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ch 8-11 pfin

A term policy designed to pay off the mortgage balance in the event of the borrower’s death
mortgage life insurance
a clause in a life insurance policy that typiclally doubles or triples the policy’s face amount if the insured dies in an accident
multiple indemnity clause
a life insurance feature giving the whole life policyholder, upon policy cancellation, the portion of those assets that were set aside to provide payment for the future death claim
nonforfeiture right
any activity that lessens the severity of loss once it occurs
loss control
the accumulated refundable value of an insurance policy; results from the investment earning on paid in insurance premiums
cash value
the process used by insurers to decide who can be insured and to determine applicable rates that will be charged for premiums
underwriting
permanent cash value insurance that combines term insurance (death benefits) with a tax sheltered savings/ investment account that pays interest, usually at competitive money market rates
universal life insurance
a clause in a life insurance contract containing a waiver of premium benefit alone or coupled with a disability income
disability clause
a contract between the insured and the insurer under which the insurer agrees to reimburse the insured for any losses suffered according to specified terms
insurance policy
a person who receives the death benefits of a life insurance policy after the insured’s death
beneficiary
a term insurance policy written for a given number of years with coverage remaining unchanged throughout the effective period
straight term policy
a method of determining the amount of life insurance coverage needed by multiplying gross annual earnings by some selected number
multiple of earnings method
life insurance designed to offer ongoing insurance coverage over the course of an insured’s entire life
whole life insurance
avoiding an act that would create a risk
risk avoidance
an option in a life insurance contract giving the policy holder the right to purchase additional coverage at stipulated intervals without providing evidence of insurability
guaranteed purchase option
life insurance in which the benefits are a function of the returns being generated on the investments selected by the policyholder
variable life insurance
life insurance sold in conjunction with installment loans
credit life insurance
insurance that provides only death benefits for a specified period and does not provide for the accumulation of cash value
term life insurance
a term insurance policy that maintains a level premium throughout all periods of coverage while the amount of protection decreases
decreasing term policy
A term life policy provision allowing the insured to convert the policy to a comparable whole life policy.
Convertability
Benefits under social security intended to provide basic, minimum support families faced with the loss of a principal wage earner.
Social Security Survivor benefits
A life insurance policy that pays policy dividends reflecting the difference between the premiums that are charged and the amount of premium necessary to fund the actual mortality experience of the company.
Participating policy
the purchase of insurance is a common form of which risk management technique
risk transfer
insurance is a tool that can lessen ___ risk
economic
the basic purpose of insurance is to protect you from the results of accidental losses t/f
true
annual term insurance premiums increase as you get older while whole life insurance premiums remain constant t/f
true
if the objective of your life insurance program is to get the greatest death protection now for your insurance dollars, you should choose ___ insurance
term
which of the following forms of life insurance requires the lowest premium per dollar of initial death benefits?
term life
___ is not a type of term insurance
not annual renewable
mary lou died from a heart attack. her 20000 dollar policy had a double indemnity clause. her beneficiary will receive 40000 t/f
false
which of the following policy features allow the insured to increase coverage periodically without showing proof of insurability
guaranteed purchase options
if a named beneficiary does not survive an insured the proceeds of the policy revert to the insurance company t/f
false
all types of life insurance offer a cash surrender value t/f
false
whole life policies typically provide a high investment rate or return t/f
false
using the ___ approach is the most accurate method to determine life insurance needs
needs analysis
the primary purpose of life insurance is to protect family members financially after one’s death t/f
true
Kurt purchased a plicy with an initial premium of 3000 and may elect how much he desires to pay in premiums from now on. he has purchased a face value of 100000 and can accumulate cash value. what type of life insurance does kurt have
universal life
in determining available resources to offset economic needs you would generally not consider
earning potential of financially independent children
the basic assumptions that the compnay used to compute its life insurance premiums include all but
none of these (age, sex, health status)
you may reinstate your lapsed life insurance policy without answering health related questions again t/f
false
underwriting is best described as
activities related to selecting acceptable risks so that general insurer objectives are met
the probability of a loss occurring can be reduced by
loss prevention
the insurance portion of a universal life policy is most analogous to
term insurance
guaranteed renewable term insurance allows you to renew the policy for another term without qualifying medically t/f
true
A provision often included in health insurance policies to prevent the insured from collecting more than 100% of covered charges.
