1. Chapter © 2010 South-Western, Cengage Learning Insurance

2. © 2010 South-Western, Cengage Learning Insurance Overview Health Insurance Life Insurance Vehicle Insurance Property Insurance 2

3. © 2010 South-Western, Cengage Learning SLIDE 3 Chapter 27 Health Insurance Health insurance is a plan for sharing the risk of high medical costs resulting from injury or illness. Like other forms of insurance, health insurance reduces individual risk by spreading it among many people. In exchange for regular premiums, the insurer promises to pay medical expenses for the treatments covered by the policy.

4. © 2010 South-Western, Cengage Learning SLIDE 4 Chapter 27 Group Policies Group insurance The most common type of health insurance is group insurance, in which all those insured have the same coverage and pay a set premium. Some employers pay the premiums as a benefit to their employees. More commonly, however, the two share the premium costs.

5. © 2010 South-Western, Cengage Learning SLIDE 5 Chapter 27 Group Policies COBRA The Consolidated Omnibus Budget Reconciliation Act, or COBRA, is a law that allows people who leave employment to continue their health insurance under the company plan for a limited period of time (usually 18 months). (continued)

6. © 2010 South-Western, Cengage Learning SLIDE 6 Chapter 27 Group Policies Pre-existing conditions The Health Insurance Portability and Accountability Act of 1996 (HIPAA) limits the pre-existing conditions that group plans may exclude. It also makes it illegal for an insurer to deny coverage based on health status, though it does not limit the amount the insurer may charge for coverage. (continued)

7. © 2010 South-Western, Cengage Learning SLIDE 7 Chapter 27 Group Policies Double coverage Coordination of benefits is a group health insurance provision that specifies how the insurers will share the cost when more than one policy covers a claim. This provision assures that reimbursement will not exceed 100 percent of allowable expenses. (continued)

8. © 2010 South-Western, Cengage Learning SLIDE 8 Chapter 27 Group Policies Flex plans A Section 125 Flex Plan, or Flex 125 Plan, is an employee benefit program that allows employees to set aside money, pretax, to help pay deductibles, copayments, and other health expenses during the year that are not covered by insurance. (continued)

9. © 2010 South-Western, Cengage Learning SLIDE 9 Chapter 27 Individual Policies High premiums Physical exam High-risk health insurance pools

10. © 2010 South-Western, Cengage Learning SLIDE 10 Chapter 27 Types of Coverage Basic health insurance Basic health coverage includes medical, hospital, and surgical costs. Major medical insurance Major medical coverage provides protection against the catastrophic expenses of a serious injury or illness. A stop-loss provision is an insurance clause that caps or sets a maximum that the insured has to pay during any calendar year.

11. © 2010 South-Western, Cengage Learning SLIDE 11 Chapter 27 Types of Coverage Dental and vision insurance Dental insurance covers basic dental services, such as exams, cleanings, Xrays and fillings. Vision insurance often pays for exams for eye disease as well as for prescription adjustments and lenses. (continued)

12. © 2010 South-Western, Cengage Learning SLIDE 12 Chapter 27 Types of Health Plans Unmanaged care allow participants to choose any doctor and to be reimbursed for a portion of the expenses incurred after a deductible is met Deductibles often range from $100 to $1,000 per patient, or $500 or more per family

13. © 2010 South-Western, Cengage Learning SLIDE 13 Chapter 27 Health Savings Accounts A health savings account, commonly known as an HSA, is used in association with a medical plan that carries a high deductible. Money is set aside to pay medical expenses not paid by insurance. Contributions are tax-deductible. Employer may contribute to account.

14. © 2010 South-Western, Cengage Learning SLIDE 14 Chapter 27 Managed Care A health maintenance organization, commonly called an HMO, is a group plan offering prepaid medical care to its members. A preferred provider organization, commonly called a PPO, is a group of health care providers (doctors and hospitals, for example) who band together to provide health services for set fees. Point of service (POS) plans give people more choice and control over medical services by combining the features of HMOs and PPOs.

15. © 2010 South-Western, Cengage Learning SLIDE 15 Chapter 27 Medicare and Medicaid Medicare is government-sponsored health insurance for people age 65 or older. Medicaid is government-sponsored health insurance for people with low incomes and limited resources.

