Unit 2: Credit/ Insurance Flashcards
hazard
Anything that increases the likelihood of loss through peril. An example is defective electrical wiring in a house increasing the risk of a fire.
What is risk
The chance of loss or injury
What is peril
An event that causes loss or injury. Examples include fire or robbery
What is a premium
A premium is the money you pay simply to have insurance. It is often collected on a monthly basis.
Risk Pooling
forms of risk management mostly practiced by insurance companies. Under this system, insurance companies come together to form a pool, which can provide protection to insurance companies against catastrophic risks such as floods, earthquakes etc.
-Loss -indirect loss
-decline in value -payments that occur because of the direct loss( house burning down) that is not the house itself. For example, now you have to buy a hotel room/ breakfast etc.
Insurable Interest
basic requirement for an insurance company to issue a policy. Entities not subject to financial loss from an event do not have an insurable interest and cannot purchase an insurance policy to cover that event.
Indemnity
insurance rule, cant make money on claims. Tells you how much you can claim
PPO health insurance
network of independent providers that are paid per service and work together to provide health services
HMO Health Insurance
full-service organization with its own facilities and caregivers on staff. A group plan that provides medical care to its members
HSA health insurance plan
health spending accounts, allow people to set aside money to pay for qualified medical expenses. Taking out of paycheck
Long term disability insurance
2-5 years, or until retirement. pay s percent of regular pay (60%) comes after short term.
short term disability insurance
temporary unable to work due to injury or illness. starts after 1-14 days of non working. 6 months-2 years can use. Pay portion of paycheck (60%)
workers compensation
if injured at work or become ill because of work doing, work provides compensation.
Credit
The receiving of funds (money) directly or indirectly to buy goods in the present with the promise to pay for them in the future.
Why you need credit
You need credit so you can show that you have a good (or bad but hopefully good) history of borrowing money or funds and then repaying them back on time so you can get loans to help purchase bigger items. *GOOD CREDIT HELPS BUILD YOUR WEALTH**
Revolving credit VS installment credit
revolving- each month get the same amount of money you can spend, only need to pay the minimum installment- you get one loan and pay the same amount each month to pay it off
Credit score range
300-850
Good credit is what range?
700 or above
5 factors that make up your credit are:
- 35% Payment History: Late payments, bankruptcies, and other negative items can hurt your credit score, but a solid record of on-time payments helps you score.
- 30% How Much You Owe: Credit scores look at the amounts you owe on all your accounts, the number of accounts with balances, and how much of your available credit you are using. The closer you are to your credit limit, the lower your score will be (Remember magic number 30% on borrowing).
- 15% Length of Credit History: A longer history of using credit responsibly will increase your score. However, you can get a high score with a short credit history if you made all of your payments on time, or paid off your credit cards quickly. -
10% New Credit: If you recently applied for or opened new credit accounts, your credit score will weigh this fact against the rest of your credit history.
-10% Mix of credit
APR
APR or annual percentage rate is the yearly interest rate charged on outstanding credit card balances.
Chapter 7 bankruptcy
- erases most of your debt, you must be unemployed, - a court-appointed trustee takes possession of your nonexempt property, arranges for its sale or liquidation and is responsible for paying as many of your debts as possible with the proceeds, - offers a financial fresh start, -file only once every eight years.
What is not forgiven from bankruptcy
Child support/alimony, debts from divorce, student loans, fines and penalties imposed for law violations, taxes, cosigner obligations, credit purchases of $1,150 or more for luxury items or services made within 60 days of your bankruptcy filing, and criminal restitution resulting from illegal activities such as embezzlement, larceny, fraud, along with willful or malicious injury to another person or another person’s property.
Snowball effect
where you pay off the smallest outstanding debt and then moved onto the next one slowly getting bigger as you finished off one.
Liability insurance
provides payout if you caused an accident- to the people/ things you damaged -DOSE NOT PROTECT YOUR OWN STUFF- ONLY OTHERS
25/50/25
how liability insurance is written -25= how much bodily damage -50= the entire accident of people -25-property damage coverage
financial responsibility law
states have this law. where to be allowed to drive you have to meet this law somehow. Most people do by buying insurance, OHIO you are allowed to purchases a bond to meet this law.
Medical car insurance
PIP or Personal Injury Protection pays for any medical, hospital, and funeral costs of the insured, the insured’s family, and other passengers in the insured’s car in the event of an accident.
Uninsured
Provides protection against damages caused by a motorist who is at fault and doesn’t have insurance or the means to pay for your damages. You should have enough uninsured/underinsured motorist coverage to protect you in case this happens. Covers you as a pedestrian who is injured by an uninsured motorist as well.
Under insured
Provides protection against damages caused by a motorist who is at fault and can’t afford to pay for the damages to the insured’s vehicle.
Comprehensive
Protection against damages to your car from causes other than collision or rolling over is provided by comprehensive coverage.
Collision
Protects against damage to your own vehicle if you hit another car or lose control and roll over, it pays when you are at fault, however if you carry liability insurance only, damage to your car will not be covered and if the accident is not your fault then the other driver’s insurance will kick in.
reversed order: credit/ insurance
Anything that increases the likelihood of loss through peril. An example is defective electrical wiring in a house increasing the risk of a fire.
hazard
reversed order: credit/ insurance
The chance of loss or injury
What is risk
reversed order: credit/ insurance
An event that causes loss or injury. Examples include fire or robbery
What is peril
reversed order: credit/ insurance
A premium is the money you pay simply to have insurance. It is often collected on a monthly basis.
