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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
Occupational disability
Type of insurance that provides income for a person that can't do the job they were trained to do
25
Out of pocket
What you have to pay
26
Permanent disability
Disabilities that are not expected to end
27
Policy
Describes the type of coverage in an insurance agreement
28
Premiums
Amount you pay to purchase different types of insurance
29
Renter's insurance
Type of insurance that covers for personal belongings and liability that may occur from accident in rental home (or dorm)
30
Restoration services
Part of identity theft insurance that assigns a counselor to clean up the mess from the stolen identity
31
Self-insured
Condition of wealth where you no longer need outside insurance to cover a loss
32
Short term disability
Often used to describe an insurance policy that insures one's income for the immediate future after an incapacitating event
33
Stop-Loss
Total out of pocket expense for health insurance; once reached, insurance will pay 100%
34
Term insurance
Life insurance coverage for a specified period of time
35
Universal life
Type of insurance policy similar to cash value but with better projected returns
36
Variable life
Type of life insurance like cash value but buys into mutual funds to project better returns
37
Whole life insurance
Life insurance that contains low-yield savings plan within life insurance policy, more expensive than term insurance
38
What is the purpose of insurance?
To transfer risk
39
What are the basic types of insurance needed?
Homeowner's/renter's, auto, health, disability, long-term care, identity theft, life
40
If you have an older car what should you consider dropping?
Collision
41
What is the time between the disabling event and the beginning of payments called?
Elimination period
42
What are some things you can do to decrease the cost of insurance policies?
Raise the deductible, shop around for rates, take advantage of applicable discounts
43
Explain at least 2 ways you can save on auto insurance.
Drop collision on older cars, raise your deductible if you have a full emergency fund, carry liability, shop around
44
Why do you need renter's insurance if you don't own valuable items?
If there is damage to your buildings or an accident/injury at your place the insurance will cover the expenses
45
Explain why life insurance is not a good savings plan
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
When do you need renter's insurance?
Anytime you are renting a property, even staying in a college dorm
47
What should homeowner's insurance be?
"Guaranteed replacement cost"
48
What are some things you need to know about auto insurance?
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
List some keys to saving on your health premiums.
Increase deductible, increase stop-loss but never decrease your max pay, see if an HSA would make sense for you
50
Which type of disability insurance should you buy?
Occupational (own occ), usually only available for 2 years
51
What should your disability coverage be?
65% of your income
52
A _______ elimination period will ________ your premium cost.
Longer, lower
53
What percentage of people over the age of 65 will require long-term care?
69%
54
What kind of identity theft should you not buy?
The kind that only provides credit report monitoring
55
What does good identity theft protection do?
Includes restoration services that assign a counselor to clean up the mess
57
What is the most common instance myth?
Life insurance is a permanent situation
58
What are some things to remember when purchasing life insurance?
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
What are some types of insurance you should avoid?
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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