Chapter 7-9 Flashcards
Adjustable Rate Mortgage (ARM)
A home loan with an interest rate that can change during the mortgage term due to changes in market interest rates
Amortization
The reduction of a loan balance through payments made over time
Appraisal
An estimate of the current value of a property
Closing Costs
Fees and charges paid when a real estate transaction is completed
Condominion
An individually owned housing unit in a building with several such units
Cooperative Housing
A form of housing in which a building containing a number of housing units is owned by a nonprofit organization whose members rent the units.
Deed
A document that transfers ownership of property from one party to another.
Earnest Money
A portion of the price of a home that the buyer deposits as evidence of good faith to indicate a serious purchase offer.
Escrow Account
Money, usually deposited with the lending financial institution, for the payment of property taxes and homeowner’s insurance.
Lease
A legal document that defines the conditions of a rental agreement.
Mortgage
A long-term loan on a specific piece of property such as a home or other real estate.
Points
Prepaid interest charged by the lender
Title Insurance
Insurance that, during the mortgage term, protects the owner or the lender against financial loss resulting from future defects in the title and from other unforeseen property claims not excluded by the policy.
Zoning Laws
Restrictions on how the property in an area can be used.
Actual Cash Value
A claim settlement method in which the insured receives payment based on the current replacement cost of a damaged or lost item, less depreciation.
Assigned Risk Pool
Consists of people who are unable to obtain motor vehicle insurance due to poor driving or accident records and must obtain coverage at high rates through a state program that requires insurance companies to accept some of them.
Bodily Injury Liability
Coverage for the risk of financial loss due to legal expenses, medical costs, lost wages, and other expenses associated with injuries caused by an automobile accident for which the insured was responsible.
Collision
Motor vehicle insurance that pays for damage to the insured’s vehicle when it is involved in an accident.
Coverage
The protection provided by the terms of an insurance policy.
Deductible
The set amount that the policyholder must pay per loss on an insurance policy.
Endorsement
An addition of coverage to a standard insurance policy.
Financial Responsibility Law
State legislation that requires drivers to prove their ability to cover the cost of damage or injury caused by an automobile accident.
Hazard
A factor that increases the likelihood of loss through some peril.
Homeowners Insurance
Coverage for a place of residence and its associated financial risks.
Household Investment
A list or other documentation of personal belongings, with purchase dates and cost information.
Insurance
Protection against possible financial loss.
Insurance Company
A risk-sharing firm that assumes financial responsibility for losses that may result from an insured risk.
Insured
A person covered by an insurance policy.
Insurer
An insurance company.
Liability
Legal responsibility for the financial cost of another person’s losses or injuries.
Medical Payments Coverage
Automobile insurance that covers medical expenses for people injured in one’s car.
Negligence
Failure to take ordinary or reasonable care in a situation.
No fault system
A motor vehicle insurance program in which drivers involved in accidents collect medical expenses, lost wages, and related injury costs from their own insurance companies.
Peril
The cause of a possible loss
Personal Property Floater
Additional property insurance to cover the damage or loss of a specific item of high value.
Policy
A written contract for insurance
Policyholder
A person who owns an insurance policy.
Premium
The amount of money a policyholder is charged for an insurance policy.
Property Damage Liability
Motor vehicle insurance coverage that protects a person against financial loss when that person damages the property of others.
Replacement Value
A claim settlement method in which the insured receives the full cost of repairing or replacing a damaged or lost item.
Risk
Chance or uncertainty of loss; also used to mean “the insured.”
Umbrella Policy
Supplementary personal liability coverage
Uninsured motorist protection
Automobile insurance coverage for the cost of injuries to a person and members of his or her family caused by a driver with inadequate insurance or by a hit-and-run driver.
Basic Health Insurance Coverage
Hospital expense insurance, surgical expense insurance, and physician expense insurance.
Blue Cross
An independent membership corporation that provides protection against the cost of hospital care.
Blue Shield
An independent membership corporation that provides protection against the cost of surgical and medical care.
Coinsurance
A provision under which both the insured and the insurer share the covered losses.
Copayment
A provision under which the insured pays a flat dollar amount each time a covered medical service is received after the deductible has been met.
Disability Income Insurance
Provides payments to replace income when an insured person is unable to work.
Exclusive Provider Organization (EPO)
A hybrid health insurance plan where services are covered only if plan’s network providers are used (except in an emergency).
Health Maintenance Organization (HMO)
A health insurance plan that provides a wide range of health care services for a fixed, prepaid monthly premium.
Hospital Expense Insurance
Pays part or all of hospital bills for room, board, and other charges.
Long Term Health Insurance (LTC)
Provides day-in, day-out care for long-term illness or disability.
Managed Care
Prepaid health plans that provide comprehensive health care to members.
Medigap Insurance
Supplements Medicare by filling the gap between Medicare payments and medical costs not covered by Medicare.
Physician Expense Insurance
Provides benefits for doctors’ fees for nonsurgical care, X rays, and lab tests.
Point of Service plan
A network of selected, contracted, participating providers
Preferred Provider Organization (PPO)
A group of doctors and hospitals that agree to provide health care at rates approved by the insurer.
Stop Loss
A provision under which the policyholder pays a certain amount, after which the insurance company pays 100 percent of the remaining covered expenses.
Surgical Expense Insurance
Pays part or all of the surgeon’s fees for an operation.
Annuity
A contract that provides a regular income for as long as the person lives.
Beneficiary
A person designated to receive something, such as life insurance proceeds, from the insured.
Cash Value
The amount received after giving up a life insurance policy.
Double Indemnity
A benefit under which the company pays twice the face value of the policy if the insured’s death results from an accident.
Interest-Adjusted Index
A method of evaluating the cost of life insurance by taking into account the time value of money.
Nonforfeiture clause
A provision that allows the insured not to forfeit all accrued benefits.
Nonparticipating policy
Life insurance that does not provide policy dividends
Participating Policy
Life insurance that provides policy dividends
Rider
A document attached to a policy that modifies its coverage.
Term Insurance
Life insurance protection for a specified period of time
Universal life insurance
A whole life policy that combines term insurance and investment elements
Whole life insurance
An insurance plan in which the policyholder pays a specified premium each year for as long as he or she lives
