Economics: Life Insurance

Preferred Provider Organizations (PPOs)

-Arrange with specific doctors, hospitals, and caregivers to provide services at reduced costs to plan members. -Offers more of a choice -Can go outside you plan for extra cost -Premiums are higher, deductibles are lower

Point-of-Service Plans ( POSP)

-Connects you with a primary care doctor ( your point of service) -Supervises your care -Makes referrals -Provide the freedom of PPO with the low cost of HMO

appraisal

-an estimate of the current value of your property

Term life insurance

-provides protection for a specific period of time. (1 year, 5 years, 10 years, of 20 years.) -When the term ends so does the protection -Policies are renewable at higher rates. -This may be the best choice for people who need insurance but can't afford high premiums.

Personal risk

-risks that affect you directly (Illness of disability to you or an immediate family member)

Property risks

-risks that affect your personal property -Car theft -House fire

Transference

-shifting the risk to someone else -Purchasing insurance ( transfer risk to insurance company)

Avoid

-taking steps to eliminate risks -Avoiding dangerous areas

Reduction

-the way of minimizing risks that you can't eliminate -Wearing a seatbelt

cost of home insurance depends

-type and amount of coverage (-higher the amount of protection purchase the more covered) -size of the deductible(higher the deductible is the lower insurance premium) -risk factors where you live(the type of home you own and its location influence premium rates) -the insurance company( the cost of insurance premiums varies from company to company) -opportunity for discounts( check with your insurance agent to see if qualify for premium reduction)

Beneficiary

A person of organization named by a policyholder to receive that person's assets of money after the policyholders' death.

Managing risks: ARRT

Avoid, Reduction, Retention, Transference

COBRA

Consolidated Omnibus Budget Reconciliation Act -Gives workers the right to continue group coverage for up to 18 months after

Decision making process

Identify the risk Assess the risk Handle the risk Make a decision

Pip

Personal injury Protection

Copayment

a flat fee the patient must pay for medical services at the time of service (appointments and prescriptions)

Insurance protection

a form of risk management that pools the premiums of the large group of people to cover the expenses of a smaller number within the group who suffers losses

Coinsurance

a percentage of the service cost that patients pay

Inpatient

a person whose care requires a stay in a hospital

Endorsement

an attachment to an existing insurance policy

Pre Existing Conditions

an illness of injury someone had prior to signing up for insurance

Renters insurance

covers losses due to damage or loss of personal property and possessions

umbrella policy

covers losses up to a higher amount of homeowners insurance

Workers compensation tax

covers medical care and pays for a portion of lost wages with work related illness of injury. Death benefits are provided for survivors

Medical payments/PIP

covers medical expenses for you and any person injured in or by your car

replacement cost

covers the cost of replacing what you lost.

Property protection

insures against financial loss due to damage or loss of dwelling and personal property

Risk

is a measure of the likelihood that something will be lost

Medicaid

is eligible for low income persons with certain disabilities

A deductible

is the amount you must pay toward your medical expenses before your insurance company begins to pay.

Exclusions

medical services that are not covered

Health insurance

offers protection on specific medical expenses

Collision insurance

pays for damage to your car due to an auto accident or collision

Comprehensive physical damage insurance

pays for loss or damage to your car from fire, theft, falling objects, earthquake, flood, riot, civil commotion, and collision with a bird or animal

Liability protection

protects a homeowner if others are injured on the policy holder's property

Bodily injury liability

protects you when you are responsible for an accident that results in injury or death of others

Property damage liability

protects you when you are responsible for an accident which damages the property of others.

Medigap

provided pay private companies to cover copayments and deductibles

Life insurance

provides financial security for you and your family

The Affordable Care Act

provisions for children to maintain of family policies until 26

Some auto insurance policies also include:

roadside assistance and rental reimbursement

Premium

the amount of money regularly paid to insurance company for a policy

actual cash value

which is the replacement cost minus depreciation (a decrease in value of the property as a result of age or wear and tear

The cost of auto insurance depends on:

-Driver classification -Rating territory -Premium discount eligibility -Car's year, make and model -Deductible amount -Coverage amount

Managed care plans

-Health Maintenance Organization (HMO) -Preferred Provider Organizations (PPOs) -Point-of-Service Plans (POSP)

Endowment insurance

-Pays the face value of the policy to the beneficiaries if the policyholder dies before the endowment ends. -It pays the face amount to the insured if they live beyond the endowment period -Combination of protection and savings -There are high premiums and possible tax consequences

Universal life insurance

-Permits adjusting premiums, face value, and level of protection -Offers investment features -Offers flexibility on the amount of premiums and the level of protection -Earnings keep pace with the market rates, you don't pay taxes on earnings until you cash in your policy.

