finance 3440- final
________________ was included in the original Social Security Act in 1935, but was defeated by strong opposition from the AMA.
Compulsory health insurance
____________ allows the policy holder to convert the term policy to a permanent policy; _________ allows a decrease of the death benefit over its term; and __________ allows an increase of the death benefit over time.
Convertible term; decreasing term; increasing term
Family's monthly take- home pay plus spouse's income.
Current monthly living expenses
_________ products offers lifetime protection.
permanent or whole life insurance
In 1939, the first Blue Shield plan was organized by physicians in California to offer ______________.
prepaid surgical expense coverage
As a result of people not paying their hospital bills, several hospitals initiated _____________ to guarantee their revenues.
prepayment health plans
Unlike the Blue Cross approach, commercial insurers provided coverage on a ____________ basis, providing payment up to a specified dollar maximum per day while the insured was confined to a hospital, or a specific limit of coverage for various surgical procedures.
reimbursement
Are patients required to use a preferred provider in a PPO?
No, but deductible are cheaper if they do
Whole life premium pays for 2 things:
1. Insurance protection 2. Legal reserve
Disadvantages of term life insurance
1. No savings feature 2. Premiums increase 3. You may outlive your policy
Advantages of term insurance:
1. Policies are renewable 2. Lower premiums 3. Cover a specific period of time
As of 2017, HMO's enrolled about _____ of covered workers in the U.S. - Has ongoing criticism about the quality of care being compromised due to the heavy emphasis on cost control
14%
In the _______, commercial insurance companies began to market hospital and surgical expense insurance.
1930s
Subscribers pay an annual fee and in return receive comprehensive health care. This is what HMO's use
Capitation
Additional child care if the husband works and the wife must return to work; these costs can amount to more than $15,000 a year in some areas.
Child care/ private school
The insurer usually pays 80% of the usual and customary cost, and the insured paid the other 20%, which is known as ______
Coinsurance
Estimate if life insurance would be needed to fund your children's college education (public or private).
College Fund
The tax code change permits _______ to deduct health insurance payments as a business expense in computing their taxes
Corporations
Today, _________ have replaced fee for service plans as the dominant force in U.S. health care
Managed care organizations
Type of Health insurance - they have contracts with health care providers and medical facilities to care for people at reduced costs
Managed care organizations
The average cost of a funeral is _________, but can double if you include flowers, monuments, concrete vaults, or cemetary expensees
$4000
With a ________, the premiums you pay are generally fixed or level for a specified period, typically 5 or 10 years. Some longer term policies guarantee that the premium will not increase during the term, but some do not, enabling the insurance company to raise the premium during the policy's term.
Level term policy
These plans allowed insureds a lot of freedom to select their own physicians and other health care providers. These plans paid cash benefits for covered services up to maximum limits, and cost control was not heavily emphasized.
Traditional
T/F: Dividends are not subjected to taxation
True
The first plan was the ____________ in 1798, which called for compulsory salary deductions to pay for hospitalization for the seamen.
U.S. Marine Hospital Service
If you have a good health insurance policy, most expenses may be covered...if not, your estate may have to pay thousands to doctors and hospitals. Some life-insurance policies have a "living needs benefit" (using it though reduces your death benefit).
Uninsured medical expenses
The financial impact of premature death is most significant for those __________, therefore the need for life insurance is greatest for these individuals as well.
with dependents to support
Several approaches may be used to assess what levels of life insurance, if any, are required for individuals or families, but a practical and accurate method is the __________. This technique estimates the present value of future income and expense cash flows to the surviving spouse, and compares that value to the current value of his/her assets to determine adequacy of life insurance coverage.
"needs approach"
An HMO may be sponsored by:
- A group of physicians - Hospital/ medical school - Employer - Labor Union - Consumer Group - Insurance company - Blue Cross and Blue Shield
The benefits of a permanent life insurance are guarenteed for
As long as you live
Cash/ Savings account, IRA, Stocks/Bonds/Mutual funds, Real estate, lump sum benefit, life insurance
Assets
Life insurance can be purchased by individuals or as part of __________ offered by an employer, an important employee benefit in the U.S.
Group Life Insurance
The distinguising characterisitc of a ______ ______ ________ is that the ____ not only provide for the financing of health care, but is also delivers that care
Health Maintenance organizations
The first group plan for employees, organized by Montgomery Ward in 1910, was intended to protect workers from loss of income due to _____
Illness
In term life insurance, do premiums increase or decrease each time a policy is renewed?
Increase
Premiums for term insurance are _______ than for permanent insurance
Lower
________ is a general term for medical care plans that provide services to its members in a cost-effective way. Outlined and briefly discussed below are the major types of ________ plans today, including health maintenance organizations (HMOs), preferred provider organizations (PPOs), and other plans.
Managed care
________, a state-federal medical assistance program for low-income persons.
Medicaid
All outstanding debts to be paid after your death including car loans, installment loans, and credit-card balances.
