Insurance

Social Security replaces about what percentage of your income?

40%

What is an "elimination period to receive benefits?"

60-90 days is common.

At what age can you begin receiving Social Security? What is considered full retirement age?

62 and 65 or 67.

What is coinsurance?

A coinsurance clause specifies the proportion of health care expenses that will be paid by the insurance company.

What is a deductible?

A deductible requires that the insured bear the cost of the health care up to a level that is specified in the policy.

Describe a (k) plan.

A defined-contribution plan that allows employers to contribute a ,maximum of $17,000 ($22,500 if they are 50 or older) per year on a pre-tax basis.

What is Medicaid?

A federal program that provides health care to the ages, blind, disabled, and needy families with dependent children.

What is the average cost for a private nursing home room?

$77,000

Describe a Preferred provider organization. Give one advantage and one disadvantage.

A health insurance plan that allows individuals to select a health care provider and covers most of the fees for services; a referral from a doctor is not required to visit a specialist. An advantage of PPOs is it allows individuals to select their health care providers and have most of the fee covered. A disadvantage is the premiums and fees for health care services are higher.

Describe a Health maintenance organization (HMO). Give one advantage and one disadvantage.

A health insurance plan that covers health care services approved by doctors; a primary care physician provides general health services and refers patients to a specialist as necessary. An advantage of HMOs is that they offer health care services at a low cost. A disadvantage of HMOs is that individuals must chooose among the primary care physicians and specialists who participate in the plan.

What should you do in the event you are in an auto accident?

Contact the police immediately. Request information from the other driver(s) in the accident, including their insurance information. You may also obtain contact information (including license plate numbers) from witnesses, just in case they leave before the police arrive.

What is an insurance policy?

Contract between an insurance company and the policyholder.

The 25 in 50/100/25 refers to what?

Covers damage done to the car or other property.

What is health insurance?

Insurance offered by private insurance companies or the government that covers health care expenses incurred by policyholders for necessary medical care.

What is medigap insurance?

Insurance provided by private insurance companies to cover medical expenses that are not covered by Medicare.

What is long-term care insurance?

Insurance that covers expenses associated with long-term health conditions that cause individuals to need help with everyday tasks.

What is disability income insurance?

Insurance that provides income to policyholders in the event that they become disabled.

What does collision coverage cover?

Insures against costs of damage to your car resulting from an accident in which the policyholder is at fault.

What does medical payments coverage insure you against?

Insures against the cost of medical care for you and other passengers in you car when you are at fault in an accident.

What does comprehensive coverage cover?

Insures you against damage to your car that results from floods, theft, fire, hail, explosions, riots and various other events.

What is social security?

Is a federal program that taxes you during your working years and uses the funds to make payments to you upon retirement.

What does renters insurance cover? What does it not cover?

It covers personal assets such as furniture, televisions, computer equipment, and audio equipment. Does not insure the structure itself because the insurance is for the renter only, not the owner of the property.

Collision and comprehensive are particularly valuable if you have what?

It is valuable if you have a new car that you would likely repair if it were damaged.

What is an auto insurance policy?

Specifies the coverage provided by the insurance company for a particular individual and vehicle.

What do these three numbers represent:100/300/50?

Split liability limits.

Give two disadvantages and two advantages of defined-contribution plans.

Two disadvantages are some people make the mistake of waiting too long before they save for retirement and when you become older you may be forced the catch up on investing for retirement. Two advantages are you can decide how you want the money to be invested and you can change your investments over time.

Describe under-insured and uninsured motorist coverage.

Under-insured motorist coverage-Insures against bodily injury and drivers who have insufficient coverage, Uninsured motorist coverage-Insures against the cost of bodily injury when an accident is caused by another driver who is not insured.

The Affordable Care Act allows young adults to stay on their parents' health insurance plans until what age?

Until they are 26.

What is the purpose of "Coordination of Benefits?"

When a policy has a coordination of benefits provision, it means that the benefits are dependent on what benefits would be paid by other policies that you have.

What is a "probationary period?"

Which extends from the time your application is approved until your coverage goes into effect.

Your retirement planning decisions include what?

Which retirement plan should you pursue and How much to contribute.

What is COBRA?

You can continue your health insurance provided through an employer's plan for 18 months after you stop working for the employer.

How do you qualify for social security?

You need to build up a total of 40 credits from contributing to Social Security over time through payroll taxes.

Who makes the contributions in a defined benefit plan?

Your employer makes all the contributions to the plan.

Currently___ in ___ workers is insured.

1, 5

Describe a managed health care plan. Give one advantage and one disadvantage.