Coordination of Benefits Provision
A hybrid form of HMO that allows members to go outside the HMO network for care and reimburses them at a specified percentage of the cost.
Point-Of-Service Plan
Insurance that provides families with weekly or monthly payments to replace income when the insured is unable to work because of a covered illness, injury, or disease.
Disability Income Insurance
A health insurance plan administered by the federal government to help persons age 65 and over, and others receiving monthly Social Security disability benefits, to meet the health care costs.
Medicare
A tax-free savings account funded by employees, employer, or both to spend on routine medical costs.
Health Savings Account
A health care plan in which subscribers or users contract with the provider organization, which uses a designated group of providers meeting specific selection standards to furnish health care services for a monthly fee.
Managed Care Plan
Health Insurance consisting of contracts written between a group, and the health care provider.
Group Health Insurance
A clause included in most individual health insurance policies permitting permanent or temporary exclusion of coverage for any physical or mental problems the insured had at the time the policy was purchased.
Preexisting Condition Clause
Prepaid hospital and medical expense plans under which health care services are provided to a plan participants by member hospitals and physicians.
blue cross/ blue shield plans
a voluntary program under medicare (commonly called part D), insurance that covers both brand-name and generic prescription drugs at participating pharmacies. participants pay a monthly fee and a yearly deductible and must also pay part of the cost of prescriptions, including a co payment or co insurance
prescription drug coverage
The delivery of medical and personal care, other than hospital care, to persons with chronic medical conditions resulting from either illness or frailty.
Long-term Care
An organization of hospitals, physicians, and other health care providers who have joined to provide comprehensive health care services to its members, who pay a monthly fee.
Health Maintenance Organization
commonly called plan c, these plans provide medicare benefits to eligible people, but they differ in that they are administered by private providers rather than by the gov’t. common supplemental benefits include vision, hearing, dental, general checkups, and health and wellness programs
medicare advantage plans
Health insurance plan in which the health care provider is separate from the insurer, who pays the provider or reimburses you for a specified percentage of expenses after a deductible amount has been met.
Indemnity Plan
tens of millions of Americans are not covered by health insurance t/f
true
which of the following programs is a joint federal and state public assistance program that provides health insurance benefits to those who are unable to pay for healthcare
medicaid
group health insurance premiums are usually lower than individual health insurance premiums t/f
true
the majority of employers pay
part of the premium for workers and dependents
workers compensation is a state program that provides benefits for
workers suffering injury or illness on the job
suppose janet, a skilled neurosurgeon, became unable to perform surgery because of severe arthritis. which is not true
if the policy contains an own occupation definition of disability the insurer will provide coverage only if janet would not be able to perform another type of job such as teaching or consulting
the average american worker is more likely to die premautrely than to be disable before 65 t/f
false
accidents are the primary cause of disabilities t/f
false
disability income benefits under social security will be paid as long as you cannot perform the duties of the job you were holding when the disability began t/f
true
disability income insurance provides benefits that are designed to
substitute for lost income
starting in 2014, the affordable care act requires insurance companies to set premiums based on all except
not tobacco use or community where you live
insurers are required to cover people with pre existing medical condition without limiting or setting unrealistically high insurance rates t/f
true
the affordable care act requires employers to offer health insurance benefits to all full time employees t/f
false
the insurance designed to help with nursing home or in home custodial care due to chronic illness is called
long term care
which would tend to increase the premium on a disability policy
use of any occupation definition of disability instead of own occupation to which one is reasonably suited
disability income benefits under social security will be paid as long as you cannot perform the duties of the job you were holding when the disability began t/f
false
insurance that protects against the financial consequences that may arise from the insured’s responsibility for property loss or injuries to others
liability insurance
insurance coverage that protects real and personal property from catastrophic losses caused by a variety of perils, such as fire, theft, vandalism, and windstorms
property insurance
coverage that protects against loss to an insured automobile caused by any peril other than collision
comprehensive automobile insurance
losses a PAP provision that protects the insured against claims made for bodily injury
bodily injury liability
failing to act n a reasonable manner or to take necessary steps to protect others from harm
negligence
the amount necessary to repair, rebuild or replace an asset at today’s prices
replacement cost
in property insurance a provision requiring a policyholder to but insurance in an amount equal to a specified percentage of the replacement value of their property
co-insurance
automobile insurance that pays for collision damage to an insured automobile regardless of who is at fault
collision insurance
The principle that insurance policies should provide a benefit no greater than the loss suffered by an insured.
