InsuranceInsurance

InsuranceInsurance

The planned protection provided by The planned protection provided by sharing economic losses.sharing economic losses.

Insurance CompanyInsurance CompanyBusinesses that provide planned Businesses that provide planned protection against economic loss.protection against economic loss.

Insurable InterestInsurable Interest

A financial interest in property A financial interest in property or a person’s life that permits or a person’s life that permits someone to buy insurance to someone to buy insurance to protect against the financial protect against the financial

loss of that property or loss of that property or person’s life person’s life

PolicyPolicy

A contract issued by the insurance A contract issued by the insurance company for coverage of the company for coverage of the policyholder policyholder

Insured (Policyholder)Insured (Policyholder)

The person for whom the risk is The person for whom the risk is assumed assumed

InsurerInsurer

The insurance company that The insurance company that provides planned protection against provides planned protection against economic losses.economic losses.

PremiumPremium

The amount of money the The amount of money the policyholder must pay for insurance policyholder must pay for insurance coverage.coverage.

DeductibleDeductible

The amount of money the The amount of money the policyholder must pay before the policyholder must pay before the insurance company will pay a claim.insurance company will pay a claim.

ClaimsClaims

Requests for payment from the Requests for payment from the insurance company to cover the insurance company to cover the financial losses.financial losses.

Actual Cash ValueActual Cash Value

The value of a new car minus The value of a new car minus depreciation.depreciation.

DepreciationDepreciation

The decline in value of a vehicle The decline in value of a vehicle because of use.because of use.

Financial Responsibility LawFinancial Responsibility Law

The law says you must pay for any The law says you must pay for any damage or injury you cause in an damage or injury you cause in an accident either with insurance, with accident either with insurance, with savings, or by selling property.savings, or by selling property.

Compulsory Insurance LawCompulsory Insurance Law

Legally requires drivers to have a Legally requires drivers to have a minimum amount of car insurance.minimum amount of car insurance.

TYPES OF AUTOMOBILETYPES OF AUTOMOBILEINSURANCE AVAILABLEINSURANCE AVAILABLE

Bodily Injury LiabilityBodily Injury LiabilityProtects the insured person from injury to people in other cars, Protects the insured person from injury to people in other cars, passengers riding with the insured person, and pedestrians, but passengers riding with the insured person, and pedestrians, but does not cover the insured persondoes not cover the insured personMedical PaymentsMedical PaymentsCovers policyholders and family members while riding in a car.Covers policyholders and family members while riding in a car.Uninsured Motorist ProtectionUninsured Motorist ProtectionProtects policyholder against drivers without insurance.Protects policyholder against drivers without insurance.Property Damage LiabilityProperty Damage LiabilityProtects the insured person against damage by his/her car to Protects the insured person against damage by his/her car to another person’s property.another person’s property.Collision InsuranceCollision InsuranceProtects the car owner against damage from a collision with Protects the car owner against damage from a collision with another object or the car turning over, but does not cover injuries another object or the car turning over, but does not cover injuries to people.to people.Comprehensive Physical DamageComprehensive Physical DamageProtects the insured person against almost all damage except the Protects the insured person against almost all damage except the collision or the car turning over.collision or the car turning over.

FACTORS THAT DETERMINEFACTORS THAT DETERMINEAUTOMOBILE INSURANCE AUTOMOBILE INSURANCE

COSTSCOSTS

Age and sexAge and sexDriving record (tickets and accidents)Driving record (tickets and accidents)Marital status or academic standingMarital status or academic standingPurpose for which the vehicle is usedPurpose for which the vehicle is usedNumber of miles driven each yearNumber of miles driven each yearValue and type of vehicleValue and type of vehicleRepair costs for the areaRepair costs for the areaGeographic locationGeographic locationTypes of Coverage neededTypes of Coverage neededDeductible desiredDeductible desired

PROPERTY INSURANCE TERMSPROPERTY INSURANCE TERMSPerils – Perils – causes of losscauses of lossReal Property – Real Property – items attached to the landitems attached to the landPersonal Property – Personal Property – property that is not real propertyproperty that is not real propertyExtended coverage - Extended coverage - includes more perils includes more perilsHomeowner’s policy – Homeowner’s policy – a convenient package-type a convenient package-type insurance policy designed to fit the needs of most insurance policy designed to fit the needs of most homeowners:homeowners:Basic Coverage – covers 11 perilsBasic Coverage – covers 11 perilsBroad Coverage – covers 18 perilsBroad Coverage – covers 18 perilsSpecial Coverage – covers all perils except those excluded Special Coverage – covers all perils except those excluded from the policy.from the policy.Renter’s insurance – Renter’s insurance – special policies designed for special policies designed for individuals who are rentingindividuals who are rentingInventory – Inventory – a list of property including the following:a list of property including the following:Original costOriginal costDate purchasedDate purchasedExpected life of the articleExpected life of the article