A health insurance policy under which individuals receive services from specific doctors or hospitals that are part of the plan. An advantage is you do not have to pay the full cost and then wait to be reimbursed, as is typically the process for fee for service plans. Disadvantage-manages health care plans charge lower premiums than indemnity plans, but they impose more restrictions on the specific health care providers that individuals can use.

If the breadwinner of the home dies, who can receive benefits?

A one-time income payment to the spouse, monthly income payments if the spouse is older then 60 or has a child under the age of 16 and monthly income payments to children under the age of 18.

What is a deductible?

A set dollar amount that you are responsible for paying before any coverage is provided by your insurer.

What is a stop-loss provision?

A stop-loss provision sets a maximum amount that you must pay for one or more health care services.

What is an umbrella policy?

A supplement to auto and homeowner's insurance that provides additional personal liability coverage.

Describe what each of the following parts of medicare covers:

A. Part A-consists of hospital insurance and is used to cover expenses associated with inpatient care (including surgeries) in hospitals or nursing facilities, and a limited amount of home health care. B. Part B-Optional medical insurance and covers some expenses that are not covered by Part A, such as outpatient hospital care, physical therapy, and some health services. C. Part C-represents a combination of Parts A and B, provided through private insurance companies that are approved by Medicare. D. Part D-provides coverage for prescription drugs. The Part D component can vary among insurance plans in terms of the specific drugs that are covered, the amount of coverage per type of drug, and the deductible. You must have Parts A and B Medicare in order to qualify for Part D.

What is a flexible spending account?

An account established by the employer for the employee to use pretax income to pay for medical expenses.

What is a health savings account?

An account that shelters income from taxes and that can be used to pay health care expenses.

Give one advantage and one disadvantage of a flex spending account.

An advantage is the money you set aside each pay period for your flexible spending account is not subject to federal, state, and local income taxes, or to FICA taxes. One disadvantage is the funds cannot be carried over to the next year.

What is a discount on charge arrangement?

An arrangement in which the preferred provider organization (PPO) pays a specific percentage of the health care provider's charges.

What is a per diem rate arrangement?

An arrangement in which the preferred provider organization (PPO) pays a specific percentage of the health care provider's charges.

What is a defined benefit plan?

An employee-sponsored retirement plan that guarantees you a specific amount of income when you retire based on you salary and years of employment.

What is a Defined-contribution plan?

An employer-sponsored retirement plan that specifies guidelines under which you and/or your employer can contribute to your retirement account and that allows you to invest the funds as you wish.

What is a personal property floater?

An extension on the homeowner's insurance policy that allows you to itemize your valuables.

What is one reason for the recent increase in auto insurance premiums?

Auto insurance fraud, whereby people submit false claims to get reimbursed by insurance companies.

What is the purpose of auto insurance?

Auto insurance insures against damage to an automobile and expenses associated with accidents.

Name the ways to approach/manage risk.

Avoid Risk, Reduce Risk, Accept Risk and Insure Against Risk.

Who is the nation's largest health care insurer?

Blue Cross and Blue Shield

What factors influence premium rates?

By the likelihood that you will submit a claims to the insurance company and the cost to the insurance company for covering those claims. Your age, your mileage, your driving record, your location, your driver training and your school performance and your insurance company that you select.

What factors influence your homeowner's premium?

By the likelihood you will submit a claims to the insurance company and the cost to the insurance company of covering those claims. Value of Insured Home, Deductible, Location, Degree of Protection and Discounts.

What is the difference between a captive and an independent insurance agent?

Captive insurance agent-Works for one particular insurance company and Independent insurance agent-Represents many different insurance companies.

What is the purpose of no-fault insurance programs?

Does not hold a specific driver liable for causing the accident.

Your risk management decisions are affected by what?

Economic conditions.

What does vesting encourage?

Employers to stay at one firm for several years.

What is HIPPA (2 Major things)?

Ensures that workers can continue their health insurance coverage even if they have switched jobs. The act prohibits insurance companies from denying health insurance coverage based on an applicant's health status, medical condition or history, previous health existing medical problems.

What is risk?

Exposure to events or perils that can cause a financial loss.

What do underwriters do?

From an insurance perspective, underwriters are hired to calculate the risk of specific insurance policies, decide what policies to offer, and what premiums to charge.

What is an insurance agent?

Recommends insurance policies for customers.

What does the term "vested" mean?

Having a claim to a portion of the money in an employer-sponsored retirement account that has been reserved for you upon your retirement even if you leave the company.

What is private health insurance?

Health insurance that can be purchased from private insurance companies to provide coverage for health care expenses.

Describe a Fee for service plan. Give one advantage and one disadvantage.

