38 terms

Auto/health/life insurance

personal finance
"driving a car is the largest single exposure to catastrophic losses for most americans
Auto insurance provides liability and property coverage
True or false, it is illegal to operate a motor vehicle without auto insurance
What is liability insurance?
Covers the insured if they are deemed responsible
Automobile bodily injury liability
covers bodily injury suffered by others
Automobile property damage liability
covers damage to the property of others. includes damage to other cars, buildings, signs, etc.
What is medical payment coverage?
covers bodily harm of insured driver and passengers. medical losses and bills within 1 yr of accident
what is physical damage coverage?
protection against loss or damage to one's car
what is collision insurance?
covers losses from collision with another car or object
What is comprehensive insurance?
covers collision, rollover, fire, theft, vandalism, wind, hail, etc
What is hmo health insurance?
payment in advance for health care coverage
Traditional health insurance
reimbursement for medical expenses, patient makes choice of where to receive care.
what is ppo health insurance?
group of health care providers, have contract with insurance company, discounted services
what is psn health insurance?
health care providers and hospitals, offer a health insurance contract, work as a group
Health savings accounts (HAS)
tax deductible savings account, individuals and employers deposit into it, used to pay medical bills and deductibles
Health reimbursement arrangements (HRA)
funds contributed by employers, funded solely by employers
What are the two primary risks of buying health insurance?
1. risk of living too long
2. risk of dying too soon
Why buy life insurance?
protects family from your financial burdens when you die
policy (term)
Contract between issuer and policy holder stating terms and dollar amounts
Death benefit (term)
amount that will be paid to beneficiary
policy holder (term)
owner of policy who retains all rights given by policy
Beneficiary (term)
person(s) who are designated to receive the death benefit
face amount (term)
the amount of coverage given in the event of the policy holder's death
premium (term)
charge to the policy holder for insurance coverage. monthly, quarterly, or annually
term insurance
pure protection against early death, face amount, pays benefits only if the insured dies
term insurance types
1. guaranteed renewable return
2. level-premium term
3. decreasing term
4. convertible term
5. group term
guaranteed renewable return
typical for term, protects against becoming uninsured
level-premium term
avoid increasing premiums with age, premiums set an average rate over time, can cover from 5-20 years
decreasing term
face amount of coverage declines. premiums remain constant. closely matches coverage with needs
convertible term
option of converting to cash value
group term
employer plan, based on health of whole group
cash value insurance
pays benefits at death and includes a savings/investment element
cash value insurance types
1. limited-pay insurance
2. adjustable insurance
3. universal insurance
4. variable insurance
5. variable-universal insurance
limited-pay insurance
premiums paid for a period of time, protected for life
adjustable insurance
allowed to adjust premiums, face amount, and cash value accumulation
universal insurance
pure protection (term), cash-value, variability of face value, premiums, and a rate of return
variable insurance
you choose your investments, face value and cash value may vary
variable-universal insurance
choice in investments, higher returns, most popular, higher commissions, annual fees