Home and auto Insurance provides what two basic types of coverage?

-Property protection -Liability protection

Health Maintenance Organization (HMO)

-Provide a list of participating physicians from which you choose a primary care doctor. -Your doctor and referral specialist from the HMO will determine which treatments and procedures are covered. -If you go outside your plan you pay part of all of the bill.

what should you consider when choosing a plan?

-Shop around if looking for yourself. -Consider services, providers, and cost

The amount and type of life insurance protection depends on what two key factors?

-The amount of protection (based on lost earnings, current and future needs of survivors, burial costs and unpaid debts) -Types of protection ( group life insurance, individual policies, guaranteed renewability, double indemnity/ accidental death, convertible provisions)

Uninsured and underinsured motorist insurance pays for:

-You and your passengers injuries caused by an uninsured of hit and run driver. -Covers you driving, riding, of walking

Adjustable life insurance

-You can revise your adjustable life insurance policy as your needs change. -You can raise and lower your premiums, face value, and premium payment period. -The disadvantage is that you have to monitor your coverage.

Fee- for-service plan

-a health care plan that pays for covered medical services after treatment is provided -You can usually go to any licensed health-care provider of accredited hospital of your choice

Speculative risk

-a risk that may result in financial gain of loss -Gambling -Stocks

Liability risk

-also called legal risk; possibility of losing money of other property as a result of legal proceedings -Texting and driving -Breaking your neighbors' window

Retention

-assessing the risk and making financial preparations for possible future loss -Rainy day fund

Medicare

-available to eligible citizens age 65, some under 65 with certain diseases of disabilities -companies contract with Medicare to combine part A and B (hospital insurance and medical insurance)

When choosing a company, agent, and policy...

-check Companies reputations -Compare premiums charged by different companies for the same types of coverage. -Choose an agent who explains things clearly and handles policy revisions and claims promptly.

Long term care

-covers certain costs of care in nursing homes, assisted living facilities, and at home -Cost varies -Premium increases with age

No-fault auto insurance:

-eliminates the fault finding process in settling claims -Each policyholder makes a claim to his or her own insurance company regardless of who is at fault -It is designed to speed up payments to accident victims and lower insurance rates by reducing court trials to determine fault

What should you consider before getting home insurance?

-find out how much it would cost to rebuild your home, should buy enough insurance to rebuild it if it gets completely destroyed

Limited payment policies

-offers lifetime protection -Premium payments are made for a stated period of time, of until you reach a certain time (45). -Premiums are higher and cash value builds faster than standard whole life coverage.

Disability insurance

-pays a portion of income lost when a worker is unable to work for a prolonged period due to illness of injury. -Short term requires a waiting period up to 14 days and provides coverage for up to two years -Long term may have a waiting period of several weeks of months and pays for years

Variable life insurance

-premiums are fixed. -Insurance is combined with an investment feature -The death may be higher than the guarantee, depending on the investment earnings -The disadvantage is it may not offer the best investment opportunities.

Whole life insurance

-provides basic lifetime protection as long as you pay your premium. -Called straight life insurance -Coverage builds cash over the years that the policyholder would receive if the policy is received before death. -You may be able to borrow against cash value, but benefits are reduced by the amount of the loan

Pure risk

a risk with a possibility of loss but no possibility of gain

Health Savings Account (HSA)

a tax advantage savings account for people with high deductible health plans (HDSPs) -High deductible before insurance -Low monthly premium -Can contribute pretax dollars into an HSA and use the money for healthcare costs, tax penalties apply for other uses.

Managed care plan

a type of health-care plan in which the insurance company contracts with specific doctors, hospitals, and other health-care providers to deliver medical services and preventative care to members at reduced cost.

Children's Health Insurance Program (CHIP)

gives federal funds to states to provide health insurance to those 18 and younger. Families earn too much to qualify for Medicaid but not enough for private health insurance.