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Personal Finance > Insurance > Flashcards

Insurance Flashcards

1
Q

the chance of a financial loss from your property or to you personally

A

risk

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2
Q

a method of transferring risk

A

insurance

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3
Q

a business that agrees to pay the cost of potential losses in exchange for a fee

A

insurer

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4
Q

your insurance contract; states what has to happen for insurers to pay

A

policy

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5
Q

person/company protected against the loss

A

insured

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6
Q

person/company who owns the insurance

A

policyholder

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7
Q

the fee you pay to insurer

A

premium

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8
Q

putting the insured back in the same financial situation they were in before the loss

A

indemnification

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9
Q

likelihood of a loss occurring; used to decide price of coverage

A

probability

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10
Q

the person named on the policy to receive the benefits (ex. w/life insurance); can have primary & secondary

A

beneficiary

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11
Q

sum of money to be paid for certain losses under terms of the policy; the MOST that insurer will pay

A

benefits

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12
Q

the amount of the loss that the policy holder is required to pay before the insurer pays anything

A

deductible

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13
Q

the chance of loss involving either your income or standard of living; ways to protect include: life insurance, health insurance, & disability insurance

A

personal risks

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14
Q

chance of loss/harm to ANY property you own; ex: car insurance, homeowners insurance, renters insurance

A

property risks

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15
Q

your actions can cause harm to somebody else or their property

A

liability risks

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16
Q

risk management process: 1-? 2-? 3-?

A

1-identify the risk
2-assess the seriousness/probability of the risk
3-handle the risk/decide what to do

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17
Q

4 techniques for handling risk:

A

1-avoiding it
2-reduce the risk
3-transferring the risk
4-assume the risk

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18
Q

6 ways of reducing insurance costs

A 
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
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19
Q

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

A

renters insurance

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20
Q

covers property owners for both property & liability risks

A

homeowners insurance

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21
Q

types of risks covered in homeowners insurance:

A

hazards such as fire, water, wind, & smoke, criminal activity such as theft or vandalism, liability

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22
Q

homeowners insurance coverage is for the _____ cost of property up to the coverage amount of the policy

A

replacement

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23
Q

with homeowners insurance personal property is usually covered as a __1__ of the real property __2__ (3: #-#_)

A

1-%
2-value
3-(50-75%)

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24
Q

with homeowners insurance keep an inventory of all your __1__ property & its __2__

A

1-personal

2-cost

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25
Q

with homeowners insurance you may need additional __1__ for some __2__ property items

A

1-coverage

2-personal

26
Q

T/F: Homeowners insurance policies cover against normal wear & tear on your property

A

false

27
Q

What is an “attractive nuisance” on homeowners insurance?

A

a dangerous place, object, or condition that is particularly attractive to children (like a swimming pool)

28
Q

an insurance that most states require

A

automobile

29
Q

premiums for automobile insurance are affected by:

A

model style & age of your car, driver classification (age, marital status, gender, driving record), location, how far you drive, purpose of your driving

30
Q

what coverage for auto insurance protects against damage you do to another person or their property?

A

liability coverage

31
Q

liability coverage is listed with 3 numbers…what do each indicate?

A

1-how much coverage you have for bodily injury
2-coverage for everyone in accident
3-property damage

32
Q

what coverage (deductible) pays for your vehicle when you cause the accident ($ on what vehicle is worth)

A

collision coverage

33
Q

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

A

comprehensive coverage

34
Q

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)

A

Personal Injury Protection (or Medical Payments)

35
Q

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?

A

uninsured/underinsured motorist

36
Q

with what coverage will your insurance company pay for your car damage no matter who caused the accident?

A

no-fault insurance

37
Q

this is for people who cannot buy insurance on their own; the insurance company decides premium

A

assigned risk pool

38
Q

what is a liability insurance that picks up where other insurance companies left off (additional liability coverage)?

A

umbrella insurance

39
Q

what provides funds to beneficiary(ies) when the insured dies?

A

life insurance

“expense not investment”

40
Q

what are the two types of insurance?

A

term life insurance & permanent life insurance

41
Q

what are the three types of permanent life insurance?

A

whole life, variable life, and universal life

42
Q

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

A

term life insurance

43
Q

what are some cons to term life insurance?

A

what if term isn’t long enough? it is more expensive to replace as you age (but will be cheapest choice when younger)

44
Q

what is the common year term for term life insurance?

A

20 years

45
Q

within life insurance, this is a policy that remains in effect for your entire lifetime as long as you continue to pay the premium

A

permanent life insurance

46
Q

within permanent life insurance, this is a policy where you keep paying premiums & it builds cash value (like a savings acct)

A

whole life

47
Q

within permanent life insurance, this lets you choose investment funds which determine the amount that will be paid out

A

variable life

48
Q

within permanent life insurance, this has neither premium nor death benefits fixed so you can change it

A

universal life

49
Q

what are some pros to permanent insurance?

A

you’ll always have coverage regardless of health issues, variable life policies are tax free growth

50
Q

what are some cons to permanent insurance?

A

more expensive, not typically great return on your $

51
Q

insurance covered by Obamacare; is a plan offered through employer

A

Group Health Insurance

52
Q

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

A

COBRA

53
Q

this is a method to determine which health insurance policy will pay when more than one policy could cover

A

Coordination of Benefits

54
Q

this is a group of health care providers that agree to provide services for set fees

A

PPO

55
Q

what does PPO stand for?

A

preferred provider organization

56
Q

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

A

HSA

57
Q

what does HSA stand for?

A

health savings account

58
Q

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

A

deductible

59
Q

when you have to pay a flat fee for certain services (within health insurance)

A

co pay

60
Q

the % you have to pay after the deductible is met (within health insurance)

A

co-insurance

61
Q

the maximum amount you have to pay for co-insurance; sometimes will include deductible, sometimes it won’t

A

out of pocket limits

62
Q

premium = __1__ + __2__ + __3__

A

1-deductible + 2-co-insurance + 3-out of pocket limits

Personal Finance (2 decks)

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