1. Chapter 14 Page 444

2.  Is a form of protection that eases the financial burden people may experience as a result of illness or injury.  For a premium (aka fee) to the insurer you receive protection against medical bills.  Medical Expense Insurance: pays only the actual medical costs.  Disability Income Insurance: provides payments to make up for some of the income the person is losing from not being able to work due to illness/injury

3.  Group plans are typically employer sponsored.  Group insurance plans cover you and could cover your family.  Cost of group insurance is typically lower because many people are insured under the same policy

4.  Not all employers offer insurance or if you are self-employed you may want individual health insurance plan to cover you and your family.  Shop around and price compare

5.  Consolidated Omnibus Budget Reconciliation Act of 1986  Allows an employee who loses his or her job to keep the former employer’s group coverage for a set period of time.  Example: you get fired, you don’t lose your group health insurance for a length of time as long as you make the premium payments yourself.

6.  Basic  Major Medical Expense  Hospital Indemnity Policies  Dental  Vision  Dread Disease  Long-Term Care

7.  Hospital Expense: pays for some or all of the daily costs of the room and board during hospital stay.  Surgical Expense: pays for all or part of the surgeon’s fees for an operation  Physician Expense: covers all or some of the physician care that does not involve surgery

8.  If something major happens basic may only cover up to so much.  Major Medical has better protection for long hospital stays from $5000 to 1 million  To keep costs low many will have a deductable (individual has to pay so much upfront before insurance kicks in)  Coinsurance: is the percentage of the medical expenses that the policy holder must pay in addition to deductible amount. Example: 20% after your deductable is reached.  Stop-Loss Provisions: is a provision that requires the policy holder to pay all costs up to a certain point before coverage begins.  Comprehensive Major Medical: very low deductible and pays for all hospital costs up to a certain limit.

9.  April was going to have a strapping baby boy.  Her family medical deductable was $1200. Her coinsurance was 20% after deductable was reached. Her max out of pocket was $3000.  All physician/hospital visits were paid for by April until it reached $1200.  From that point on she paid 20% of all medical expenses until she reached her max out of pocket of $3000.  Once the baby was born he had his own deductable at $1200 with a max out of pocket of $3000.  How much did she pay?  Must find out whether co-pays and deductibles count towards max out.

10.  Page 447: Summarize everything you need to know about that that insurance in 2 sentences.  Indemnity  Dental  Vision  Dread  Long-Term

11.  You need to understand what your policy covers, what are the benefits and limits?

12.  Defines people covered by insurance (individual, spouse, kids up to a certain age)

13.  Insurer makes direct payments to your doctor/bill (unless you pay then they reimburse you)

14.  Sets levels of repayment for certain services  Example $250 a day per hospital room or $50 for chiropractor

15.  Flat fee that you pay EVERY time you receive a covered service

16.  List coverage in terms of services NOT dollar amounts  Example: You get x-rays versus $100 toward x- rays  Example: All lab work is free

17.  Defines a maximum benefit either in terms of dollar amounts or in terms of number of days in the hospital

18.  What your policy does not cover  Cosmetic surgery, preexisting conditions

19.  The insurer cannot cancel the policy unless you fail to pay premiums

20.  Circumstances under which the insurer can cancel your coverage

21.  Consider the following tradeoffs (page 451)  Reimbursement versus indemnity  Internal limits versus aggregate limits: fixed amounts or limit total amounts  Deductibles and coinsurance: higher deductible the cheaper the insurance  Out of pocket limits: max you can pay then they pay 100%

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24.  Provide mostly group health plans to employers, who in turn offer them to their employees  Employer may pay all or part of employees premium

25.  Blue Cross: company provides hospital care benefits  Blue Shield: provides benefits for surgical and medical services performed by physicians

26.  Refers to prepaid health plans that provide comprehensive health care to their members

27.  HMO: insurance plan that directly employs or contracts with selected, or preapproved, physicians and other medical professionals to provide health care services in exchange for a fixed, prepaid monthly premium.  Preventive services to minimize future medical problems

28.  A group of doctors and hospitals that agree to provide specified medical services to members at prearranged fees  Greater flexibility than a HMO

29.  Combo of HMO and PPO, can use network of specific medical professionals or hospitals for little or no cost or go out of the network for a higher charge like a PPO

30.  One of the fastest-growing areas of the health care: home care aide organizations  Medical care in a home at a fraction of the hospital cost

31.  Company runs its own insurance plan and collects premiums from employees and pays medical benefits as needed.  Can be disastrous for the company if it cannot pay for coverage of employee.

