CEF 251 Exam 2

HO-7

Is intended to cover mobile homes and house trailers

policy limits

Often described as series of 3 numbers: 100/300/50 (recommended average coverage amount) $100,000 per person injured in an accident $300,000 for all people combined $50,000 for property damage

HO-4

Renter's insurance. Protects personal assets from events such as theft, fire, vandalism, and smoke.

common stock

a public company, certificate issued by a firm to raise funds that represent partial ownership in the firm

Deductible

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

lump-sum settlement

a single payment of all the benefits owed to a beneficiary under a life insurance policy

umbrella personal liability policy

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

Universal Life Insurance

a type of cash value or permanent life insurance where the excess of premium payments above the current cost of insurance is credited to the cash value of the policy, which is credited each month with a fixed interest .

Living Benefits

benefits that allow the policyholder to receive a portion of death benefits prior to death

Underwriters

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

Conversion Option

allows you to convert your term insurance policy into a whole life policy that will be in effect the rest of your life

non-forfeiture clause

allows you to receive the savings you accumulated if you terminate your whole life policy

renewability option

allows you to renew your policy for another term once an existing policy expires

discount on charge arrangement

an arrangement in which the preferred provider organization (PPO) pays a specific percentage of the health care providers' charges

per diem rate arrangement

an arrangement in which the preferred provider organization (PPO) pays the provider a specific sum for each day a patient is hospitalized

personal property floater

an extension of the homeowner's insurance policy that allows you to itemize specifics, as well as typically expensive and easily movable valuables. This is an all perils coverage. (Except War, Nuclear Fallout, etc.)

fee-for-service plan

health insurance that reimburses individuals for part or all of the expenses they incur from health care providers; individuals are free to seek care from a primary care physician or a specialist

individual investors

individuals who invest funds in securities

Health Insurance

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

Medigap insurance

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

long-term care insurance

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

life insurance

insurance that provides a payment to a specified beneficiary when the policyholder dies

disability income insurance

insurance that provides income to policyholders in the event that they become disabled

Underinsured Motorist Coverage

insures against bodily injury and drivers who have insufficient coverage

collision insurance

insures against costs of damage to your car resulting from an accident in which the policy holder is at fault

uninsured motorist coverage

insures against the cost of bodily injury when an accident is caused by another driver who is not insured

Coverage B: Medical Payments Coverage

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

comprehensive coverage

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

day traders

investors who buy stocks and then sell them on the same day

financial responsibility law

laws that require individuals who drive cars to purchase a minimum amount of liability insurance

whole life insurance

life insurance that continues to provide insurance as long as premiums are paid; not only provides benefits to the beneficiary but also has a cash value

Term Insurance

life insurance that is provided over a specified time period and does not build a cash value

mortgage life insurance

life insurance that pays off a mortgage in the event of the policyholder's death

Bonds

long-term debt securities issued by government agencies or corporations

replacement cost policy

pays you for the actual cost of replacing the damaged property with comparable property considering material, quality, and purpose

cash value policy

pays you for the actual cost of replacing the damaged property with comparable property considering material, quality, and purpose

growth stocks

stocks of firms with substantial growth opportunities

income stocks

stocks that provide investors with periodic income in the form of large dividends

Group Term Insurance

term insurance with generally lower than typical premiums that is available to people within a defined group

Settlement Options

the alternative ways a beneficiary can receive life insurance benefits in the event that the insured person dies

liability

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

standard deviation

the degree of volatility in the stocks return over time

primary market

the market in which new securities are originally sold to investors

secondary market

the market in which previously issued securities are traded among investors

installment payments settlement

the payment of the benefits owed to a beneficiary under a life insurance policy as a stream of equal payments over a specified number of years