principle of indemnity
additional coverage that allows the insured to collect damages from his or her own insurance company when they are not collectible from the person who caused the harm
uninsured motorists coverage
property and liability insurance covering all perils unless they are specifically excluded
comprehensive policy
automobile insurance designed to meet the needs of “innocent” victims of accidents who are negligently injured by uninsured, under insured, or hit and run motorists
uninsured motorists coverage
A value assigned to an insured property that is determined by subtracting the amount of physical depreciation from its replacement costs
actual cash value
an insurance endorsement or policy providing either blanket or scheduled coverage of expensive personal property not adequately covered in a standard homeowner’s policy
personal property floater
A PAP provision that protects the insured against claims made for damage to property
property damage liability losses
Laws requiring motorists to buy a specified minimum amount of automobile liability insurance or to provide other proof of comparable financial responsibility
financial responsibility laws
A comprehensive automobile insurance policy designed to be easily understood by the “typical” insurance purchaser
Personal automobile policy (PAP)
property and liability insurance policy that individually names the perils covered
named peril policy
a cause of loss
peril
Donna, who is single and 30-years-old, has received several speeding tickets recently and was shocked by the effect of her auto insurance. Donna drives a 2002 Pontiac Firebird, is currently not covered by health insurance, has an emergency fund of $25,000, an income of $100,000 per year, and an investment portfolio of $230,000. She is trying to reduce the price of her auto insurance. Which of the following actions is most likely to be advisable?
Raise her deductible from $250 to $1,000
your auto liability insurance shows policy limits of $100,000/$300,000.
This means $100,000 limit per individual with a $300,000 limit per accident
The right of ____ gives the insurer the right to recover its costs from the at-fault party after the company has paid a claim to its insured.
subrogation
If you have two insurance policies on the same property, the ____ clause explains how the two insurance companies will share the loss.
other insurance clause
Coinsurance is a policy provision to discourage the policyholder from being
underinsured.
The personal liability umbrella policy typically includes coverage for liability losses that are in excess of the limits purchased in the comprehensive personal liability coverage provided in the homeowner’s policy. t/f
true
The personal liability umbrella policy typically includes coverage for liability losses that are in excess of the limits purchased in the comprehensive personal liability coverage provided in the homeowner’s policy.
After packing up to return home for the holidays after the fall semester, Tex stopped at Double T bookstore to sell textbooks. After collecting $25, he headed back to his pickup truck only to find a broken window, the truck broken into, and all his suitcases and personal property gone. The loss of his personal property and suitcases would be covered by
personal property off premises (homeowners coverage)
your car is damaged by fire while parked in your garage, protection would be provided by
other than collision auto coverage
if you have an outstanding loan on your car the contract will require you to carry ____ insurance
collision and other than collision
generally actual cash value is defined as
replacement cost minus depreciation
personal property floaters provide increased coverage for jewelry and other collectable items at an additional premium t/f
true
auto insurance is needed primarily because of
potential liability claims

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