financial agreement between individuals and insurers to provide protection form loss or injury.
payments to an insurer
risk an insurance underwriter takes in exchange for premiums
personal risk management
process of identifying and evaluating risk faced by individuals and families.
risk that has a threat if loss without possibly of gain
risk that has the possibility of fain and loss
sources of risks (example: driving)
events that cause financial loss
claim on the assets of a business, organization, or individual
individuals that own, rent, or use property are exposed to the risk that the property may be damaged, destroyed or stolen
individuals can be held legally liable for a number of reason, ranging from personal act that cause bodily harm or property damage to others to liability from the negligent use of boats or cars.
represents the insurer and acts on the insurers behalf
spreading of loss of a few over an entire group
contract between individuals or group and insurer.
description of what is being insured
items insurers will not pay for
description of extended coverage
obligations imposed on policyholder and insurer
amend or add to a policy
amount policy holder pays toward a loss before insurance coverage beings
sharing of an insurance risk between two or more insurers
steps of insurance management
pays for losses to homes and personal property due to a number of causes
Pays for losses from negligence resulting in bodily injury or property damage to others for which policyholders is responsible.
protects you from the cost of damage to your home.
o Most important feature is the replacement cost coverage
limited name perils
usual basic perils covered by insurance
broad names perils
extended perils coverage
o Keeps it at a minimum cost
covers major perils, provides liability protection and additional living expenses; form HO-4
o Inexpensive but less than half Americans use it
personal auto policy PAP
legal liability arising out of the ownership or operation of covered auto.
o Liability coverage is the most important part
auto insurance pays up to a stated amount
auto insurance coverage is split between 3 categories
medical payment coverage
pays for reasonable medical, dental, x ray, surgical, and funeral expensed by a covered persons within 3 years from the date of accident.
uninsured motorist coverage
pays for bodily injury caused by an uninsured motorist or hit and run driver or negligent driver with an insolvent insurer.
violent striking of an auto by another object
provides liability coverage over a million dollars at a cost of 200-400 dollars a year
o Goes into effect after underlying liabilities policy coverage limits have exceeded.
o To protect against the possibility of a large jury award in a lawsuit
a prepaid plan that combines financing and delivery of health care (private health insurance)
health maintenance organization HMO
type of managed care that provides all of ones health care for a fixed monthly fee. *most popular
preferred provider information PPO
type of managed care that provides health care services to employees at a discount.
point of service organization POS
type of managed care that combines traditional insurance with HMOs
two companies sharing the risk
employers won't buy ____ insurance
home and auto
contract between an insurer and policyholder specifying a sum to be paid to a beneficiary on the insured death
o More IMP when its deducted
o 5 to 10 years is the most popular type
stated sum of money on a policy
recipient of policy proceeds of insured dies.
o Must be paid ASAP, insurance cant hold it.
whole life insurance
policy that combines insurance with a savings feature
term life insurance
policies that offer pure protection, no savings feature, over a specified period of time.
universal life insurance
flexible type of policy that combines term life insurance with a tax deferred savings account.
variable life insurance
policy that allows for flexibility in types of investments
long term care life insurance
not an investment, its set up to care of people. Usually old age (assistant care) singles usually buy, middle class to upper class can afford it, poor cant
in US the single, largest line of property and liability insurance is
connection between risk management and insurance
most people rely heavily on insurance as the main way to handle risk
individuals become insured when
they sign a contract called a policy
most important feature of home owners insurance
replacement cost coverage