Grace Period

the period of time you have to make your premium payment , without your policy lapsing. Typically 30 Days

risk

exposure to events or perils that can cause financial loss

Kentucky Minimum Auto Insurance Liability Limits

25/50/10

Private Stock

A certificate issued by a private company. They don't need to disclose any company information to general public. Shares are not traded on public exchanges

preferred stock

A public company A certificate issued by a firm to raise funds that entitles shareholders to first priority to receive dividends. Shares represent a piece of ownership in a company. Usually do not give shareholders voting rights

Variable Life Insurance

A type of universal life insurance, so a permanent life insurance, that provides insurance over a specified term and allows policyholders to invest residual funds, after the the term portion is paid, in various types of investments

Coverage A: Liability Coverage

Bodily injury liability coverage: protects against liability associated with injuries caused by the policyholder Property damage liability coverage: protects against losses that result when the policyholder damages another person's property with his car

Car Premiums are based on:

Characteristics of the car, personal characteristics, the insurance company

HO-6

Condominium owner's insurance. Protects personal assets from events such as theft, fire, vandalism, and smoke (review the specific policy to determine which events are covered).

HO-1

Protects against fire, lightning, explosions, hail, riots, vehicles, aircraft, smoke, vandalism, theft, malicious mischief, glass breakage

HO-2

Protects against the events identified in HO-1, along with falling objects, the weight of ice, snow, or sleet, the collapse of buildings, overflow of water or steam, power surges, and the explosion of steam or hot-water systems, frozen plumbing, heating units, air- conditioning systems, and domestic appliances.

HO-3

Protects the home and any other structures on the property against all events except those that are specifically excluded by the homeowner's policy. The events that are typically not covered by this insurance are earthquakes, floods, termites, war, and nuclear accidents. It may be possible to obtain additional insurance to protect against floods or earthquakes. This policy also protects personal assets against the events that are listed in HO-2.

HO-8

Protects the home from the same events identified in HO-1, except that it is based on repairs or cash values, not replacement costs.

HO-5

Protects the home, other structures on the property, and personal assets against all events except those that are excluded by the specific homeowner's policy. This policy provides coverage of the home similar to that provided by HO-3, but slightly more coverage of personal assets.

Money Market Securities

Short-term securities, such as Treasury bills or certificates of deposit, whose maturities are one year or less

beneficiary

a person named to receive the benefits from an insurance policy

interest payments / income settlement

a method of paying the benefits owed under a life insurance policy in which the company retains the amount owed for a specified number of years and pays interest to the beneficiary

Decreasing Term Insurance

a form of term insurance in which the benefits that will be paid to the beneficiary are reduced over time and the premium remains constant

Health Maintenance Organization (HMO)

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

Preferred Provider Organization (PPO)

a health insurance plans that allows individuals to select a health care provider and covers most of the fees for services; a referral is not required to to visit a specialist

managed health care plan

a health insurance policy under which individuals receive services from specific doctors or hospitals that are part of the plan

Point of Service (POS)

combines features of both HMOs and PPOs

employer self-funded health plans

company runs self-insured insurance program, collects premiums from employees, pays medical benefits as needed

home inventory

contains detailed information about your personal property that can be used when filing a claim

Risk Management

decisions about whether and how to protect against risk

portfolio managers

employees of financial institutions who make investment decisions

Exclusive Provider Organization (EPO)

exclusive network of providers; does not require PCP and referrals

Incontestability Clause

prevents the provider from voiding coverage due to a misstatement by the insured after a specific amount of time has passed

institutional investors

professionals responsible for managing money on behalf of the clients they serve

Homeowners Insurance

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

independent insurance agent

represent many different insurance companies, usually paid by commission only. May not have specialized knowledge of specific products.

range of returns

returns of a specific investment over a given period

Publicly traded indexes

securities whose values move in tandem with a particular stock index representing a set of stocks

Mutual Funds

sell shares to individuals and invest the proceeds in a portfolio of investments

Captive (or exclusive) insurance agent

works for one particular insurance company. Generally, paid with salary and commission. May not have the product you want/need. May be pushed to sell certain policies