Other debt Repayment
Most term policies are ________ which means that no evidence of insurability is required to renew a term policy for additional periods
Renewable
Term life insurance does not provide a ______ feature called cash value
Savings
Term insurance provides coverage for a __________, therefore is is ideally suited for meeting specific needs such as getting children through college or retiring a mortgage in the event of your death
Specific period of time
_________ is a simple product which covers you for a specific term such as 1, 5, 10, 20, or 30 years. At the end of that period you can usually renew the policy or buy a new one. It is a relatively cheap policy compared with other types of insurance. If you need a lot of insurance as families with young children likely do, then this policy may be the only affordable way to buy enough coverage.
Term insurance
Permanent life insurance can also be called
Whole life
Permanent life insurance commences at the age when:
You begin the policy
Estimate the expenses your survivors will have to pay when you die: federal estate taxes, state inheritance taxes, funeral costs, fees for settling your estate, and any uninsured medical bills you leave behind.
Your final Expenses
Federal/ State Taxes, funeral costs, Settling your estate, Uninsured medical expenses
Your final expenses
Family expense fund, currenly monthly living expenses, future monthly living expenses, expected monthly income, expected annual shortfall
Your survivor's future income/ expenses
Employees today ___________ on the value of the health insurance benefits paid by their employers.
are not taxed
The first health plans in the U.S. were designed to ___________ workers for loss of income when an accident or illness caused extended disability
compensate
Insurers, employers, and public policy makers began to look for ways to change the way in which health care was financed in order to give providers an incentive to ________ medical expenses.
control
HMO's were heavily criticized in the 1990's and 2000's for failing to _________, while physicans complained of restrictions on patient visit times and rules that interefered with the quality of care.
control costs
The price of term insurance _______ increase as you get older, but your insurance needs will likely decrease as well, so term insurance in smaller amounts may still be your most affordable option.
does
Over time, most people were covered under the ___________ form of health insurance
fee for service plan
During the years immediately following Medicare in 1965, the cost of health care (and of private health insurance) ____________ dramatically and attention turned to the problems inherent in the fee-for-service system.
increased
The most popular term product is the ______ (99% of new term policies issued in 2015).
level term policy
Health care development in the U.S. was further improved in 1954 when the Internal Revenue Service Code clarified the ___________ status of an employer's contributions to health care premiums.
tax exempt
____________ products offer temporary life insurance coverage
term insurance
During World War II and after, ___________ prevented U.S. firms from offering higher wages to attract employees; therefore they began to offer more generous benefits including health insurance through Blue Cross/Blue Shield and other private insurers.
wage controls
For over a century, __________ life insurance has been the main product of the U.S. life insurance industry
whole
Through the years, _________ has become fancier/more expensive, but it remains the product of choice for many insurance companies their agents, and customers, despite its high costs.
whole life
Before there was social security or a welfare system, small ____________ were sold to replace income if breadwinners died.
whole-life policies
At the end of 2015: 814 life insurance companies were in the U.S.; approximately 40% of all life insurance in force (face amount) was Group Life Insurance, _____ was Individual Life Insurance, and _____ was Credit Life Insurance.
59%- individual 1%- credit life
For term insurance, you may outlive your coverage because it is generally not renewable in your ______ (age)
70's
Traditional fee for service plans accounted for _____ of workers in the U.S. in 2017
<1%
Some whole-life policies pay ______ annually, based upon company's investment earnings, death benefits paid and other expenses
Dividends
As a general rule families with two wage earners should have at least three months of disposable income in an emergency fund.
Emergency fund
Estimate the amount of monthly income your family will have after you are gone: spouse's income, Social Security survivors' benefits and any income from your company's pension plan. Practically speaking, spouses under age 65 who earn at least $30,000 will receive no survivor's benefit; surviving children receive social security benefits until they are 18, or 19 if still in high school.
Expected monthly income
Amount of money your dependents will need to live on after you die, subtracted from the income they can expect from various sources.
Family expense fund
For most families federal estate taxes will not be a major consideration, particularly with the 2010 Tax Relief Act of 2010 which exempts up to $5 million in estate inheritance from taxation. In most states if you owe no Federal estate taxes you won't owe state inheritance taxes either.
Federal and State taxes
PPO's do not provide services on a prepaid basis, but instead are paid on a ________ basis at the time service is delivered
Fee for service
Under this plan, the insured coud use any medical provider (doctor and hospital) and then send the bill to the insurance company that paid for all or part of it. Usually a deductible was involved
Fee for service
In return for a fixed monthly fee, the individual receives virtually all the medical care required during the year. There may be a nominal charge, on the order of $10-15, paid by the participant when visiting the physician, but this charge is the same regardless of the service rendered. The subscriber is required to choose a primary-care physician or PCP (also know as the gatekeeper), who is responsible for determining what care is received and when the individual is referred to specialists. If the PCP decides the patient requires the services of a specialist, the patient is referred to a specialist in the HMO network. If the network does not include a specialist of the type required, referral is made to a specialist outside the network. Emergency care services are provided outside the network when there is a sudden onset of an illness or injury, which if not immediately treated, could jeopardize the subscriber's life or health.
