2.  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

3.  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

5.  Policyholder pays premium that stays the same throughout his/her lifetime  Provides savings during policyholder’s life and pays benefits after death

7.  Pay premiums for certain number of years ◦ EX. 20-payment life policy, you pay premiums for 20 years  “Paid up at age 65” - many retire at 65 & won’t have to pay premiums after paychecks stop

8.  Cash value part of premium is invested ◦ Stocks, bonds, and mutual funds rather than savings  Rest of premium is used for death benefits  Increases or decreases depending on value of investments

10.  Based more on savings over death benefits  Coverage for specific period of time  Proceeds go to policyholder if alive at the end of period  If policyholder dies during endowment period, beneficiaries receive proceeds  Usually used to provide income for retirement or education  More expensive

11.  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

13.  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

14.  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

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

17.  = catastrophe ins.  Most important coverage for a serious illness/accident  Covers: hospital care, doctor’s 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)

18.  Pays hospital care for a given period of time  Covers: room & board, tests, x-rays, operating room costs, nursing care, and fees for drugs & treatments  Could have deductible  Some policies have limits for specific exp.s  Some set a max per day for max # of days  Most popular

19.  Pays part of a surgeons entire fee for operation  Max payment for particular surgical exp.  Policy lists surgeries & costs allowed  Major Medical Ins. picks up where Surgical Exp. doesn’t  Usually bought w/ Hospital Exp.

20.  Covers costs of a doctor’s care not involving surgery  Usually purchased w/ Hospital Exp. & Surgical Exp.  Ins. Co. could combine all 3 types into 1 basic health ins. plan

21.  Least expensive  Co./org. provides for employees/members  Employees/members can add extra coverage at their own exp.  Health maintenance organization (HMO): provides health care at its own health center for a fixed fee per month ◦ you must go to its own clinic/choose one of their doctors

22.  Medicare: major health ins. program set up by the federal gov’t (2 parts)  Part A: hospital ins. (covers hospital care) ◦ Pay a deductible  Part B: medical ins. (covers doctor’s fees/tests) ◦ Pay a deductible ◦ Coinsurance ◦ Monthly premium

23.  Medicaid: another gov’t 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

24.  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 won’t 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

25.  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

26.  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