vocabulary chapter 9

Question 1

an arrangement in which an individual will receive financial protection or reimbursement

Answer 1

insurance

Question 2

policy

Answer 2

the contract between an insurance company and the insured individual

Question 3

coverage

Answer 3

the amount of liability protection offered to an individual through an insurance policy

Question 4

premium

Answer 4

the amount of money paid for an insurance policy

Question 5

grace period

Answer 5

the amount of time after the premium is due in which a policyholder can make a premium payment without suffering a lapse (break) in coverage

Question 6

deductible

Answer 6

the amount of money you will pay out of pocket before the insurance company will make a payment

Question 7

claim

Answer 7

a formal request by a policyholder to their insurance company for compensation for a covered loss

Question 8

copays

Answer 8

(also copayments or coinsurance) the payments an individual makes each time they get medical service

Question 9

out-of-pocket maximum

Answer 9

the most a policyholder has to spend for covered services in a year

Question 10

liability insurance

Answer 10

protection against claims resulting from personal injury or property damage as the result of an auto accident

Question 11

collision insurance

Answer 11

protection for damage to your car resulting from a collision with another car or object

Question 12

comprehensive insurance

Answer 12

protection for loss or damage to your vehicle caused by something other than a collision (such as vandalism)

Question 13

uninsured/underinsured motorist protection

Answer 13

protection for you and passengers if you’re hit by an uninsured or underinsured motorist, or if you are the victim of a hit-and-run

Question 14

personal injury protection (PIP)

Answer 14

a component of auto insurance that pays for medical expenses, lost wages, and other financial losses of the driver and passengers of the policyholder’s vehicle

Question 15

homeowners insurance

Answer 15

protection for losses to a private residence and the possessions within it, as well as liability coverage against accidents in the home or on the property

Question 16

renters insurance

Answer 16

protection for destroyed or stolen personal propoerty for a renter

Question 17

umbrella insurance

Answer 17

optional extended liability coverage that can be added to auto and homeowners policies

Question 18

ways to lower insurance

Answer 18

Get good grades.
Take a driver education class.
Drive an older car.
Shop around for the best rate.
Stay on your parents’ policy, if you can.
Be a safe driver.

Question 19

health insurance

Answer 19

coverage for an individual’s or family’s medical expenses from illness or injury

Question 20

affordable care act (ACA)

Answer 20

also known as Obamacare; the health care reform law enacted in 2010, intended to make affordable health insurance more available

Question 21

subsidizing

Answer 21

the practice of employers paying for a portion of their employees’ insurance premiums

Question 22

health insurance marketplace

Answer 22

a platform where individuals, families, and small businesses can compare health insurance plans

Question 23

high-deductible health plan (HDHP)

Answer 23

a health plan with a high minimum deductible for medical expenses

Question 24

health savings account (HSA)

Answer 24

a tax-exempt savings account dedicated to health care costs; only available for individuals on a high-deductible health plan (HDHP)

Question 25

Lifetime limit

Answer 25

the maximum amount of lifetime benefits a person can receive from their insurance company

Question 26

beneficiaries

Answer 26

people who are designated by the policyholder to receive the death benefit of a life insurance policy

Question 27

death benefit

Answer 27

benefit paid to the beneficiaries after the policyholder dies

Question 28

term life insurance

Answer 28

life insurance for a specified amount of time; at the death of the policyholder, the insurance company pays the death benefit to the beneficiaries

Question 29

whole life insurance (or cash value)

Answer 29

life insurance that lasts for the life of the policyholder and uses a portion of the premium as an investment

Question 30

self-insured

Answer 30

having enough money saved and invested so a spouse or loved one could live off of it when you die, eliminating the need for life insurance

Question 31

dependent

Answer 31

a person who relies on someone for financial support

Question 32

actuarial life table

Answer 32

life expectancy chart used by insurance agents to figure out life insurance premiums for an individual based on a variety of factors

Question 33

disability insurance

Answer 33

a type of insurance that will replace a portion of the policyholder's income in the event that the policyholder becomes disabled and is unable to work

Question 34

elimination period

Answer 34

the period of time between when a doctor confirms a disability and when the policyholder receives a disability payment

Question 35

identity theft

Answer 35

the act of fraudulently gaining and using the personal information of someone else, usually for financial gain

Question 36

long-term care insurance

Answer 36

a type of insurance that covers some or all of the costs of nursing home care, assisted living, in-home care, and other end-of-life care

Question 37

supplemental insurance

Answer 37

plans to cover expenses and services not on typical policies