Business & Personal Finance

INSURANCE

The protection against possible financial loss.

• Policy – A contact for insurance between the policyholder and the insurance company

• Policyholder – the purchaser of the policy• Premium – a fee paid by the policyholder to the

insurer for insurance• Coverage – protection provided by the terms of an

insurance company• Insured – the people protected by the policy

Insurance

Risk – the chance of loss or injuryPeril – anything that may possibly cause

loss.Hazard – anything that increases the

likelihood of loss through some perilNegligence – failure to take ordinary or

reasonable care to prevent accidents from happening.

Types of Risks

Homeowner’s Insurance

A homeowner’s policy includes all of the following:

The building in which you live and any other structures on the property.

Additional living expensesPersonal PropertyPersonal liability and related coverage'sSpecialized coverage's

Personal Property Floater – additional property insurance that covers the damage or loss of a specific item of high value.

Umbrella Policy – (also called: personal catastrophe policy) supplements your basic personal injury claims.

Medical Payments Coverage – pays the costs of minor accidental injuries to visitors on your property.

Added Coverage

Factors That Affect Home Insurance Costs

Location of HomeType of Structure

Coverage Amount and Policy TypeHome Insurance Discounts

Company Differences

Motor Vehicle Insurance

Every state in the United states has it!

The law requires drivers to prove that they can pay for damages or injury caused by an

automobile accident.

Financial Responsibility Law

Protection for Bodily Injury

and

Protection for Property Damage

Two Categories of Motor Vehicle Insurance

Bodily Injury Coverage

Bodily Injury Liability

Medical Payments Coverage

Uninsured Motorist’s Protection

Insurance that covers physical injuries caused by a vehicle accident for which you were

responsible.

Bodily Injury Liability

Insurance that applies to the medical expenses of anyone who is injured in your vehicle, including

you.It also pays if you or your family

members are injured while riding in another person’s vehicle or if any of you are hit by a vehicle.

Medical Payments Coverage

Insurance that covers you and your family members of you are involved in an accident with an

uninsured or hit-and – run driver.

Uninsured Motorist’s Protection

Motor Vehicle Property Damage Coverage

Property Damage Liability

Collision

Comprehensive Physical Damage

Motor vehicle insurance that applies when you damage the

property of others.

It protects you when you are driving another person’s vehicle with the

owner’s permission.

Property Damage Liability

Covers damage to your vehicle when it is involved in an

accident.

It allows you to collect money no matter who is at fault.

Collision

Protects you if your vehicle is damaged in a nonaccident situation,

such as:

Comprehensive Physical Damage

FireTheft

Falling objectsVandalism

HailFloods

TornadoesEarthquakesAvalanches

Health Insurance

Basic Health Insurance CoverageHospital ExpenseSurgical ExpensePhysician Expense

Major Medical Expense InsuranceLong hospital staysMultiple Surgeries

Hospital Indemnity PoliciesSupplement to Basic Coverage and Major

Medical

Type of Health Insurance Coverage

Dental Expense InsuranceVision Care InsuranceDread Disease Policies

Trip accident, death insurance, cancer policies

Illegal in many statesIf you have major medical you are

already coveredLong-Term Care Insurance

Private Insurance CompaniesHospital and Medical Service PlansHealth Maintenance Organizations

(HMO)Preferred Provider Organizations

(PPO)Home Health Care AgenciesEmployer Self-Funded Health Plans

Private Health Care Plans

Blue Cross Provides hospital care benefits

Blue Shield

Provides benefits for surgical and medical services performed by

physicians

Hospital and Medical Service Plans

Managed CarePrepaid health plans that provide comprehensive health

care to their members. It is designed to control the cost of health care services by controlling how they are

used.

Health Maintenance Organization (HMO)A plan that directly employs or contracts with selected physicians and other medical professional to provide health care services in exchange for a fixed, prepaid

monthly premium. Based on the idea that preventative services will minimize future medical problems.

Health Maintenance Organizations

A group of doctors and hospitals that agree to provide specific medical

services to members at prearranged fees.

Point-of-Service Plan (POS)

Combines features of both HMOs and PPOs

Preferred Provider Organizations

Medicare

Federally funded health insurance program available mainly to people over 65 and to

people with certain disabilities.

Medicaid

A medical assistance program offered to certain low-income individuals and families .

Government Health Care Programs

Provides regular cash income when you are unable to work

because of pregnancy, a nonwork-related

accident, or an illness

Disability Income

Protect against financial losses caused by death

Life Insurance

Term Insurance

Provides protection against loss of life for

only a specified term, or period of time. It pays

the benefit only if you die during the period that it

covers

Whole Life Insurance

A permanent policy for which you pay a specified premium each year for the

rest of your life

Types of Life Insurance Policies

Deductible – the set amount that the policy holder must pay per loss on an insurance policy.

Claim – request for payment to cover financial losses.

Liability – legal responsibility for the financial cost of another person’s losses or injuries.

Copayment – a flat fee that you pay every time you receive a covered medical service

Beneficiary – the person named to receive the benefits from a life insurance policy

Additional Insurance Vocabulary