Protects the standard of living of the survivors Policyholder dies = ins. co. pays survivors Proceeds: the money paid to survivors Beneficiary: each person who receives part of the proceeds Policyholder names beneficiaries

1.Permenant life Insurance (Cash Value Insurance) - Comprised of two parts: a savings, or investment, portion (i.e.Cash Value) and an insurance portion. Whole Life Universal Life 2.Term insurance – No investment component. You're buying life coverage that lasts for a set period of time provided you pay the monthly premium

Cash-value insurance: provides savings and death benefits Part of premium death benefits Part of premium builds up cash value (savings acct) Cash value over life of policy Cancel policy, claim collected cash-value Emergency – borrow part/all of cash value, pay interest Different kinds of cash value insurance

Whole life is meant to insure someone for their whole life. Has a cash-value component. (builds tax deferred) Premium and death benefit are fixed.

Cash value part of premium is invested Stocks, bonds, and mutual funds rather than savings, and doesnt guarantee a certain rate of return like a whole life policy Increases or decreases depending on value of investments (Variable)

Term Insurance: life insurance that covers a person for a specific period of time Could be 5, 10, or 20 years Only pays benefits if person dies within the term If the insurer lives longer, policy has no value Can be renewed….higher premium Pure protection – only pays death benefits, no cash value Low cost

How it works: Your friend purchases a 5 year, $10,000 policy (covers him for 5 years) If your friend dies within those first five years, his/her beneficiary will receive $10,000. After five years his/her coverage ends The policy can be renewed over time but with a higher premium Term insurance is often used as a part of group life insurance Offered by employers; if you leave company, you lose coverage Group policies are cheaper than individual policies

Term insurance < cash value insurance Factors that effect premium: Age, health, occupation Many have to take a physical first Older = higher cost Dangerous occupations = higher cost

Protects against the cost of illness/accidents Avg. cost of one hospital day stay = $5,000-$8000

Private Health Care Plans Group Health plans: Least expensive Co./org. provides for employees/members Employees/members can add extra coverage at their own exp. Individual Health plans: most expensive. Government-Sponsored Health Care Plans

Coinsurance Clause – requires you to pay a certain % of medical exp.s beyond deductible Copayment: fee paid each time a service is used More people covered = higher premium (i.e. dependents) Many policies wont cover a pre-existing condition: a serious health condition diagnosed before a person obtained health ins. EX. Someone suffers from a heart condition, an insurance company might refuse to cover it

Fee-For-Service or Traditional Indemnity Plans Managed Health Care Plans Health maintenance organizations (HMOs) Preferred provider organizations (PPOs)

= catastrophe ins. Most important coverage for a serious illness/accident Covers: hospital care, doctors bills, tests, x-rays, and nursing care Deductible Some plans have coinsurance: % of medical exp. a policyholder must pay beyond the deductible Insurance 75-80%, policyholder 20-25% EX. $1,000 deductible and coinsurance of 20%. Bills are $6,000, you pay $2,000 ($1,000 deductible and 20 % of $5,000)

Medicare: major health ins. program set up by the federal govt (2 parts) Part A: hospital ins. (covers hospital care) Pay a deductible Part B: medical ins. (covers doctors fees/tests) Pay a deductible Coinsurance Monthly premium

Medicaid: another govt health care plan for certain groups of citizens Provides care for those who are unable to pay for ins. or health care Much more comprehensive than medicare

The act provides comprehensive health ins. reforms that hold ins. companies more accountable President Obama signed the Act on Mar. 23, 2010 Lower costs More choices Enhance the quality of healthcare

Lower Costs creation of a competitive private health ins. market Stabilizes economy Expected to reduce deficit over next ten years by $100 billion End Ins. Co. denial & abuse of care (Americans w/ pre-existing conditions) Will be rolled out through 2014 Covers: Individuals Families Seniors Businesses Reduced premiums for families & small businesses

Premium Deductible Coinsurance Co-payment Coinsurance Cap or Stop-Loss Provision Pre-existing Conditions Waiting Period Policy Limits Policy Provisions Coordination-of-benefits Clause