Section 21.1 Insurance

Section 21.1 Insurance Insurance is a type of contract in which one party (the insurer) compensates another party (the insured) for any losses.

The written insurance contract is called the policy. Section 21.1 Insurance The written insurance contract is called the policy. The person who buys an insurance policy is called the policyholder. The amount of money a policyholder pays for insurance is called the premium.

Section 21.1 Insurance The amount paid by the insurance company for losses is called the proceeds. The person who receives the proceeds from a life insurance policy is called the beneficiary.

Section 21.1 Insurance To obtain insurance, a person must have an insurable interest in the insured. This means the person would suffer from the loss of the person or property insured.

Section 21.1 Insurance Property insurance covers damage or destruction to property such as cars, homes, boats, and personal items. Liability insurance covers claims against the policyholder for injuries suffered by others.

higher res to be inserted Section 21.1 Insurance fig. 16.2 from ubpl 2006. higher res to be inserted

Section 21.1 Insurance Homeowner’s insurance covers both real and personal property, and liability for injuries suffered by others on the property. Renter’s insurance covers personal property and liability for injuries suffered by visitors.

straight life insurance Section 21.1 Insurance straight life insurance There are two major types of life insurance: term life insurance

Section 21.1 Insurance Straight life insurance requires paying premiums until the face value, or amount of coverage in the policy, is reached or the insured dies.

Section 21.1 Insurance Term life insurance is issued for a particular period of time, usually five or ten years.

There are two main types of health insurance: Section 21.1 Insurance Major medical insurance covers only long-term hospitalization and catastrophic illness There are two main types of health insurance: Basic health insurance covers routine medical care, surgery, and prescription drugs

Most health insurance is obtained in three ways: Section 21.1 Insurance Most health insurance is obtained in three ways: group insurance plans, obtained through and subsidized by employers individual insurance, paid entirely by the person insured government health care plans

The two major government health care plans are: Section 21.1 Insurance The two major government health care plans are: Medicare, which covers people on Social Security Medicaid, which covers low-income people and is administered by each state

Section 21.2 Estate Planning

Section 21.2 Estate Planning Estate planning consists of safeguarding assets to protect a person’s family before and after death.

Section 21.2 Estate Planning The main legal instruments for estate planning are: 1. Wills 2. Trusts

Section 21.2 Estate Planning A will is a document that provides for distribution of a person’s assets upon death. The person who receives property by will is the beneficiary.

Section 21.2 Estate Planning To make a will a person must: be at least 18 years of age have testamentary intent, or the intent to make a last will and testament have testamentary capacity, or the mental ability (be of sound mind) to make a will

Section 21.2 Estate Planning To be valid, a will must be published, or written and declared a true expression of the testator or testatrix attested, or witnessed by the number of people required by the state signed

Section 21.2 Estate Planning The process of validating and executing a will is called probate. This process is carried out by a court.

Section 21.2 Estate Planning Testate is to die with a will. To die without a will is to be intestate. When a person dies intestate, the person’s assets are distributed by the state to family members according to state law.

Section 21.2 Estate Planning To provide for their children, some people set up a trust. A trust is a legal device in which property is held by one person for the benefit of another person.

Section 21.2 Estate Planning The person who sets up the trust, or entrusts another person, is the settler. The person who holds the property, or is entrusted with it, is the trustee. The person who the property is held for is the beneficiary.

Section 21.2 Estate Planning Many people set up a trust rather than write a will to avoid the time and cost of probate, and to save on taxes.