Health insurance that reimburses individuals for part or all of the expenses they incur from health care providers; individuals are free to decide whether to seek care from a primary care physician or a specialist. An advantage is you can choose your own health care provider. The disadvantage of this type of plan is that you must usually make the payment when you see your health care provider and then request reimbursement for your health care bills.

What is one of the most important retirement planning decisions you can make and why?

How much to contribute each pay period, as this decisions will influence the amount of funds you have to spend during your retirement.

What can you consider doing to reduce your homeowner's insurance premiums?

Increase your deductible, improve protection, use one insurer for all types of insurance, stay with the same insurance company and shop around.

What does it mean to be 20% vested? 100% vested?

Means that 20% of the amount reserved for you through employer contributions will be maintained in your retirement account even if you leave the company. 100%-All money that is reserved for you each year will be maintained in your retirement account.

If you and your spouse were in a care accident and had to go to the hospital, what type of insurance policy (other than health insurance) would you want to have to take care of your injuries?

Medical payments coverage.

What are some other types of coverage your health insurance may offer?

Mental Health, Pregnancy, Dental Insurance and Vision Insurance.

What types of tax-benefits are offered by defined-contribution plans?

Money contributed by employer is like extra income, encourages employees to save and offers tax deferred income.

The closer you are to retirement, what kinds of investments should you make?

More conservative.

What age group has the greatest need for health insurance?

Older individuals

What are some factors that have contributed to the rise in health care costs?

Older individuals are requiring more health care, people are living longer and they require health care for a longer period of time.

What is one pro and one con of social security?

One pro is it is intended to ensure that you receive some income once you retire and therefore is an important part of retirement planning, one con is it does not provide sufficient income to support the lifestyles of most individuals.

If your insurance policy has been in effect for 60 or more days, your policy can only be cancelled under what circumstances?

Only if you provided fraudulent information on your application, if your driver's license is suspended, or if you do not pay your insurance premium.

Retirement fund withdrawals are usually taxed as _____ income.

Ordinary

What is a replacement cost policy?

Pays you for the actual cost of replacing the damaged property.

What is a cash value policy?

Pays you for the value of the damages property after considering its depreciation.

The 100 in 100/300/50 refers to what?

Person injured in an accident.

Starting in 2014, health insurance cannot deny applicants based on what?

Preexisting conditions, such as a person's disease, disability, or other health problems that exist at the time a person is applying for health care insurance.

What are the most popular types of insurance?

Property and casualty insurance, life insurance, and health insurance.

What is the purpose of property insurance?

Property insurance ensures that any damages to your auto and home are covered, and that your personal assets are protected from any Liability.

What does bodily injury liability coverage cover?

Protects against liability associated with injuries caused by the policyholder.

What does property damage liability cover?

Protects against losses that result when the policyholder damages another person's property with his car.

What is medicare?

Provides health insurance to individuals who are 65 years of age or older and qualify for Social Security benefits, or who are disabled.

What is homeowner's insurance?

Provides insurance in the event of property damage, theft, or personal liability relating to your home.

In general, how do insurance companies make money?

Receiving payments for policies, and from earning a return from investing the proceeds until the funds are needed to cover claims.

What is liability?

The amount that you may be required to pay someone for damages that you caused.

How do your investments differ when you are far off from retirement versus close to retirement?

The amount that you try to save by the time you retire is partially on the retirement income that you will need to live comfortably.

What is a premium?

The cost of obtaining insurance.

How is a health savings account different than a flex spending account?

The health savings account is set up with pretax dollars, similar to some college savings accounts and retirement accounts that have been created by the U.S. government to encourage saving.

What are some variables to consider when determining how much to save for retirement?

The important variables to consider are the levels of your existing assets and liabilities, whether you will be supporting anyone besides yourself at retirement, your personal needs, the expected price level of products at the time of your retirement, and the number of years you will live while retired.

The amount of income you receive from Social Security is determined by what two factors?

The number of years you earned income and your average level of income.

If you are young and far away from retirement, what kinds of investments might you make?

The ones with more risk.

What does the liability portion of a homeowner's policy cover?

The policy specifies coverage in the event that you are sued as the result of an event that occurs in your home or on your property.

What is primary function of insurance?

The primary function of insurance is to maintain your existing level of wealth by protecting you against potential financial losses or liability as a result of unexpected events.

What is a "waiting period?"

Three months or six months before you would begin to receive any income benefits.

How does one qualify for Medicaid?

To qualify, individuals must meet some federal guidelines, but the program is administered on a state-by-state basis. Individuals you qualify for Medicare may also be eligible for Medicare may also be eligible for Medicaid if they need public assistance; in this case, they will receive more health benefits.