Insurance Flashcards
the chance of a financial loss from your property or to you personally
risk
a method of transferring risk
insurance
a business that agrees to pay the cost of potential losses in exchange for a fee
insurer
your insurance contract; states what has to happen for insurers to pay
policy
person/company protected against the loss
insured
person/company who owns the insurance
policyholder
the fee you pay to insurer
premium
putting the insured back in the same financial situation they were in before the loss
indemnification
likelihood of a loss occurring; used to decide price of coverage
probability
the person named on the policy to receive the benefits (ex. w/life insurance); can have primary & secondary
beneficiary
sum of money to be paid for certain losses under terms of the policy; the MOST that insurer will pay
benefits
the amount of the loss that the policy holder is required to pay before the insurer pays anything
deductible
the chance of loss involving either your income or standard of living; ways to protect include: life insurance, health insurance, & disability insurance
personal risks
chance of loss/harm to ANY property you own; ex: car insurance, homeowners insurance, renters insurance
property risks
your actions can cause harm to somebody else or their property
liability risks
risk management process: 1-? 2-? 3-?
1-identify the risk
2-assess the seriousness/probability of the risk
3-handle the risk/decide what to do
4 techniques for handling risk:
1-avoiding it
2-reduce the risk
3-transferring the risk
4-assume the risk
6 ways of reducing insurance costs
1-taking a higher deductible 2-purchasing group insurance 3-payment options (paying up front) 4-taking advantage of discounts you have 5-combine all your policies into one place 6-comparison shopping
policy that protects renters from property & liability risks; property insurance of the property owner does not cover your property; usually based on a dollar value of your personal property
renters insurance
covers property owners for both property & liability risks
homeowners insurance
types of risks covered in homeowners insurance:
hazards such as fire, water, wind, & smoke, criminal activity such as theft or vandalism, liability
homeowners insurance coverage is for the _____ cost of property up to the coverage amount of the policy
replacement
with homeowners insurance personal property is usually covered as a __1__ of the real property __2__ (3: #-#_)
1-%
2-value
3-(50-75%)
with homeowners insurance keep an inventory of all your __1__ property & its __2__
1-personal
2-cost
with homeowners insurance you may need additional __1__ for some __2__ property items
1-coverage
2-personal
T/F: Homeowners insurance policies cover against normal wear & tear on your property
false
What is an “attractive nuisance” on homeowners insurance?
a dangerous place, object, or condition that is particularly attractive to children (like a swimming pool)
an insurance that most states require
automobile
premiums for automobile insurance are affected by:
model style & age of your car, driver classification (age, marital status, gender, driving record), location, how far you drive, purpose of your driving
what coverage for auto insurance protects against damage you do to another person or their property?
liability coverage
liability coverage is listed with 3 numbers…what do each indicate?
1-how much coverage you have for bodily injury
2-coverage for everyone in accident
3-property damage
what coverage (deductible) pays for your vehicle when you cause the accident ($ on what vehicle is worth)
collision coverage
what coverage is for damage to your vehicle other than collision? (ex. hail, tornado, vandalism, animals) *small deductible doesn’t cause insurance rates to go up
comprehensive coverage
what coverage is extra insurance that will pay some medical to you and your family in an accident as part of automobile insurance (& is really not needed)
Personal Injury Protection (or Medical Payments)
what coverage protects you against risk of being in an accident caused by someone who does not have insurance/does not have high enough coverage limits to pay for all damages?
uninsured/underinsured motorist
with what coverage will your insurance company pay for your car damage no matter who caused the accident?
no-fault insurance
this is for people who cannot buy insurance on their own; the insurance company decides premium
assigned risk pool
what is a liability insurance that picks up where other insurance companies left off (additional liability coverage)?
umbrella insurance
what provides funds to beneficiary(ies) when the insured dies?
life insurance
“expense not investment”
what are the two types of insurance?
term life insurance & permanent life insurance
what are the three types of permanent life insurance?
whole life, variable life, and universal life
within life insurance, this is a policy that remains in effect for as long as you pay the premium FOR A CERTAIN AMOUNT OF TIME
term life insurance
what are some cons to term life insurance?
what if term isn’t long enough? it is more expensive to replace as you age (but will be cheapest choice when younger)
what is the common year term for term life insurance?
20 years
within life insurance, this is a policy that remains in effect for your entire lifetime as long as you continue to pay the premium
permanent life insurance
within permanent life insurance, this is a policy where you keep paying premiums & it builds cash value (like a savings acct)
whole life
within permanent life insurance, this lets you choose investment funds which determine the amount that will be paid out
variable life
within permanent life insurance, this has neither premium nor death benefits fixed so you can change it
universal life
what are some pros to permanent insurance?
you’ll always have coverage regardless of health issues, variable life policies are tax free growth
what are some cons to permanent insurance?
more expensive, not typically great return on your $
insurance covered by Obamacare; is a plan offered through employer
Group Health Insurance
this is a law that allows you to keep your health insurance as long as you pay a premium even if you leave an employer
COBRA
this is a method to determine which health insurance policy will pay when more than one policy could cover
Coordination of Benefits
this is a group of health care providers that agree to provide services for set fees
PPO
what does PPO stand for?
preferred provider organization
this is designed to be used with a high deductible plan that $ can be set into for health insurance; get a tax deduction for it
HSA
what does HSA stand for?
health savings account
this is the amount you have to pay before health insurance kicks in; for health insurance this is annual (for auto insurance it is by occurrence); may differ based on how many people are covered
deductible
when you have to pay a flat fee for certain services (within health insurance)
co pay
the % you have to pay after the deductible is met (within health insurance)
co-insurance
the maximum amount you have to pay for co-insurance; sometimes will include deductible, sometimes it won’t
out of pocket limits
premium = __1__ + __2__ + __3__
1-deductible + 2-co-insurance + 3-out of pocket limits
