Buying Insurance Information retrieved from Succeeding in the World of Work Chapter 20, page 335

Terms to Know Insurance Policy Premium Deductible Cash Value Liability Health Maintenance Organization (HMOs) Preferred Provider Organization (PPOs) Face Value

Understanding Insurance Insurance Insurance is a financial precaution against injury, loss, or damage. FireCarHealthProperty

The Language of Insurance Policy and Policyholder Coverage Benefit and Beneficiary Premium Deductible Filing a Claim

The Language of Insurance Policy and Policyholder policyholder Policy and Policyholder -- An insurance policy is a contract between a person buying insurance and the insurance company that sells it. The person who buys the policy is called the policyholder.

The Language of Insurance An insurance policy states how much the insurance company will pay if an event causing a financial loss occurs.

The Language of Insurance Coverage Coverage – Your insurance coverage is limited to those events listed in your policy as occurrences for which you are entitled to receive payment.

The Language of Insurance Benefit and Beneficiary benefitcash benefit Benefit and Beneficiary – the insurance company pays the policyholder a certain amount of money. This amount is often called the benefit or cash benefit. The person who receives this payment is called the beneficiary.

The Language of Insurance Premium Premium – The amount of money the policyholder agrees to pay the insurance company at regular intervals for his or her insurance coverage.

The Language of Insurance Deductible Deductible – is the amount of loss the policyholder must pay. The amount of the deductible can vary and can affect the amount of the premium you pay.

The Language of Insurance Filing a Claim Filing a Claim – Reporting a loss to collect payment is called filing a claim.

Kinds of Insurance Renter’s Insurance Homeowner’s Insurance Automobile Insurance Health and Life Insurance Other Kinds of Insurance

Kinds of Insurance Renter’s Insurance Renter’s Insurance – If you have many valuable personal possessions, consider buying renter’s insurance. Your landlord will probably have insurance on the building in which you live. However, that insurance will not pay to replace the personal belongings of the renter.

Kinds of Insurance Homeowner’s Insurance Homeowner’s Insurance – If you borrow money from a bank or other financial institution to buy your home, you will probably be required to buy homeowner’s insurance.

Kinds of Insurance Automobile Insurance Automobile Insurance – is also property insurance because your automobile is your personal property. It is insurance to protect you against the loss, damage, or injury that may happen to or because of your car.

Types of Coverage Liability Medical Collision Comprehensive Uninsured Motorist

Types of Coverage Liability Liability – means responsibility. Liability insurance covers your responsibility to others. If you cause an accident—if you are at fault—you are responsible for any injury, loss, or damage that other people suffer because of your mistake.

Types of Coverage Medical Medical – coverage helps pay medical expenses for you and your passengers should your car be involved in an accident.

Types of Coverage Collision Collision – covers damage to your car, whether the accident is your fault or someone else’s. The coverage pay to repair your vehicle or replace it. Mississppi law requires that all motorist have at least this type of insurance.

Types of Coverage Comprehensive Comprehensive– Damage resulting from fire, lightning, wind, flood, and hail is covered. May also include glass breakage, theft, vandalism, and falling objects.

Types of Coverage Uninsured Motorist Uninsured Motorist – protects you against motorist who do not have liability insurance. Two kinds: one kind insures you for bodily injury and the other kind covers property damage.

Buying Automobile Insurance Driving Record The Company Age Where You Live Other Factors Other Vehicles Cost of automobile insurance vary considerably. Insurance companies take several factors into account in determining how much your premiums will be.

Buying Automobile Insurance Driving Record If you have a history of violations and accidents, you may not be able to get insurance at all. Insurance companies base their rates on the number of claims. If you are involved in several accidents, your rates will go up. Insurance companies usually go back three years in checking your records.

Buying Automobile Insurance The Company Some companies are very selective about which people they sell automobile insurance to. Some do not sell policies to drivers with bad driving records. If you have a good driving record you can get lower rates.

Buying Automobile Insurance Age Insurance companies have found that male drivers under the age of 25 file more accident claims than any other group. Since they have more accidents, they pay higher rates. As you get older, your rates will go down.

Buying Automobile Insurance Where You Live Urban areas have a higher rate of accidents than rural areas. For this reason, the premiums are higher in cities. (If you move, your rates may go up or down.)

Buying Automobile Insurance Other Factors People who have taken driver education classes sometimes get lower rates than those who haven’t.

Buying Automobile Insurance Other Vehicles Vehicles other than cars, such as motorcycles or motorboats, should be insured. The same kinds of coverage are usually available. The same factors—number of claims, age, company, and location—will determine premium rates.

Kinds of Insurance Health and Life Insurance Health and Life Insurance – offers financial protection in the event of death.

Types of Coverage Basic Coverage Major Medical Coverage Disability

Types of Coverage Basic Coverage Basic Coverage – covers two areas— hospital-surgical expenses (Include room and board in the hospital, medicines given in hospital, operating room, and surgeon’s fees.) and other medical expenses (None-hospital expenses, such as doctor’s appointments, prescription drugs, and test performed on an out-patient basis).

Types of Coverage Basic Coverage Limits to what services are covered and how much will be paid for them. Based on what the insurance company feels is “reasonable” regardless of what is charged by the doctor.

