Personal Insurance and Employee Benefits Coach Johnson Understanding Business and Personal Law

Vocabulary Insurance Insurer Policy Policy Holder Insured Beneficiary Rider Insurable Interest Premium Face Value Case Value Life Insurance Straight Life Insurance (Whole) Annuity Term Insurance Endowment Insurance HMO Medicare Medicaid

What is Insurance? Contractual Agreement Prevents Loss Indemnify- pay for a parties loss (make good) Insurer (Company: State Farm, Geico, etc) Covered or Protected Party- Insured Beneficiary- Recipient of amount to be paid Policy- Written Contract of Insurance (Binder before) Face Value- Maximum paid out Premium- What you pay for the insurance

Life Insurance Pays a beneficiary after death of policy holder Three common types of life insurance Term Specific time period Cheapest form (why?) Increase at end of term (why?) Whole Life Paid throughout entire life Payments never increase (why?) Gains cash value (why?) Endowment Life Specific amount and time Paid at end of term or to beneficiary (if you die before) Also: Accidental Death and Dismemberment Insurance Pays face value if you die in accident (to beneficiary) Pays other amounts based on disabilities

Disability Insurance Paid when workers are “not able” to work Only pays a % of your normal pay Pay premiums to private company through employer Physical or Mental Two Major Types: Short Term Pregnancy Minor Injury Long Term Major Injury Permanent disability

Disability Examples These are considered severe enough to meet the test of disability: Loss of both arms, both legs, or a leg and an arm Heart and lung disease Progressive cancer Brain damage that results in loss of judgment or memory Loss of vision, inability to speak, deafness

Health Insurance Basic Health Insurance covers: Inpatient and outpatient hospital care Physician Care (Doctor’s Visit) Surgery Prescription Drugs Dental and Vision (sometimes separate) Major Medical (must be added) Pays for expenses beyond normal charges (long stay, terminal illness)

Insurance Information Group Plans Purchased by individuals who work for companies Usually cheaper (why?) Sometimes employee pays part of premium COBRA Keeps employees insured after loss of job Individual Plans Covers same thing as group policies More expensive

More Insurance?? Three major types of Policies HMO (Health Maintenance Organization) Members include doctors, insurance companies, labor unions, corporations Must choose from list of providers Larger Network, Lower Coverage PPO Will cover only part costs if out of network (provider) Smaller Network, Higher Coverage HRA (Health Reimbursement Account or Arrangement) Account pays for medical costs up to a certain amount You pay full out of pocket costs until deductable is reached After, it pays normal %

Government Healthcare Medicare Over 65 years of age Covered by Social Security Part A- inpatient hospital care Part B- 80% of doctors’ and other medical Medicaid Low income people Funded by state and federal funds