the year. the subscriber has to choose a primary care physician known as a ______ who is responsible for determining what care is received and when the individual is referred to specialists. If they need a specialist, they are referred to one in the HMO network.

Gatekeeper

Government run pension plans were introduced in Europe in _______ in 1889 during the rule of Otto von Bismark to soothe the proletariats and lure them away from socialism.

Germany

In ______ and across much of continental ____, insurance and delivery operate as self-governing associations independent on the state, although the government plays a coordinating role among insurers, physicians, and other major players

Germany / Europe

Social Security in the U.S. had its origins in the _____ ____

Great Depression

______ ____ _____ Coverage is an employee benefit that pays the cost of hospital care, physicians' and surgeons' fees, and related medical expenses. These plans are important in providing financial security to employees and their families.

Group Health Insurance Coverage

The _____ may be sponsored by a group of physicians, a hospital, employers, medical school, labor union, consumer group, insurance company or blue cross blue shield.

HMO

_______ ____ ____ not only provides for financing of health care, as do commercial insurers and the blue cross/shield plans, but is also delivers the care. These often operate their own hospitals and clinics and employ or maintain contracts with physicians and other health care professionals. They charge for their services under the _____ approach

Health Maintenance Organization (HMOs)

At the beginning of 2010, the U.S. goal of providing _____ quality, _____ health care for all its citizens remained elusive despite the fact that the U.S. health care was among the highest in the world

High, Affordable

The law of _____ ______ since healthcare reform has previously failed under administration of four presidents: Franklin D Roosevelt, Harry S. Truman, John F. Kennedy, and William J. Clinton

Historic Significance

Many older non group medical expense plans still in force today are ____ ____ insurance plans, which cover routine medical expenses and are not designed to cover catastrophic losses.

Hospital Surgical

Spending on healthcare in the U.S. is ____ than any other organization for economic co-operation and development country despite high numbers of uninsured citizens

More

Life insurance can be purchases by _____ or as part of ____ ____ insurance offered by an employer

Individuals, Group Life

All managed health care plans involve an arrangement between ______ and a selected _____ of providers and they offer policyholders significant _____ incentives to use the providers network

Insurers and Network, Financial

Part of the whole life premium pays for insurance protection , called the ____ ____, and the other part goes into a ___ ____ that is used later to pay for the increasing cost of insurance protection.

Mortality charge , Legal Reserve

As an employee benefit, group insurance has many advantages, including ______ costs since much of the cost may be borne by the employer.

Lower

Group insurance premium costs are frequently _____ than individual insurance because economies of scale in large groups make administration less expensive.

Lower

____ _____ is a product designed to pay sizable bills associated with serious illness both in and out of the hospital.

Major Medical

Most new non-group health insurance plans sold today are _____ ____ _____ plans

Major Medical Insurance

_____ ____ is a general term for medical care plan that provide services to its members in a cost-effective way. (HMOs, PPOs)

Managed Care

In 1965, Congress amended the Social Security system by establishing the ______ Program to provide medical expense insurance to persons over the age of 65. The same legislation created _____, a state federal medical assistance program for the low income persons

Medicare Medicaid

Average life expectancies in the U.S. have continued to rise with improvements in _____, ______, and _____

Medicine, Incomes, Public Health

The first group plan for employees was organized by ____ ____ in 1910, and was intended to protect workers from loss of income due to illness

Montgomery Ward in 1910

The social security system in the United States is a ____-____-____-____ system, which means that payroll taxes funded by current employers and employees are used to pay benefits to current retirees.

Pay as you go

______ ____ _____ Corporation was created in 1974 to protect defined benefit pension plans

Pension Benefits Guaranty

______ originated to provide a source of income to people who retired from work

Pensions

______ or whole life policies are significantly more expensive than term insurance

Permanent

The ____ ___ _____ contracts with a network of health care providers for medical services to its members at a reduced rate.

Preferred Provider Organization (PPO)

The mortality charge for any policy ______ as you get older whether you buy a cash-value policy or a term policy

Rises

______ ____, a leader of South America's independence from Spanish rule, first used the term social security publicly at a freedom rally in Venezuela in 1819.

Simon Bolivar

_____ ______ is the most important social insurance program in the U.S., and , as outlined above in the history sections, was enacted into law in 1935 during the turbulent years of the Great Depression under FDR

Social Security

The three major causes of premature death in the U.S. are _____, _____, and ____ ____

Stroke, Cancer, Heart Problems

Heath care development in the U.S. was further improved in 1954 when the IRS Code clarified the ____--_____ states of an employer's contributions to heath care premiums. As a result of these codes, employees today are not taxed on the value of the heath insurance benefits paid by their employers

Tax-exempt

If you need a lot of insurance as families with young children likely do, then a ____ policy may be the only affordable way to buy enough coverage

Term

Some longer term policies guarantee that the premium will not increase during the term, but some do not, enabling the insurance company to raise the premium during the policy's _____

Term

______ Insurance is a simple product which covers you for a specific term such as 1, 5, 10, 20, or 30 years. At the end of the period, you can usually renew or buy a new one.

Term

The _____ _____ combines private insurance with public financing of Medicare and Medicaid, while the delivery of care is free from formal controls. They spend about 2 trillions dollars annually on healthcare.

United States

Other permanent life insurance policies include ______ life, _____ life, and ____ ____ life which offer varying degrees of flexibility in premium and death benefits

Universal, Variable, Variable Universal

All major medical policies contain exclusions that typically include injuries from ____/____ conflict, elective ______ surgery, _____ care, _____/____ exams, and ______ and _____ birth

War/Military Cosmetic Dental Eye/Hearing Pregnancy/Child Birth

Through the years, the ____ ____ insurance policy has become fancier/more expensive, but it remains the product of choice for many insurance companies their agents, and customers, despite its high costs.

Whole Life

Another advantage of group insurance is that the _____ selection risk is used, not individual selection, therefore individuals are rarely required to provide evidence that they are insurable if they enroll when they first become eligible for coverable. So, preexisting conditions will usually not preclude coverage

group

Today, ____ ____ organizations have replaced the free for service plans as the dominant force in the U.S. health care

managed care organizations