Exam 3 Flashcards
CH 8,9,10
Insurance
protection against possible financial loss
Hazard
anything that increases the likelihood of loss through some peril
Risk managment
an organized plan for protecting yourself, your family, and your property that reduces financial losses caused by destructive events
General risk management techniques
Risk avoidance, risk reduction, risk assumption, & risk shifting
Risk avoidance
Choosing not to participate at all in any kind of heavy physical activity
Risk assumtion
taking on responsibility for the negative results of a risk
Self insurance
setting up a special fund possibly from savings to cover the cost of a loss
Risk shifting
In exchange for the fee you pay, the insurance company pays for your losses
Deductible
the set amount that the policyholder must pay per loss on an insurance policy
premium
the amount of money a policy holder is charged for an insurance policy
coverage
the protection provided by the terms of an insurance policy
policy
a written contract for insurance
liability
legal responsibility for the financial cost of another person’s losses or injuries
risk reduction
decreasing the likelihood that risk will cause you harm
Broad form
covers personal property against perils specified in the policy
comprehensive form
protects personal property against all persils, not specifically excluded in the policy
homeowners insurance
coverage for a place of residence and its associated financial risks
What all does renters insurance cover?
Personal property, additional living expenses, & personal liability and related coverage
household inventory
a list or other documentation of personal belongings, with purchases dates and cost information
What all is covered by a homeowners policy
personal property, additional living expenses, personal liability and related coverage, specialized coverage, & the building in which you live and other structures on the property, along with detached structures such as garage, toolshed, plants, & trees
Influences that affect premium
Location of home, policy type, & type of structure
HO-3 coverage inlucdes
windstorms, theft, smoke, fire and lightning
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
Basic health insurance coverage
Hospital expense insurance, surgical expense insurance, and physician expense insurance.
hospital expense insurance
Pays part or all of hospital bills for room, board, and other charges.
surgical expense insurance
Pays part or all of the surgeon’s fees for an operation.
physician expense insurance
Provides benefits for doctors’ fees for nonsurgical care, X rays, and lab tests.
coinsurance
A provision under which both the insured and the insurer share the covered losses.
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.
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.
major medical expense
pays the large costs involved in long hospital stays and multiple surgeries, and it covers every type of care and treatment prescribed by a physician, in and out of a hospital.
Managed care is offered by
Point-of-service plans
Health maintenance organizations
Preferred provider organizations
health maintenance organization (HMO)
A health insurance plan that provides a wide range of health care services for a fixed, prepaid monthly premium.
preferred provider organization (PPO)
A group of doctors and hospitals that agree to provide health care at rates approved by the insurer.
point-of-service (POS) plan
A network of selected, contracted, participating providers
medigap insurance
Supplements Medicare by filling the gap between Medicare payments and medical costs not covered by Medicare.
disability income insurance
Provides payments to replace income when an insured person is unable to work.
higher or lower premiums are charged on life insurance policies for those likely to die sooner
higher
life expectancy in the US is increasing or decreasing?
increasing
what is life insurance?
when a person joins a risk-sharing group known as an insurance company and purchases a contract also called an insurance
policy
nonparticipating dividend
life insurance that does not provide policy dividends; nonpar policy
participating policy
life insurance that provides policy dividends
term insurance
life insurance protection for a specified period of time; for customers, known to be best value; aka temporary life insurance for
What is the Easy Method?
Used for estimating life insurance, “typical family” will need 70 percent of your salary for 7 years before they adjust to the financial consequences of your death
What are the different types of terms?
renewable, multiyear level, conversion, decreasing & return of premium
renewable term
ends at the conclusion of the term, but you can continue it for another term
multiyear level term
guarantees that you will pay the same premium for the duration of your policy
conversion term
the type that allows you to change from term to permanent coverage; has a higher premium
whole life insurance
An insurance plan in which the policyholder pays a specified premium each year for as long as he or she lives
cash value
The amount received after giving up a life insurance policy.
universal life insurance
a whole life policy that combines term insurance and investment elements
nonforfeiture clause
A provision that allows the insured not to forfeit all accrued benefits.
rider
A document attached to a policy that modifies its coverage.
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.