Types of Coverage Major Medical Coverage Major Medical Coverage – pays hospital-surgical and medical expenses beyond those covered by a basic plan. It pays for long-term hospital stays and catastrophic illnesses, such as intensive care for a heart-attack patient.

Types of Coverage Major Medical Coverage Major medical takes up where basic coverage leaves off in two ways. 1.It covers more services than the basic plan such as services for a nurse to come to your home after you have left the hospital. 2.Pay most of the medical expenses that remain after the basic plan has paid its share. For example, if a surgeon’s fee is $2,000 and basic coverage pays only $1,000 for surgeon’s fees, the remaining $1,000 will be covered by major medical.

Types of Coverage Major Medical Coverage Major Medical Coverage Major medical payments are based on a percentage of the remaining expenses and require a deductible. $17,500 Total expenses - 7,000 Amount paid by basic plan $10, Deductible (paid by patient) $10,000 x.80 Percentage paid by major medical $8,000 Amount paid by major medical $10, ,000 $ 2,000 Amount paid by patient

Types of Coverage Disability Disability – provides money for people unable to work. Disability coverage is often of two types: 1.Short-term – pays for a few months. 2.Long-term – can pay for a lifetime.

Buying Health Insurance Group Insurance Plans Individual Insurance Plans Health Maintenance Organizations (HMOs) Preferred Provider Organizations (PPOsD)

Buying Health Insurance Group Insurance Plans Group Insurance Plans – the main advantage of group plans is that insurance companies can offer better rates to a large group of people than it can to an individual. Another advantage is that the employer usually pays part of all of the premium for each employee.

Buying Health Insurance Individual Insurance Plan Individual Insurance Plan – if you work for a company that does not offer health insurance, if you are self- employed, or if you don’t work, you should consider buying individual health insurance.

Buying Health Insurance Health Maintenance Organization (HMOs) Health Maintenance Organization (HMOs) – are based on the idea that health care costs can be kept down if people are treated for minor health problems before they become major health problems. HMOs are sponsored by many different kinds of organizations. Doctors, community groups, insurance companies, labor unions, and corporations have organized HMOs throughout the country.

Buying Health Insurance Preferred Provider Organizations (PPOs) Preferred Provider Organizations (PPOs) – usually operate in conjunction with employer-sponsored group health plans. A PPO is a group of health care providers such as doctors or hospitals, who provide health care for groups of employees at reduced rates. The employees have the option of choosing one of the doctors or hospitals on the PPO list at a lower rate, or they may choose another doctor or hospital at a higher rate.

Types of Life Insurance Term Life Insurance, Whole Life Insurance Universal Life Insurance Life insurance can provide enough money for your family to continue its usual life-style after you’ve gone. It can provide benefits to your family to help cover the expenses associated with your death or it may also provide funds to help cope with the loss of your income. It can also provide an investment to be borrowed against or cashed in. Life insurance can provide enough money for your family to continue its usual life-style after you’ve gone. It can provide benefits to your family to help cover the expenses associated with your death or it may also provide funds to help cope with the loss of your income. It can also provide an investment to be borrowed against or cashed in.

Types of Life Insurance Terms to know when considering life insurance: – the amount of protection stated on the policy.Face value – the amount of protection stated on the policy. – amount of money the policyholder can take by either borrowing against or cashing in the policy. (only certain kinds of life insurance policies have a cash value.)Cash value – amount of money the policyholder can take by either borrowing against or cashing in the policy. (only certain kinds of life insurance policies have a cash value.)

Types of Life Insurance Term Life Insurance Term Life Insurance – covers the insured for a specified period of time or a term such as five, ten, or more years. If the insured dies within the term the beneficiary is paid the face value of the policy. Term life is least expensive type of insurance but must be renewed at a certain time. At renewal, this type of policy will most likely go up.

Types of Life Insurance Whole Life Insurance Whole Life Insurance – also called ordinary or straight life insurance. Whole life pay the beneficiary the face value of the policy if the insured dies. Whole life continues as long as the insured pay payments. The premiums for whole life remains the same regardless to how old you get. Whole life builds up cash value.

Types of Life Insurance Universal Life Insurance Universal Life Insurance – is a form of whole life insurance. It pays a death benefit and builds cash value. However, the premium might go up. (premium variable not fixed) Whole life continues as long as the insured pay payments. The premiums for whole life remains the same regardless to how old you get. Whole life builds up cash value.

Buying Life Insurance coverage agehealth type of policy The amount of your life insurance premiums will depend on several factors – the coverage you feel you need, your age, your health, and the type of policy you choose. Before you purchase a life insurance policy, ask yourself the following questions. 1.How much money do I want to leave my beneficiaries if I die this year? Do I need more insurance to provide for them in the way I want to? 2.What are my retirement plans? Will I need income form an insurance policy? 3.How much can I afford to pay for insurance? How much life insurance will my employer provide? 4.Do I want just the death benefit, or do I want to build up some cash value?

Kinds of Insurance Other Kinds of Insurance Other Kinds of Insurance – Farmers buy hail insurance, home buyers buy title insurance, and banks buy deposit insurance. To determine the kind of insurance you may need, contact an insurance agent.