Chapter 8 Personal financial planning

The basic purpose of insurance is to
protect you from losses
In insurance terms, risk Is defined as
uncertainty concerning a potential economic loss
Insurance is a tool that can
lessen economic risk
Underwriting is best described by
activities related to selecting acceptable risk so that the general insurer adjectives are met
What is the simplest type of insurance?
term life is the lowest premium of dollar of initial debt benefits
If a life insurance policy pays dividends it is called
participating
The most valuable single technique in personal risk management to instill how much life insurance is needed
assessing the families economic needs and subtracting financial resources
Term life is the
lowest premium o
Probability of loss occurring is reduced by
loss prevention
The best way to prevent risk
AVOID RISK, ASSUME RISK, PREVENT LOSSES, transfer risk to an insurance companies
Term life insurance is characterized by
premium amounts related to age
Settlement options choose by most beneficiaries
Lump sum
What is a common provision in many term policies
a renewable clause
What is the least expensive form of whole life insurance
straight life
Universal life insurance is
a combined investment plan an insurance policy
Group life insurance is
often more expensive than private coverage
A life insurance contract contains clauses for
settlement options polices reinstatements and change of policy
When a primary beneficiary dies before the insured the premiums are paid
to the contingent beneficiary or benificaries
The largest portion of healthcare cost pay for
hospital expenses
The fastest growing segment of the healthcare industry is
managed care plans
Which of the flowing types of plans pay for some medical cost even when the insured decides to go out of the provider network (with out a referral for services)
PPO and a POS
If your employment is terminated COBRA
Temporary continuation of group benefits but you pay the premium
Most employees select who for their health insurance needs
preferred provider organization
Health insurance coverage can include
group plans workers compensation social security veterans benefits
Social securityprovides health care coverage for people
age 65 and older and this who are collecting disability under social security
Medicare is a government sponsored healthcare plan composed of part a part B. Part A covers ___________
Hospital expenses
Workers compensation is a state program that provides
benefits for workers suffering injuries on the job or injuries from employers negligence
Hospital indemnity policies make payment for
per day hospital charges
Surgical expenses now generally are reimbursed on he basis of
usual, reasonable, and customary expenses
Major medical plans are characterized by
deductibles, internal limits, and participation or co insurance
A characteristic of dental insurance is
low maximum limits
In Order To qualify for disability insurance under social security a person must be
unable to carry out the duties of any job
Basic principals of property and liability insurance retain to ;
types of exposure, the principals indemnity and co insurance
Some common liability risk include
driving a car, entertaining guest at home, being carless and preforming duties ALL go the above
Your standard HO policy will not include coverage for
damage done by flood
Negligence result when a person fails to act as
a reasonable person
the principal of indemnity states that
an insured should not be compensated by an insurance company in an amount exceeding an economic loss
Generally actually cash value is defined as
replacement cost – depreciation
The right of subrogation gives the insure the right to recover is cost from the
at fault party after the company has paid the claim to be insured
While on vacation your homeowners policy typically covers
personal property
The deductible on a standard home owners policy applies to coverage on the
house and coverage on personal property
Homeowners insurance premiums are determined by
policy limits, perils cover and deductibles choose
Homeowners insurance will cover which of the following:
if the meter reader is bitten by the dog or your attached garage destroyed by a hurricane
Common types of property that are subject to limits on HO policies is
Jewelry
Auto insurance is needed primarily because of
potential liability claims
An independent agent represents
multiple insurance companies

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