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Capstone! > Ch 11- Insurance > Flashcards

Ch 11- Insurance Flashcards

0
Q

Beneficiary

A

The person who inherits your possessions when you die

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1
Q

Auto insurance

A

Insurance to protect a car owner in the event of an accident or damage to a vehicle

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2
Q

Break-even analysis

A

Method used to evaluate how wise a financial decision is based on how long it will take for that cost to break even

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3
Q

Cash value insurance

A

(Aka permanent life insurance) premiums include a death benefit & a plan to build savings within it, more expensive than term life insurance

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4
Q

What are the 2 main types of cash value insurance?

A

Whole life & universal life

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5
Q

Claim

A

Paperwork filed with insurance company to get money to cover a loss

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6
Q

Collision

A

Portion of auto insurance that covers losses due to an accident

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7
Q

Comprehensive

A

Pays for damage to your car that is not due to an accident

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8
Q

Co-pay

A

Paying a set amount per medical visit

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9
Q

Coverage

A

Applies to the amount of protection you have through insurance

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10
Q

Deductible

A

The amount you have to pay before insurance starts to cover the costs

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11
Q

Elimination period

A

Amount of time that passes after a disabling event before the insurance starts to pay benefits

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12
Q

Extended replacement cost

A

Part of homeowner’s insurance that pays a percentage beyond the insured price of the home for rebuilding in the event of loss. Need to update this or it will not cover the appreciation of the home

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13
Q

Guaranteed replacement cost

A

Part of homeowner’s insurance that pays for replacing damaged property without a deduction for depreciation & no dollar limit

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14
Q

HSA (Health Savings Account)

A

A tax-sheltered savings account for medical expenses that works with a high deductible insurance policy

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15
Q

Health insurance

A

covers you in the event of illness/injury

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16
Q

Homeowner’s insurance

A

Policy that covers a loss due to damage, theft, or injury in one’s home

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17
Q

Level term

A

You pay the same amount for the entire term of the policy

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18
Q

Liability

A

Policy that protects you from a lawsuit due to injury on your property or car accident

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19
Q

Life insurance

A

Type of insurance designed to replace income due to death

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20
Q

What are the two traditional types of life insurance?

A

Term and cash value

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21
Q

Long-term care insurance

A

Policy that covers in-home care or nursing homes. Recommended for 60 years or older

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22
Q

Long-term disability

A

Disability insurance designed to replace lost income for a period of 5+ years

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23
Q

Maximum payment

A

The amount insurance will pay before you are dropped from coverage. Keep at least $1 million max pay

24
Q

Occupational disability

A

Type of insurance that provides income for a person that can’t do the job they were trained to do

25
Q

Out of pocket

A

What you have to pay

26
Q

Permanent disability

A

Disabilities that are not expected to end

27
Q

Policy

A

Describes the type of coverage in an insurance agreement

28
Q

Premiums

A

Amount you pay to purchase different types of insurance

29
Q

Renter’s insurance

A

Type of insurance that covers for personal belongings and liability that may occur from accident in rental home (or dorm)

30
Q

Restoration services

A

Part of identity theft insurance that assigns a counselor to clean up the mess from the stolen identity

31
Q

Self-insured

A

Condition of wealth where you no longer need outside insurance to cover a loss

32
Q

Short term disability

A

Often used to describe an insurance policy that insures one’s income for the immediate future after an incapacitating event

33
Q

Stop-Loss

A

Total out of pocket expense for health insurance; once reached, insurance will pay 100%

34
Q

Term insurance

A

Life insurance coverage for a specified period of time

35
Q

Universal life

A

Type of insurance policy similar to cash value but with better projected returns

36
Q

Variable life

A

Type of life insurance like cash value but buys into mutual funds to project better returns

37
Q

Whole life insurance

A

Life insurance that contains low-yield savings plan within life insurance policy, more expensive than term insurance

38
Q

What is the purpose of insurance?

A

To transfer risk

39
Q

What are the basic types of insurance needed?

A

Homeowner’s/renter’s, auto, health, disability, long-term care, identity theft, life

40
Q

If you have an older car what should you consider dropping?

A

Collision

41
Q

What is the time between the disabling event and the beginning of payments called?

A

Elimination period

42
Q

What are some things you can do to decrease the cost of insurance policies?

A

Raise the deductible, shop around for rates, take advantage of applicable discounts

43
Q

Explain at least 2 ways you can save on auto insurance.

A

Drop collision on older cars, raise your deductible if you have a full emergency fund, carry liability, shop around

44
Q

Why do you need renter’s insurance if you don’t own valuable items?

A

If there is damage to your buildings or an accident/injury at your place the insurance will cover the expenses

45
Q

Explain why life insurance is not a good savings plan

A

You can become self-insured by following what Dave says, returns are historically low, when you die with cash value the insurance company keeps the cash value, the fees deducted from your return are extremely high

46
Q

When do you need renter’s insurance?

A

Anytime you are renting a property, even staying in a college dorm

47
Q

What should homeowner’s insurance be?

A

“Guaranteed replacement cost”

48
Q

What are some things you need to know about auto insurance?

A

You’re not a person, you’re a set of risks, they base their decision off of “risk factors”; prices vary; a low price is not a bargain if it takes forever to service a claim; look for a minimum coverage of $500,000; ask for discounts for safe driving; your idea of fair compensation will not match theirs; reread your policy before filing a claim

49
Q

List some keys to saving on your health premiums.

A

Increase deductible, increase stop-loss but never decrease your max pay, see if an HSA would make sense for you

50
Q

Which type of disability insurance should you buy?

A

Occupational (own occ), usually only available for 2 years

51
Q

What should your disability coverage be?

A

65% of your income

52
Q

A _______ elimination period will ________ your premium cost.

A

Longer, lower

53
Q

What percentage of people over the age of 65 will require long-term care?

A

69%

54
Q

What kind of identity theft should you not buy?

A

The kind that only provides credit report monitoring

55
Q

What does good identity theft protection do?

A

Includes restoration services that assign a counselor to clean up the mess

57
Q

What is the most common instance myth?

A

Life insurance is a permanent situation

58
Q

What are some things to remember when purchasing life insurance?

A

buy only low cost level term, do not forget your spouse, stay away from fancy options, kids only need enough for burial expenses, you need about 10 times your income

59
Q

What are some types of insurance you should avoid?

A

credit life and disability; credit card protection; cancer & hospital indemnity; accidental death; any insurance with cash value, investments or refunds; pre-paid burial policies; mortgage life insurance; duplicate coverage

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