16. © 2010 South-Western, Cengage Learning SLIDE 16 Chapter 27 Disability Insurance Disability insurance is an insurance plan that makes regular payments (usually monthly) to replace income lost when illness or injury prevents the insured from working. Common types of disability insurance include: Group disability insurance Social Security disability insurance Workers’ compensation insurance

17. © 2010 South-Western, Cengage Learning SLIDE 17 Chapter 27 Life Insurance Life insurance provides funds to the beneficiaries when the insured dies. A group life insurance plan insures a large number of people under the terms of a single policy without a medical examination. Portability means that when you leave your employer, you are able to continue paying the premiums and convert your group policy into an individual policy.

18. © 2010 South-Western, Cengage Learning SLIDE 18 Chapter 27 Provisions of Life Insurance Policies You have the right to name your beneficiary. An incontestable clause is a provision of a life (or health) insurance policy that once the policy has been in effect for a stated period of time (usually two years), the insurer may no longer question items on the application in order to deny coverage. Double indemnity means that the beneficiary is paid double the face amount of the insurance policy.

19. © 2010 South-Western, Cengage Learning SLIDE 19 Chapter 27 Types of Life Insurance There are two main types of life insurance: Temporary life insurance Permanent life insurance

20. © 2010 South-Western, Cengage Learning SLIDE 20 Chapter 27 Temporary Life Insurance Temporary life insurance lasts for a specified period, such as 20 years. The most common form of temporary life insurance is term insurance. Term life insurance is a life insurance policy that remains in effect for a specified period of time.

21. © 2010 South-Western, Cengage Learning SLIDE 21 Chapter 27 Permanent Life Insurance Permanent life insurance remains in effect for the insured’s lifetime and builds a cash value. Cash value is the savings accumulated in a permanent life insurance policy that you would receive if you canceled your policy. Four common types of permanent life policies: Whole life Limited-pay life Universal life Variable life

22. © 2010 South-Western, Cengage Learning Auto-Insurance Motor Vehicle Risks Accident or Injury Damage to your vehicle or someone else’s vehicle Your vehicle could be vandalized or stolen Law suits The person whom is legally at fault is responsible for damages and financial losses that result from the accident

23. © 2010 South-Western, Cengage Learning All states have some type of financial responsibility law. These laws protect the public from financial loss caused by drivers. Most states require drivers to carry a certain type of automobile insurance before they can get a license for their car, this is called Compulsory Insurance Laws.

24. © 2010 South-Western, Cengage Learning Personal Injury Coverage This includes: Bodily injury liability, Medical Payments, Uninsured Motorist Protection Bodily Injury Liability Insurance that protects a driver from claims resulting from injuries or death for which the insured is at fault 100/300 Pays injuries up to one person/maximum for more than one person

25. © 2010 South-Western, Cengage Learning Personal Injury Coverage Medical Payment Protection-Policy members and family are covered if they are injured while riding in their car or another car, or walking and hit by a car. Uninsured Motorist Protection- Only available to people who carry bodily injury liability insurance.

26. © 2010 South-Western, Cengage Learning Property Damage Coverage Automobile insurance protects you from economic loss as a result of property damage. Property Damage Liability Insurance that protects a driver against claims if the insured’s car damages someone else’s property and the insured is at fault.

27. © 2010 South-Western, Cengage Learning Property Damage Coverage Collision Insurance Insurance that protects a car owner against financial loss resulting from a collision or rollover Does not cover injuries to people or damage to the property of others. Deductible Pay this amount before the insurance company will pay the claim

28. © 2010 South-Western, Cengage Learning Property Damage Coverage Comprehensive Coverage-protects the insured against almost all damage losses except those caused from a collision or rollover. No Fault Insurance Law-people injured in an accident collects form their insurance companies no matter who is at fault.

29. © 2010 South-Western, Cengage Learning Property Insurance Coverage Protects you against three kinds of economic losses Damage to your home or property Expenses you must pay to live somewhere else if your home is damaged and Must be repaired or rebuilt Liability Losses related to your property Personal liability coverage covers claims from injuries to people, or damage to property caused by you, your family, or even your pets.

30. © 2010 South-Western, Cengage Learning Homeowners Policy-Most common form of home and property insurance sold today Renters Policies Special Coverage-(Varies with the area) Flood Making a Claim Depreciation-decreases in value