What is a premium
reversed order: credit/ insurance
forms of risk management mostly practiced by insurance companies. Under this system, insurance companies come together to form a pool, which can provide protection to insurance companies against catastrophic risks such as floods, earthquakes etc.
Risk Pooling
reversed order: credit/ insurance
-decline in value -payments that occur because of the direct loss( house burning down) that is not the house itself. For example, now you have to buy a hotel room/ breakfast etc.
-Loss -indirect loss
reversed order: credit/ insurance
basic requirement for an insurance company to issue a policy. Entities not subject to financial loss from an event do not have an insurable interest and cannot purchase an insurance policy to cover that event.
Insurable Interest
reversed order: credit/ insurance
insurance rule, cant make money on claims. Tells you how much you can claim
Indemnity
reversed order: credit/ insurance
you can pick any doctor etc
higher premiums but if accident occurs you pay less
PPO health insurance
reversed order: credit/ insurance
Insurance plan that you have to pick from certain doctores etc.
Lower premiums but if something happens you will pay more of the accident costs
HMO Health Insurance
reversed order: credit/ insurance
health spending accounts, allow people to set aside money to pay for qualified medical expenses. Taking out of paycheck
HSA health insurance plan
reversed order: credit/ insurance
The receiving of funds (money) directly or indirectly to buy goods in the present with the promise to pay for them in the future.
Credit
reversed order: credit/ insurance
You need credit so you can show that you have a good (or bad but hopefully good) history of borrowing money or funds and then repaying them back on time so you can get loans to help purchase bigger items. *GOOD CREDIT HELPS BUILD YOUR WEALTH**
Why you need credit
reversed order: credit/ insurance
revolving- each month get the same amount of money you can spend, only need to pay the minimum installment- you get one loan and pay the same amount each month to pay it off
Revolving credit VS installment credit
reversed order: credit/ insurance
300-850
Credit score range
reversed order: credit/ insurance
700 or above
Good credit is what range?
reversed order: credit/ insurance
-35% Payment History: Late payments, bankruptcies, and other negative items can hurt your credit score, but a solid record of on-time payments helps you score. -30% How Much You Owe: Credit scores look at the amounts you owe on all your accounts, the number of accounts with balances, and how much of your available credit you are using. The closer you are to your credit limit, the lower your score will be (Remember magic number 30% on borrowing). -15% Length of Credit History: A longer history of using credit responsibly will increase your score. However, you can get a high score with a short credit history if you made all of your payments on time, or paid off your credit cards quickly. -10% New Credit: If you recently applied for or opened new credit accounts, your credit score will weigh this fact against the rest of your credit history. -10% Other Factors: Several minor factors also can influence your score.
5 factors that make up your credit are:
reversed order: credit/ insurance
APR or annual percentage rate is the yearly interest rate charged on outstanding credit card balances.
APR
reversed order: credit/ insurance
- erases most of your debt, you must be unemployed, - a court-appointed trustee takes possession of your nonexempt property, arranges for its sale or liquidation and is responsible for paying as many of your debts as possible with the proceeds, - offers a financial fresh start, -file only once every eight years.
Chapter 7 bankruptcy
reversed order: credit/ insurance
Child support/alimony, debts from divorce, student loans, fines and penalties imposed for law violations, taxes, cosigner obligations, credit purchases of $1,150 or more for luxury items or services made within 60 days of your bankruptcy filing, and criminal restitution resulting from illegal activities such as embezzlement, larceny, fraud, along with willful or malicious injury to another person or another person’s property.
What is not forgiven from bankruptcy
reversed order: credit/ insurance
where you pay off the smallest outstanding debt and then moved onto the next one slowly getting bigger as you finished off one.
Snowball effect
reversed order: credit/ insurance
where you pay off the debt with the highest interest rate and then work your way through the list, always paying off the next highest interest rate after the next.
interest method for debt
reversed order: credit/ insurance
provides payout if you caused an accident- to the people/ things you damaged -DOSE NOT PROTECT YOUR OWN STUFF- ONLY OTHERS
Liability insurance
reversed order: credit/ insurance
how liability insurance is written -25= how much bodily damage -50= the entire accident of people -25-property damage coverage
25/50/25
reversed order: credit/ insurance
states have this law. where to be allowed to drive you have to meet this law somehow. Most people do by buying insurance, OHIO you are allowed to purchases a bond to meet this law.
financial responsibility law
reversed order: credit/ insurance
PIP or Personal Injury Protection pays for any medical, hospital, and funeral costs of the insured, the insured’s family, and other passengers in the insured’s car in the event of an accident.
Medical car insurance
reversed order: credit/ insurance
Provides protection against damages caused by a motorist who is at fault and doesn’t have insurance or the means to pay for your damages. You should have enough uninsured/underinsured motorist coverage to protect you in case this happens. Covers you as a pedestrian who is injured by an uninsured motorist as well.
Uninsured
reversed order: credit/ insurance
Provides protection against damages caused by a motorist who is at fault and can’t afford to pay for the damages to the insured’s vehicle.
Under insured
reversed order: credit/ insurance
Protection against damages to your car from causes other than collision or rolling over is provided by comprehensive coverage.
Comprehensive
reversed order: credit/ insurance
Protects against damage to your own vehicle if you hit another car or lose control and roll over, it pays when you are at fault, however if you carry liability insurance only, damage to your car will not be covered and if the accident is not your fault then the other driver’s insurance will kick in.
Collision
