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Economics > Last Chapter > Flashcards

Last Chapter Flashcards

1
Q

what is an essential financial planning tool?

A

insurance

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2
Q

What is the purpose of insurance?

A

to transfer risk

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3
Q

what can happen without proper insurance?

A

losses can bankrupt you

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4
Q

What are the basic types of insurance coverage needed?

A
  1. homeowners
  2. auto insurance
  3. health insurance
  4. disability insurance
  5. long term care insurance
  6. identity theft protection
  7. life insurance
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5
Q

what should you raise if you have a full emergency fund?

A

raise your deductible

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6
Q

what should homeowners insurance be called?

A

guaranteed replacement cost.

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7
Q

what liability policy is good to buy once you have some assets?

A

umbrella

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8
Q

what are the top things to know about auto insurance?

A 
your a statistic
insurers differ
don't just look at prices
go beyond the basics
demand discounts
your insurers is not your friend
prepare before you have to file a claim.
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9
Q

What are the keys to saving on health premiums

A

increase your deductible and coinsurance amount
increase your stop-loss, but never decrease your max pay.
see if an HSA, would make sense for your situation

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10
Q

What’s HSA?

A

Health Savings Account

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11
Q

What is HSA account good for?

A

a tax sheltered savings account for medical expenses that works with a high deductible insurance policy.

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12
Q

What is disability insurance designed to replace?

A

income lost due to short term or permanent disability.

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13
Q

What is occupational disability insurance?

A

insurance that pays if you cannot perform the job that you were educated or trained to do. available for only two years

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14
Q

what policies should you be aware of?

A

short term policies covering less than 5 years.

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15
Q

your insurance should be for what percentage of your current income?

A

65%

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16
Q

What is the elimination period?

A

the time between the disabling event and when the payments actually begin.

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17
Q

What happens with a longer elimination period?

A

a lower premium cost

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18
Q

what is long term care insurance for?

A

nursing home, assisted living facilities or in-home care.

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19
Q

What percentage of people over 65 will require long term care

A

69%

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20
Q

should you by identity theft protection that only provides credit report monitoring?

A

no

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21
Q

What does good identity theft protection include?

A

restoration services that assign a counselor to clean up the mess.

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22
Q

What is life insurance to replace?

A

lost income due to death.

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23
Q

What are the two types of life insurance?

A

term insurance

cash value insurance

24
Q

what is term insurance?

A

a specified period, is cheaper and has no savings plan built into it.

25
Q

What is cash value insurance?

A

normally for life and is more expensive because it funds a savings plan.

26
Q

What is the most common insurance myth?

A

is that the need for life insurance is a permanent situation.

27
Q

What does it mean to be self insured?

A

you are debt free, and have investments that have grown to a substantial amount.

28
Q

Why should life insurance not be an investment?

A
  1. returns are historically low
  2. when you die with cash value, the insurance company keeps the cash value.
  3. the fees deducted from your return are extremely high.
29
Q

what should you remember when purchasing life insurance?

A 
buy only low cost level term
do not forget your spouse
stay away from fancy options
children only need enough for bunal expenses
you need about 10 times your income
30
Q

What insurance should you avoid

A
  1. credit life and disability
  2. credit card protection
  3. career and hospital indemnity
  4. accidental death
  5. any insurance with cash
  6. prepaid bunal policies
  7. mortgage life insurance
  8. any kind of duplicate coverage
31
Q

what is not an investment?

A

insurance

32
Q

what is insurances only function?

A

to transfer risk

33
Q

What must you have if you have a car?

A

auto insurance

34
Q

what can raising you deductible save you money on

A

your premiums

35
Q

the amount you pay for an insurance policy

A

.

36
Q

costs that insurance doesnt cover. amount you pay

A

…

37
Q

the amount of life insurance you should have is – times your income.

A

…

38
Q

covers damage to a car if there is an accident

A

..

39
Q

covers damge to a car if a tree falls on it.

A

………

40
Q

the deductible on any insurance is the portion you have to pay before insurance covers any expenses

A

……

41
Q

if you have an older car, you can consider dropping liability

A

…..

42
Q

the purpose of insurance is to transfer risk

A

…

43
Q

cash value is a good way to invest since it has savings plan inside it.

A

.

44
Q

neither accidental death nor cancer insurance are good insurance policies to carry.

A

….

45
Q

short term disabilities is covered by your emergency fund, so only buy long term disability.

A

……

46
Q

the best type of identity theft insurance only provides credit report monitoring.

A

..

47
Q

the time between the disabling event and the beginning of payments

A

….

48
Q

life insurance policy for a specific period

A

..

49
Q

what can you do to decrease the cost of insurance policies

A

…

50
Q

covers restoration and monitoring services

A

..

51
Q

covers damage to a vehicle

A

…..

52
Q

covers the contents of an apartment

A

…..

53
Q

designed to replace income lost if you cannot perform your job.

A

…..

54
Q

covers assisted living, in-home or nursing home care

A

…….

55
Q

designed to replace income lost due to death

A

….

Economics (7 decks)

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