WISE - Insurance, Insurance (W!SE)
A woman has just received a very expensive piece of jewelry. The woman has homeowner's insurance. Which statement would it be most appropriate for her to make to her insurance agent?
"I think I need a personal property floater" A personal floater is additional property insurance, which is available within a homeowner's policy, to cover damage or loss of a specific item of value.
For the past five years, a person has had a $20,000 whole life insurance policy that has a cash value clause. The person decides to surrender the policy. At the time of surrender
A calculated amount of money which includes the premiums paid as well as the interest on that money.
homeowners insurance
A form of property insurance designed to protect an individual's home against damages to the house itself, or to possessions in the home. Homeowners insurance also provides liability coverage against accidents in the home or on the property. Some events are typically excluded from policies, namely: earthquakes, floods or other "acts of God" and acts of war.
insurance
A promise of compensation for specific potential future losses in exchange for a periodic payment. Insurance is designed to protect the financial well-being of an individual, company or other entity in the case of unexpected loss.
unemployment insurance
An insurance regulated and administered by the government which covers those who have lost their income due to involuntary unemployment (job loss). In order to qualify for coverage under this insurance, a person must work a predetermined length at a qualifying job and earn a minimum amount of compensation.
Sally's health insurance policy requires her to pay the first $500 of medical costs each year before the company will pay any of her medical bills. This policy provision is the:
Annual deductible
Which of the following insurance covers vehicles?
Automobile Insurance
comparison shopping
Before you can shop for something, you have to decide what you need. For example, the first step in finding the right auto insurance for you is to figure out the amount of coverage you need. Then find out what coverage is required in NY. Go online and compare quotes from different companies. Your final selection should depend on two things: a. the reliability of the insurance company based on the criteria above; b. the price of the quote.
collision insurance
Collision Insurance will reimburse the insured for any damage sustained to their personal automobile that is due to the fault of the insured driver. This type of insurance is often added as an extension of a basic policy. Collision Insurance repays the insured for damage from an actual collision. It does not cover damage due to theft or vandalism. It also does not cover damage that is paid from another driver's policy, if the other driver was at fault.
Mr. Akon's wife died. The money he received as the beneficiary on her life insurance is called the:
Death benefit or face value
Sally took out a $50,000 life insurance policy. The $50,000 amount of coverage is called the:
Death benefit or face value
You have a $2,000 loss. Your insurance company pays you $1,500 on the claim for the loss. The $500 the insurance did not pay is a result of your policy having a:
Deductible
A person buys a homeowner's insurance policy with a $250 deductible, which means the person will:
Have to pay the first $250 which will be deducted from the claim settlement paid by the insurance company.
under-insured
Having insufficient (not enough) insurance coverage.
HMO
Health Maintenance Organization
disability insurance
Insurance policy that pays benefits in the event that the policyholder becomes incapable of working.
Insurance is frequently described as a method of "sharing the risk" because the:
Insured shares the risk of loss with all the other policy holders
Debbie owns a clothing store. She is concerned that a customer who is injured in the store will sue. Which type of insurance should Debbie purchase?
Liability Insurance
assigned risk pool
Liability coverage for certain individuals (such as reckless drivers) who cannot buy conventional insurance policies due to their accidents or numerous tickets on their record. The risky drivers are undesirable, and cannot purchase insurance through regular means. They are assigned by the government to insurance companies (who charge higher than normal premium rates to sell them insurance) so that their victims may be fairly compensated in case they get into another accident.
universal variable life insurance
Life insurance which combines the low-cost protection of term insurance with a savings component that is invested in a tax-deferred account, the cash value of which may be available for a loan to the policyholder.
whole life insurance
Life insurance which provides coverage for an individual's whole life, rather than a specified term. A savings component, called cash value or loan value, builds over time and can be used for wealth accumulation. Whole life is the most basic form of cash value life insurance.
Lucy has no insurance. The situation(s) should she consider insuring against first are:
Losses resulting from an illness, accident, or disability
Generally, the higher the deductible on an insurance policy, the:
Lower the premium.
When Jessie needs health care, she must first go to her primary care physician who coordinates her care and decides whether Jessie should see a specialist. Jessie pays $10 as the co-pay when she sees her primary care doctor. Jessie has which type of health insurance?