LOSSES COVERED BY A HOMEOWNER’S POLICYLOSSES COVERED BY A HOMEOWNER’S POLICY

BasicBasic::

Fire or lightningFire or lightningVolcanic eruptionVolcanic eruptionWindstorm or hailWindstorm or hailExplosionExplosionVehiclesVehiclesRiot or civil commotionRiot or civil commotionAircraftAircraftSmokeSmokeVandalism or malicious mischiefVandalism or malicious mischiefTheftTheftBreakage of glass constituting a part of a buildingBreakage of glass constituting a part of a building

Broad (includes the basic perils):Broad (includes the basic perils):

Falling objectsFalling objectsWeight of ice, snow, sleetWeight of ice, snow, sleetCollapse of building(s)Collapse of building(s)Sudden and accidental tearing apart, cracking, burning, or Sudden and accidental tearing apart, cracking, burning, or bulging of a steam or hot water heating system or of bulging of a steam or hot water heating system or of appliances for heating water, an air-conditioning or appliances for heating water, an air-conditioning or automatic fire protective sprinkler systemautomatic fire protective sprinkler systemAccidental discharge, leakage or overflow of water or steam Accidental discharge, leakage or overflow of water or steam from within a plumbing, heating or air-conditioning system from within a plumbing, heating or air-conditioning system or domestic applianceor domestic applianceFreezing of plumbing, heating and air-conditioning systems, Freezing of plumbing, heating and air-conditioning systems, automatic fire protective sprinkler system and domestic automatic fire protective sprinkler system and domestic appliancesappliancesSudden and accidental injury from artificially generated Sudden and accidental injury from artificially generated currents to electrical appliances, devices, fixtures and currents to electrical appliances, devices, fixtures and wiringwiring

Comprehensive (includes basic Comprehensive (includes basic and broad perils):and broad perils):

All perils All perils EXCEPTEXCEPT earthquake, flood, earthquake, flood, war, nuclear accidents, and certain war, nuclear accidents, and certain othersothers

FACTORS THAT DETERMINE THE FACTORS THAT DETERMINE THE PREMIUM OF PROPERTY INSURANCEPREMIUM OF PROPERTY INSURANCE

The value of the propertyThe value of the property

The construction materials usedThe construction materials used

The type of policy desired (basic, The type of policy desired (basic, broad, or special)broad, or special)

Number of perils coveredNumber of perils covered

The distance to the nearest fire The distance to the nearest fire department and water supplydepartment and water supply

The amount of the deductibleThe amount of the deductible

WHAT TO INCLUDE ON AN INVENTORY FORWHAT TO INCLUDE ON AN INVENTORY FORHOMEOWNERS INSURANCEHOMEOWNERS INSURANCE

The Item:The Item:Name the item and give a detailed description of Name the item and give a detailed description of ititOriginal Cost:Original Cost:List the original cost of the item including a sales List the original cost of the item including a sales receipt if possiblereceipt if possibleThe Date of Purchase:The Date of Purchase:Give the date the item was purchased including a Give the date the item was purchased including a sales receipt if possiblesales receipt if possibleExpected Life:Expected Life:List the expected life of the item including the List the expected life of the item including the warranty if possiblewarranty if possible

TYPES OF HEALTH INSURANCETYPES OF HEALTH INSURANCE

Hospitalization InsuranceHospitalization Insurance

Highest selling insuranceHighest selling insurance

Pays the major part of the cost of a Pays the major part of the cost of a hospital stayhospital stay

Covers such charges as room, food, Covers such charges as room, food, anesthesia, anesthesia,

X-rays, laboratory tests, and X-rays, laboratory tests, and medicinesmedicines

Surgical InsuranceSurgical InsurancePays for all or most of the charges for surgery and in-hospital care Pays for all or most of the charges for surgery and in-hospital care by physiciansby physiciansRegular Medical InsuranceRegular Medical InsurancePays for part or all of nonsurgical care given in the doctor’s office, Pays for part or all of nonsurgical care given in the doctor’s office, hospital, or patient’s homehospital, or patient’s homeMajor Medical InsuranceMajor Medical InsurancePays for extended and serious illnessesPays for extended and serious illnessesPays for all or most of all kinds of health care prescribed by a Pays for all or most of all kinds of health care prescribed by a doctordoctorCovers the cost of treatment in and out of the hospital, special Covers the cost of treatment in and out of the hospital, special nursing care, X-rays, psychiatric care, medicinenursing care, X-rays, psychiatric care, medicineComprehensive Medical InsuranceComprehensive Medical InsuranceCombines the features of hospital, surgical, regular, and major Combines the features of hospital, surgical, regular, and major medical insurancemedical insurance

