business law - chapter 21

Insurance

Type of contract where insurer compensates the insured for any losses

Insurance policy

Written insurance contract

Policy holder

Buys policy

Premium

Amount policy holder pays for insurance and paid usually on a regular basis

Proceeds

The amount the insurance pays the insured for any losses (no tax)

Beneficiary

Person who gets proceeds from life insurance

Insurable interest

Must be possessed in order to get insurance

Homeowner insurance

Protects against real & personal property related to the homeownership including liability

Liability insurance

Covers claims against the policy holder for injuries suffered by others or their property

Examples of liability insurance

Injury to a person/guest/stranger in your house

Flood insurance

required if you live in a flood zone, optional if you don’t, waiting period to be able to obtain a policy

Property insurance

Covers damage or destruction to property; homes/cars/etc.

Floater policy

Covers items constantly changing in value

Ocean marine insurance

Covers transportation of goods that can be damaged at sea

Term life insurance

For particular period of time, covers person for set amount of time

Whole life insurance

Provides a death benefit payout like life but lower fixed savings rate that is paid out later

Why is term recommended

It protects family until retirement age & less costly

Endowment

Life insurance that offers a death benefit and a guaranteed lump sum payout at the conclusion of the policy term

Major medical coverage

Pays for long term care, emergencies, etc

Routine medical care

Covers office visit copays, prescriptions & specialist referrals

Group insurance

Employer pays amount and employees pay too (usually less)

HMO (health maintenance organization)

Health care organization that contracts with doctors to provide service for its members within a network (ex Kaiser)

PPO (preferred provider)

Allows you to choose provider for any network

Medicaid

Government healthcare for low income people; government subsidies

Medicare

a federally funded health insurance program for people who retire with social security starting at age 65

Disability insurance

Covers you when injured or too ill to work

Unemployment insurance

Paid my govt if out of work