32.  Some consumers are eligible for health insurance coverage under programs offered by federal and state governments  Fed = Medicare  State – Medicaid

33.  Federally funded health insurance program available mainly to people 65 and to people with certain disabilities  Part A: hospital insurance: funded by social security tax for inpatient care: single annual deductible  Part B: medical insurance: pay for doctor’s services: has a deductible and 20% coinsurance provision

34.  Medicare is a risk as health care costs increase and our population gets older.  Projected to be bankrupt by 2019  Obamacare

35.  Medical assistance program offered to certain low-income individuals and families  Administered by the states but funded by state and fed governments

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37.  Provides regular cash income when an employee is unable to work due to pregnancy, a non-work related accident, or an illness.  Protects your earning power

38.  Disability in result of an accident or illness on the job

39.  Disability insurance through a group plan

40.  If you have paid into the social security system then your funds are available if you become disabled

41.  Gives weekly or monthly cash payments to people who cannot work due to accident or illness  Usually 40-60% of your normal income

42.  Benefits do not begin the day you become disabled, 1-6 months before you can begin collecting  The longer the waiting period the cheaper the premium

43.  Some policies only pay for specific durations  Look a plan that makes payments for life  You get crippled on the job, you don’t want a disability insurance that stops after a year or after you turn 65, need it for life!

44.  Greater benefits cost higher premiums but shoot for a benefit that pays 70-80% of your normal income.

45.  Some disability policies only pay for accidents, make sure there is also coverage for sickness

46.  If your health becomes poor (you become more likely to become disabled) they will try to cancel you  Look for guarantees coverage as long as you make your payments

47. Page 464

48.  A contract with a company that for your monthly payment they will pay a death benefit upon your death to your beneficiary  Beneficiary – person named to receive the benefits from an insurance policy

49.  Protect the people who depend upon you  Pay off mortgage, kids, education, charitable donations, income for survivors

50.  Life insurance companies make educated guesses on how long people will live based on tables of data  The sooner the person is likely to die the higher the premium he or she will have to pay

51.  In the year 2000 Women was 80 and Men was 74  Many suggest getting life insurance to cover early death when you have a young family depending on you

52.  If your death would cause financial hardship for someone you care about then the answer is probably yes

53.  Temporary life insurance, provides protection against loss of life for only a specified term (1, 5, 10, 20 years)  Best value for most consumers 1. Renewable Term: option to continue for another term 2. Multiyear Level: pay same premium for duration of policy 3. Conversion Term: change from term to permanent 4. Decreasing Term: pays less to beneficiary as time passes, but premium will stay the same

54.  Straight Life Policy: permanent policy for which you pay a specified premium each year for the rest of your life.  Insurance company will pay stated sum when you die  So how do they make money b/c everyone dies???? Amount you get decreases over time and they are investing your money to earn interest

55.  Can be an investment, part of your premium is put into a savings plan, if you ever cancel you plan you can claim what cash value is in your accumulated savings 1. Limited: premiums for a certain length of time and then you’re covered for life (high premiums) 2. Variable: part of your premium is put into savings and other part is invested, amount you can withdraw varies with market 3. Adjustable: allows you to change coverage 4. Universal: term policy with cash value, you can borrow or withdraw your cash value

56.  You decide who gets what, primary beneficiary(ies) can receive designated percentages  Contingent beneficiaries who get the money if your primary beneficiary dies  Example: Your primary beneficiary was killed in a car wreck with you, so it goes next to the contingent beneficiaires.

57.  Insurer cannot cancel policy if it has been in force for a specified period of time

58.  Read closely  Within 2 years get premiums back  Some will say after 2 years amount paid in full

59.  Adding a rider, document attached to policy that changes its terms by adding or excluding specified conditions  Example: adding a child to a life insurance policy

60. 1. Page 459 1-3 2. Page 463 1-3 3. Page 471 1-3