Managed Care Health Plan
liability car insurance
Most states laws require drivers to buy two types of liability car insurance coverage in order to operate a vehicle on the roadway. Bodily injury liability car insurance pays the medical bills of individuals you are found liable for injuring with your car. Property damage liability car insurance pays to repair or replace cars or other property that you hit with your vehicle.
no-fault insurance
No-fault insurance is a type of car insurance in which an insurance provider covers damages incurred to its customer in an accident, regardless of who's at fault. Essentially, this eliminates the need for a driver to go after another party's insurance company in order to be reimbursed for damages that the other person caused.
claim
Notification to an insurance company requesting payment of an amount due under the terms of the policy. also called insurance claim.
Gwen receives a bill from her auto insurance company, and she sends a check to the company to make sure her policy is not cancelled. The cost of her policy is called the:
Premium
When a self-employed person decides to purchase disability insurance it is generally to
Protect against the financial effects of not being able to work.
Richard's auto insurance policy expired on 5/15/2002. Richard was upset with his insurance agent and decided to change insurance companies. At 10:00 a.m. on 5/16/2002, as he drove to a different agent to buy a new policy, he had an accident. Who is liable for damage to his car and his personal injuries?
Richard
The purpose of Insurance is to:
Share risk with other policy holders in the company, protect your assets, and protect against potential losses
The only type of life insurance that does not develop a cash value is:
Term life insurance
comprehensive
Term used for a variety of insurance policies providing broad protection.
copay
The amount an insured person is expected to pay for a medical expense at the time of the visit.
cash value
The amount available in cash upon cancellation of an insurance policy, usually a whole life policy, before it becomes payable upon death or maturity. also called cash surrender value or surrender value.
benefit period
The benefit period is the length of time during which a benefit is paid. This can involve a government benefit program such as Medicare, or payment from an insurance policy, such as health or disability insurance. The benefit period is defined in each program or policy's guidelines.
face value
The face value is the numerical worth of the life insurance policy. Although that amount is intended to be the paid when the insured dies, the final payout of a policy can be increased or decreased due to policy activity.
premium
The financial cost of obtaining an insurance cover, paid as a lump sum or in installments during the duration of the policy. A failure to pay premium when due automatically cancels the insurance policy which, upon payment of the outstanding amount within a certain period, may be restored.
risk
The identification, analysis, assessment, control, and avoidance, minimization, or elimination of unacceptable risks.
death benefit
The payment made to a beneficiary from an annuity or policy when the policyholder dies. also called survivor benefit.
Why is term life insurance usually the least expensive type of life insurance?
The policy only pays a death benefit
managed care health insurance
There are three categories of managed care plans: health management organizations (HMO), preferred provider organizations (PPO) and point of service (POS). HMOs provide medical treatment on a prepaid basis, which means that HMO members pay a fixed monthly fee, regardless of how much medical care is needed in a given month. A PPO is a group of doctors or hospitals that offer medical services at discounted rates as part of a specific network. A Point of Service (POS) plan is a type of managed healthcare system that combines characteristics of the HMO and the PPO.
A person buys a flat screen, plasma, theater-like television. The person has homeowner's insurance. Why would it be appropriate to add a personal property floater to that insurance?
To cover the cost of replacement should the television get damaged or stolen.
Ben's truck is crushed by a hit-and-run driver. Scott is hit by an uninsured driver. How will they receive payments?
Uninsured or no-fault motorist coverage
If you have a managed health care plan, it means that you:
Usually must first meet with your primary health care physician
over insured
When an individual has coverage for more than the value of item that is insured.
beneficiary
a person or group designated to receive certain profits, benefits, or advantages, as the recipient of a will or insurance policy.
insured
a person whose interests are protected by an insurance policy
renter's insurance
a type of insurance that covers the loss of a tenant's personal property as a result of damage or theft
Neil will be traveling by air in Southeast Asia for a six-week vacation. Which step will not provide protection during the trip?
a. Baggage claim insurance b. Take his passport (CORRECT ANSWER!) c. Buy flight insurance d. Buy medical insurance that covers when he travels internationally
Which statement does NOT accurately describe a characteristic of cash value for whole life insurance?
