Chapter 20: Insurance
variable life insurance
- an insurance plan that resembles an investment portfolio
surgical insurance
- covers all or part of the surgeon's fees for an operation - typically lists the types of operations it covers and the amount allowed for each
medical payments coverage
- covers policyholders and family members if they are injured while riding in their car or another car - may also cover them if they are walking and are hit by car - also protects guests in car - pays for regardless who is at fault
permanent life insurance
- has cash value - investment feature
homeowners policy
- insures real and personal property - most common form of home and property insurance policy - HO- 3, 4, 5, 6, 7
under-insured motorist coverage
- insures you for losses caused by another driver whose coverage is insufficient
PPO
- involves several health care providers - providers charge set fees for services - medical treatment significant discount
financial responsibility law
- laws the protect the public from financial loss caused by drivers - make you legally responsible for any injuries you cause to people and for damage to the property of others
universal life insurance
- provides both insurance protection and a substantial savings plan - the investment portion of the policy earns a variable rate of return, which is usually higher than is paid on other types of cash value life insurance
individual health insurance
- rather expensive - require a physical exam and have a waiting period before the policy takes effect
Medicare
- social security law - designed to help people aged 65 and older and some disabled people pay for health care 1) hospital insurance 2) medical insurance
group health insurance
- the most popular way to buy health insurance - some companies sponsor
Medicaid
- to some low-income individuals and families
uninsured motorist coverage
-protects against hit-and-run / insurance-less drivers who cause injuries - only available to people who carry bodily injury liability insurance - covers guests, family, and insured - can not be at fault!! - also offers under-insured motorist coverage
major elements of a life insurance policy
1) Name of the insured 2) Amount of coverage (face value / death benefit) 3) Cost of the insurance AKA premium amount 4) Name of the beneficiary
two kinds of economic loss that home and property insurance protects you against
1) damage to your home or property 2) expenses you must pay to live somewhere else if your home is damaged and must be repaired or rebuilt 3) liability losses related to your property
cost of health insurance factors
1) extent of coverage 2) number of claims filed 3) age of the policyholder 4) number of dependents
health insurance sources
1) group 2) individual 3) HMO 4) PPO 5) govt programs
medical insurance classifications
1) hospital insurance 2) surgical insurance 3) regular medical insurance 4) major medical insurance 5) a comprehensive medical policy
two main categories of auto insurance protection
1) personal injury coverage 2) property damage coverage
three types of property damage coverage
1) property damage liability 2) collision 3) comprehensive damage
HO-5
Comprehensive Form: Expands HO-3 to include replacement cost coverage
HO-6
Condominium Form: covers personal belongings for condominium owners
HO-7
Country Home Form: provides coverage for agricultural buildings and equipment for non-farm business rural residents
HO-3
Special Form: covers all perils
HO-4
Tenants Form: covers personal belongings of renters
inventory
a list of personal property that you have insured - includes: brand name and description of each item, purchase price, date and place of the puchase
dependent
a person who must rely on another for financial support
assigned-risk plan
a plan where every automobile insurance company in the state is assigned a certain number of high-risk drivers, based on the amount of insurance each company sells
renters policy
a property and liability policy suitable for renters - covers household goods and personal belongings.. NOT real property
ordinary life policy
a type of whole life insurance where premiums for ordinary life insurance remain the same each year as long as the policyholder lives
insurance rates factors
age, record, marital status, credit rating, academic standing, purpose for car, number of miles driven, value and type of car, community of residency, amount of coverage and deductibles
renewable term insurance
allows the policyholder to continue term insurance for one or more terms without taking another physical examination
deductible clause
an amount you must pay before the insurance company pays a claim - reduces the premium cost
additional living expenses
an insurance feature that helps to pay for the living costs you would incur if something happened to your home
group life insurance
an insurance policy that covers a group of people
personal injury coverage
bodily injury liability, medical payments, uninsured motorist protection
comprehensive medical policy
combines the features of hospital, surgical, regular, and major medical insurance - one deductible
HMO
commonly consists of a staffed medical clinic to serve members - fixed monthly fee - entitled to a wide range of prepaid health car services - emphasize preventive health care, so do not cover treatment or care
personal liability coverage
covers claims from injuries to people or damage to property caused by you, your family, or even your pets
regular medical insurance
covers feeds for nonsurgical care given in the doctor's office, patient's home, or a hospital - policy states the amount payable for each visit/call - max number of visits covered - usually combined with hospital and surgical insurance
depreciation
decrease in value --> may affect the amount an insurance company will pay if the property is destroyed
limited-payment policies
designated by the number of years the policyholder agrees to pay on them - like ordinary life policies except that premiums are paid for a limited number of years or until a person reaches a certain age
long-term care insurance
fastest growing type of protection - provides long term care AKA daily assistance needed from illness or disability
compulsory insurance
insurance being mandatory to register a car, get a license, etc
workers' compensation
insurance plan that provides medical and survivor benefits for people injured, disabled, or killed on the job
bodily injury liability
insurance that covers people in other cars, passengers riding with the insured, and pedestrians - the insured and their immediate family are NOT covered
collision coverage
insurance that protects a car owner against financial loss resulting from a collision or rollover - does not cover injuries or damage - usually written with a deductible clause
property damage liability
insurance that protects a driver against claims if the insured's car damages someone else's property and the insured is at fault - does not cover damage to the insured's car
property insurance
insurance that protects you from the financial loss you would incur if some of your property were lost or destroyed due to fire, theft, vandalism, other hazards
term life insurance
insurance that provides financial protection from losses resulting from a death during a definite period/term - least expensive form of life insurance - ONLY form of PURE life insurance (not savings or investment features)
replacement insurance
insurance where the insurance company actually replaces an item that has been destroyed
cost containment
keeping costs down through coinsurance and deductibles
no-fault insurance laws
laws made in an effort to reduce insurance costs and speed up claim settlements
hospital insurance
pays most or all of the charges, like room, food, medical items, etc - most popular
whole life insurance
permanent insurance that extends over the lifetime
managed health care
programs that cover more than two thirds of Americans who have insurance through their employer - often provide lower-cost, comprehensive health care through networks of medical professionals - higher monthly premiums, but low/no deductibles, low co-payments, and little/no paperwork - HMO and PPO
personal property
property not attached to the land
real property
property permanently attached to land
comprehensive coverage
protects the insured against almost all damage losses except those caused from a collision or rollover
disability income insurance
protects you against the loss of income caused by a long illness or an accident
major medical insurance
provides protection against the high costs of serious illnesses or injuries - complements the other forms of medical insurance - have a deductible clause similar to that of the automobile collision insurance
face value
the amount of insurance coverage that was originally purchased and that will be paid upon the death of the insured
cash value
the amount of money that the insurance company will pay if the policyholder decides the insurance is no longer needed - longer you keep your policy, the higher the cash value will me
level term insurance
the amount of protection and the premiums remain the same while the insurance is in effect
decreasing term insurance
the amount of protection gradually becomes smaller, but premiums remain the same during term
perils
the causes of loss (eg fire, wind, theft)
beneficiary
the person named in the policy to receive the insurance benefits - often a spouse, children, etc
basic health coverage
the protection provided by regular medical, hospital, and surgical insurance
coinsurance
the sharing of expenses by the policyholder and the insurance company
insurance premiums factors
value of property insured construction of building and material number of claims on the property type of policy distance to nearest fire department and water supply amount of deductible credit rating of the insured