Insurance

1. Insurance Terms

2. Auto Insurance • Risk – the greater the risk the greater the need for insurance. However, the greater the risk, the higher the cost of insurance (premium)coverage. • Risks rise with traffic violations, traffic accidents, more expensive vehicles, gender, amount of coverage, use of vehicle and amount of miles driven, location. • The policy is the contract between the insurance company (insurer)and the policyholder (insured)

3. Auto Insurance • The insured picks the deductible for collision and comprehensive coverage. The deductible is the amount the insured pays out of his pocket in the event of a covered incident before the insurer pays the balance of the claim (filed asking for the insurance company to pay under coverage of the policy). The higher the deductible, the lower the premium since the insured is taking on more risk.

4. Types of Auto Insurance • Personal Property Liability – pays for property damage to the other vehicle and any outside property damage when the insured is at fault • Personal Injury Liability – pays for injuries to people in the other vehicle or other bystanders when the insured is at fault • Collision – pays to fix the insured’s vehicle when the accident is the insured’s fault

5. Auto Insurance Coverage • Comprehensive Physical Damage – pays for those “other” things that may damage the insured’s vehicle such as storm damage, theft, hitting a deer, vandalism, etc. • Medical Payments – pays for medical care to the driver and others in the insured’s vehicle when the insured is at fault • Uninsured/Underinsured Motorist – covers the insured’s car when the other driver is at fault in an accident and doesn’t have sufficient insurance to pay for damages and injuries

6. Health Insurance • With very few exceptions, everyone needs health insurance coverage because of the cost of health care treatment • Group health insurance policies through the employer are less expensive since more people are paying the premiums allowing discounts and many times the employer will pay part of the premium for employees

7. Types of Private Health Insurance • Basic Medical Benefits – pays for large part of hospital care, surgeries, and doctor visits • Major Medical – pays for long-term and catastrophic injuries and illnesses requiring long-term care • Disability Insurance – supplies part or all of the employee’s pay if the insured is sick or injured; usually a waiting period before it takes affect; LONG TERM vs SHORT TERM

8. Types of Private Health Coverage • Dental Insurance – covers all or part of routine dental procedures and some others • Vision Insurance – cover all or part of eye examinations, glasses, or contact lenses • Long-term Care insurance – covers the cost of long-term home nursing care and related expenses • Accident Insurance – covers costs from injuries at an eligible location. Not for illnesses.

9. Government Health Insurance • Medicare – federal government pays part for part of the medical expenses for the elderly, 65 or older: Must have paid into the system for 10+ years in your lifetime. May purchase Medigap coverage to pay for deductibles instead of paying it out of pocket. • Medicaid – pays certain medical expenses for low income families • Childrens’ Hospital Insurance Program (CHIP) – coverage for the children of people who make too much to qualify for Medicaid, but don’t make enough to pay for private insurance

10. Government Health Insurance Coverage • COBRA – right to pay one’s own premiums to continue employer sponsored health insurance after leaving job. Very expensive since employer does not assist with premiums.

11. Managed Care Programs • Health Maintenance Organization (HMO) – provides health care services to members a set fee and small co-payment (amount paid to the provider at each visit). Member must visit a physician or clinic/hospital within the HMO organization. May then be referred outside. • Preferred Provider Organization (PPO) – agreement between health care providers with employers to provide services at reduced rates for employees. Choose from list of primary care physicians. If the member chooses for Point-of-Service and goes outside the network on his own, more expensive.

12. Continued • Fee for Services Plan – insured can select his/her own doctors, pay costs at time of visit, and file with insurance company for reimbursement from insurance company • Health Savings Account – employer sponsored plan allowing employees to voluntarily deposit before tax income into a savings account to be used to pay predicted medical, dental, vision and child-care expenses during the year. Use it or lose it.

13. Choosing Health Insurance Coverage • Co-payments – the amount or percentage the insured pays for medical treatment once the deductible is met • Deductible – amount of medical expenses paid before the insurance company will cover any expenses. Higher the deductible, the lower the premium. • Pre-existing condition – conditions that are not covered because they existed before the coverage began

14. continued • Maximum Benefits – the maximum amount that the insurance company will pay over the term or lifetime. • Open Enrollment Period – period of time when eligible participants make their choices concerning insurance coverages • Preauthorization – insurance approval is required in advance for expensive or elective treatments (surgeries)

15. continued • Exclusions – items the insurance policy will not cover • Renewability – unless otherwise stated, the policy should be renewed for the policyholder without proof of excellent health

16. Term Life Insurance • Life insurance is purchased to provide funds for those who are dependent upon the insured financially in the event of his death • Beneficiaries – the person or persons chosen by the policyholder to accept the death benefits if/when the insured dies • Term Life Insurance – cheapest form of life insurance. Pays a death benefit only; does not earn a cash value • Level-term – the premium and death benefit stay the same for the term of the policy

17. Term Life Insurance • Decreasing-term – premiums stay the same but the benefits decrease over the life of the policy • Renewable-term – can renew the policy without taking a physical exam • Convertible-term – can change the policy from term to permanent insurance without taking a physical exam-more expensive

18. Permanent Life Insurance • Cash value life insurance – type of investing • Whole-life insurance – provides life insurance for a lifetime as long as premiums are paid. Pay premiums for your lifetime • More expensive than term, since a cash value is realized over time • Investment grows as more premiums are paid and interest is earned from investing • Can borrow or “cash in” the value of the policy according to policy

19. Types of Permanent Life Insurance • Limited Payment Life – coverage for entire life, but premiums paid for a limited pre-set time • Universal Life – allows adjustments of premium, face value (amount of the insurance coverage paid in event of death), level of protection • Variable Life – fixed premiums, but allows policyholder ability to change how money is invested from time to time

20. Cost of Life Insurance • Family Health history/current health • Pre-existing conditions • Occupation and hobbies (risk) • Gender (women statistically live longer) • Age (the older you are, the higher the premium)