Fee- for-service system
Estimate the percentage of the amount you estimated above that your family will need to live on after your death: 75% is usually a reasonable figure to cover food clothing, rent or mortgage payment, property taxes, transportation, insurance, utilities, medical care, and entertainment.
Future monthly living expenses
In 1965, Congress amended the Social Security system by establishing the ____________ to provide medical expense insurance to persons over age 65.
Medicare Program
Emergency fund, childcare/ private school, college fund, mortgage repayment, other debt repayment
Other future expenses
As of 2017, ______ are the most popular U.S. health care plans, with enrollment of 48% of covered employees
PPO
Contracts with a network of health care providers for medical services to its members at a reduced (discounted) rates
PPO
Most ____ do not use a gatekeeper physician, and employees do not have to get permission from him/her to see a speacilist
PPO
Which is more expensive, permanent or term insurance?
Permanent
Legal process to validate wills
Probate
____________ is considered to be the forerunner of the Blue Cross plans, which were organized by a group of hospitals to permit and encourage prepayment of hospital expenses. They offered subscribers contracts that promised a semiprivate room in a participating hospital when the insured was hospitalized.
The Baylor plan
The permanent life policy accumulates _________ value, an amount policyholders receive if they terminate their coverage. Policyholders can also borrow against _______ value through a policy loan.
cash-surrender
Of the number of new individual life policies purchased in 2015, 62 percent were ______ which made up 31 percent of the total face amount issued.
permanent (whole life)
Permanent or whole life policies are significantly more ________ than term insurance. As an example, $250,000 of coverage for a 45 year old man might cost $300/yr for the first year of a top-rated annual-renewable term policies, but it may cost approximately $4000/yr for that much coverage from a traditional whole-life policy. The term policy would not cost that much until the 16th year at the earliest, but by that time the man would be 61 years old; he would probably no longer need so much insurance coverage.
expensive
In 1929, Baylor University Hospital enrolled public school employees in Dallas, many of whom were women of child-bearing age, in a health plan that guaranteed 21 days of hospital care at Baylor for a premium of $6 a year ($85/yr. in 2013, inflation-adjusted). This marked the beginning of __________________ in the U.S.
group health insurance
New types of insurers emerged that not only offered risk financing, but the delivery of health care as well. The prototype of this type of organization was the ________________, which offered a more direct relationship between the provision of health care and its financing, and by the 1980s, ______ grew from local healthcare cooperatives in the 1970s to large national corporations.
health maintenance organization (HMO)
Consequently, the financial problems of premature death have been reduced by these longevity trends, but the three major causes of death in the U.S. (____,_______,____) persist as major causes of premature death
heart problems, stroke, and cancer
Many people need life insurance protection against the premature death of the head(s) of the family when
his/her (their) deaths result in significant financial hardship for surviving family members or loved ones.
The level premiums for a permanent life policy offer _________ protection to age 100, and are usually fixed for life
lifetime
In 1949, commercial insurers introduced a form of catastrophe medical expense insurance called ____________________, designed to pay sizable bills associated with serious illness both in and out of the hospital.
major medical insurance
Private enterprise discovered a way to address rising health care costs via the concept of ______________, which represented a change not only in the financing of health care, but in its delivery as well
managed care
The term ____________ is also used to refer to the variety of case management procedures that are now used by virtually all health insurers as cost control measures. Even where indemnity plans are offered, they now contain cost-containment features that encourage efficient provision of care.
managed care
All _______________ involve an arrangement between insurers and a selected network of providers and they offer policyholders significant financial incentives to use the providers in the network.
managed care plans
Part of a whole life premium pays for insurance protection, called the _______, and the other part goes into the legal reserve that is used later to pay for the increasing cost of insurance protection
mortality charge
Annual-renewable term policy premiums _______ each year that you renew the policy. The annual renewable policy, however, is no longer a top selling term insurance product.
rise
When the term ends for a renewable level term policy, premiums will _______ to reflect the new age of the insured.
rise
The nature of U.S. Health plans changed during ___________, when some hospitals failed because people could not pay their bills.
the Great Depression
(T/F) A whole-life policy may be appropriate for people starting families in their forties or fifties who need coverage late in life when term insurance will not necessarily be more economical, or for those who want coverage throughout their lifetimes, not just for certain periods of time.
true
There are numerous basic types of permanent insurance, but we will only focus our discussion upon ___________. Other permanent life insurance policies include universal life, variable life, and variable universal, which offer varying degrees of flexibility in premium and death benefits
whole life insurance