Dental InsuranceDental InsurancePays for normal dental care such as Pays for normal dental care such as examinations, X-rays, cleaning, fillings, and examinations, X-rays, cleaning, fillings, and dental injuries due to accidentsdental injuries due to accidentsVision InsuranceVision InsurancePays for eye examinations, prescription lenses, Pays for eye examinations, prescription lenses, frames, and contact lensesframes, and contact lensesMental Health InsuranceMental Health InsurancePays for psychological counseling and psychiatric Pays for psychological counseling and psychiatric carecareDisability Income InsuranceDisability Income InsurancePays for loss of income due to extended illness or Pays for loss of income due to extended illness or accidentaccident

HEALTH INSURANCE HEALTH INSURANCE PROVIDERSPROVIDERS

Group Health InsuranceGroup Health InsuranceMost popular way to buy health insuranceMost popular way to buy health insuranceUsually provided by an employerUsually provided by an employerIndividual Health InsuranceIndividual Health InsuranceMost expensive method of buying health insuranceMost expensive method of buying health insuranceThe individual pays the entire premiumThe individual pays the entire premiumUsually has a waiting period before the policy is activeUsually has a waiting period before the policy is activeUsually requires a physical examinationUsually requires a physical examinationHealth Maintenance OrganizationHealth Maintenance OrganizationProvides health care to its members usually at a medically Provides health care to its members usually at a medically staffed clinic for a set fee per monthstaffed clinic for a set fee per monthEmphasis is on preventative health careEmphasis is on preventative health care

Government Provided Insurance Government Provided Insurance MedicareMedicareFederal assistance for people aged 65 and over and some Federal assistance for people aged 65 and over and some disabled individualsdisabled individualsProvides medical and hospital insuranceProvides medical and hospital insuranceMedicaidMedicaidFederal assistance for low-income familiesFederal assistance for low-income familiesCovers the cost of doctor’s services, X-rays, lab tests, Covers the cost of doctor’s services, X-rays, lab tests, nursing home care, diagnosis and treatment of children’s nursing home care, diagnosis and treatment of children’s illnesses, and home health care servicesillnesses, and home health care servicesWorker’s CompensationWorker’s CompensationProvides medical and survivor benefits for people injured, Provides medical and survivor benefits for people injured, disabled, or killed on the job.disabled, or killed on the job.

LIFE INSURANCE TERMSLIFE INSURANCE TERMS

DependentDependentA person that relies on another for financial supportA person that relies on another for financial supportProceedsProceedsMoney paid to the policyholder’s survivorsMoney paid to the policyholder’s survivorsBeneficiaryBeneficiaryThe person named in the policy who receives the proceedsThe person named in the policy who receives the proceedsRenewable PolicyRenewable PolicyA policy which the policyholder may renew for one or more terms without A policy which the policyholder may renew for one or more terms without proving he is a good riskproving he is a good riskCash ValueCash ValueThe amount of money received if a policyholder decides to give up the The amount of money received if a policyholder decides to give up the policy before his deathpolicy before his deathFace ValueFace ValueThe amount of insurance coverage originally purchased which will be paid The amount of insurance coverage originally purchased which will be paid upon the policyholder’s deathupon the policyholder’s deathInsurable InterestInsurable InterestA financial interest in or benefit from the continued life of a person A financial interest in or benefit from the continued life of a person

FOUR TYPES OF LIFE INSURANCEFOUR TYPES OF LIFE INSURANCE

Term Life InsuranceTerm Life InsuranceProvides financial protection for a survivor of the Provides financial protection for a survivor of the policyholder for a specific period (term) of timepolicyholder for a specific period (term) of timeWhole Life InsuranceWhole Life InsuranceProvides death benefits and savings until the policyholder Provides death benefits and savings until the policyholder diesdiesVariable Life InsuranceVariable Life InsuranceProvides death benefits and savings, but allows the Provides death benefits and savings, but allows the policyholder to determine how to invest the cash valuepolicyholder to determine how to invest the cash valueUniversal Life InsuranceUniversal Life InsuranceDivides the premium three ways: death benefits, insurance Divides the premium three ways: death benefits, insurance company expenses, and investments or savings that earn a company expenses, and investments or savings that earn a high interest ratehigh interest rate