a. Cash value grows gradually over time b. If the policy is cancelled, you may be entitled to some or all of the accrued cash value c. Policy that accumulates cash value is less expensive than a policy that does not accumulate cash value (CORRECT ANSWER!!) d. When an insured person dies, the beneficiary will receive the death benefit but the insurance company keeps the cash value
John's job provided the main income for his family. He died unexpectedly and had no life insurance. The probable financial consequence for his wife and two children does not include:
a. The loss of John's income b. A reduction in the family's standard of living c. Death-related expenses to be paid d. An increase in income and expenses (CORRECT ANSWER!)
factors which affect the cost of auto insurance
age, gender, martial status, type of car, cost of repairs, mileage, location, law enforcement, driving record (tickets, accidents, DUI's)
the amnt you pay for covered expenses first before an insurance plan pays
annual deductible
insurance is brought from insurance _______ or ____________.
brokers; salesperson
the amnt the patient pays each time they receive medical service
co-pay
insurance on damage to your own vehicle by impact with another vehicle or object
collision insurance
designed to replace your income in the event that you are unable to work (or limited hours due to a disability)
disability insurance
property risks
fire; theft; natural disasters
health insurance has lower cost for ppl with ______ health or that _______ regularly.
good; exercise
insurance benefits
he contractual payout agreed to by the carrier for the policy holder.
what insurance is required for all adults?
health insurance
long-term care insurance
helps provide for the cost of long-term care beyond a predetermined period. Individuals who require long-term care are generally not sick in the traditional sense, but instead, are unable to perform the basic activities of daily living (ADLs) such as dressing, bathing, eating, toileting, continence, transferring (getting in and out of a bed or chair), and walking.
the ___________ the risk the more expensive the ____________.
higher; insurance
the ________ the deductible, the ______ the cost of insurance.
higher; lower
protects against risk of loss to a home and contents
homeowner's insurance
strategies to reduce the cost of auto insurance
increase the deductible; cancel collision insurance; evaluate the right amnt of insurance (over/under insured); car kept in garage; install security alarm; maintain a good driving record; avoid submitting small claims; take drivers ED
automobile insurance
insurance against loss due to theft or traffic accidents
the amnt you must pay before the insurance company will begin paying on your claim.
insurance deductible
protection against the loss of income that would result if the insured passed away
life insurance
term life insurance
life insurance that pays a benefit in the event of the death of the insured during a specified term.
an insurance policy that provides benefits for the chronically ill or disabled over a long period of time
long-term care insurance
the _______ the deductible, the _______ the cost of insurance.
lower; higher
insurance is a way to __________________.
manage risk
who is in need of more insurance?
more insurance is needed for younger ppl w families
self insured (no insurance)
no health insurance- pay a fine when filling tax returns no auto insurance- against the law; ticket, fine, or worse others- could leave a person in severe financial distress
with some policies, insurance company must cover
pre-existing conditions
personal risks
premature death; old age; sickness; unemployment
provides protection against most risks to property such as fire, theft, and some weather damage
property insurance
mortgage insurance
protects a lender's investment in the event the homeowner defaults on the home's mortgage. MI is a financial assurance in which the insurer assumes a certain percentage of the lender's risk. Lenders typically require mortgage insurance for mortgages with down payments of less than 20 percent.
how is health insurance paid?
rarely paid in full by the employer; the portion the employee pays is deducted from the employee's pay
Health Maintenance Organization
relatively low premiums; use a primary care physician who must refer you if you need a specialist; charges based on negotiated agreement w specific doctors for health care
for individuals who live in a dwelling that is owned by another person (doesn't cover the dwelling; just possessions)
renter's insurance
if a policy covers _____________ value, it is more _____________ than a policy without this coverage.
replacement; expensive
the chance of injury, damage, or economic loss
risk
to share or reduce risks that no single member could handle on their own
risk pooling
what reduces an exposure to financial loss by spreading the risk among many members or companies?
risk pooling
it is important to do comparison __________.
shopping
liability risks
someone gets hurt on your property; your dog bites someone
temporary insurance that pays face value if the insured dies within a specific period of time
term life
collision insurance is terminated when?
the vehicle is older and its value has dropped significantly
annual deductible
the yearly fixed amount or percentage of an insurance claim that you have to pay before the insurance company will pay. For example, if your health insurance has a $300 deductible that means that you have to pay the first $300 in medical expenses, and then your insurance company will pay any additional covered expenses.
level premiums and protection which builds cash value and can be borrowed from
whole life
is collision insurance optional?
yes