Financial Literacy Test Unit 4- Insurance

Explain the concept of Insurance.

An arrangement where a company gives customers financial protection against loss in return for a fee.

List the major types of Insurance, and which one(s) is/are required by law.

• Life Insurance

• Auto Insurance (required by law)

• Homeowners Insurance

• Health Insurance

• Disability Insurance (Aflac)

Define Policy.

A legal contract that states what is covered and the price.

Explain Premium.

The fee that you pay for the insurance coverage upfront.

Define Deductible.

The set amount that the policy holder must pay per loss when making a claim.

Define Claim.

A request for payment from the insurance company to cover a financial loss.

Define Liability.

The legal responsibility for the financial cost of another person’s loss or injuries.

What is Homeowners Insurance, and what does it cover? (4)

Protection on a home that you own. It covers:

1. Damage to structure of home

2. Living Expenses

3. Personal Property

4. Personal Liability

Define Personal Property Floater.

Additional insurance added to homeowners to cover the loss of items of high value. ($$$+)

Explain Bodily Injury Liability.

Covers physical injuries to people caused by automobile accidents that were your fault.

What is Property Damage Liability?

Covers damage to property of others or other cars.

What levels of Auto Insurance are required by law in Ohio? (Minimum)

• $25,000 bodily injury liability per person

• $50,000 bodily injury liability per accident

• $25,000 property damage liability per accident.

Define Uninsured Motorist Protection.

Covers you if you are in an accident caused by another driver without insurance. You must still pay the deductible.

What is Collision and Comprehensive Physical Damage? What did Mr. Boyce tell you to remember?

Collision- covers the damage to your car when you are involved in an accident that’s your fault.

Comp. Physical Damage- covers you for other methods of loss to your car (theft, vandalism, falling objects, floods, etc.)

These are both optional (start with ‘c’).

Define No-Fault Insurance.

Each driver is responsible for paying their own bills (required in some states, not in Ohio).

What factors affect Auto Insurance Premiums?

1. Driver Classification

2. Rating Territory

3. Vehicle Type

4. Other Discounts: home/renter policy (bundle), good student.

Higher deductible=lower premium

Define Health Insurance.

Protects you against the financial burden people experience as a result of illness or injury.

What’s a Group Plan?

Health insurance to a group of employees and their immediate family members.

High deductible plan- first $1,600 is paid, then there is a 90/10 split, with the employer paying 10%.

Define Individual Health Insurance.

Health insurance for the self-employed. Much more expensive than a group plan.

What is COBRA?

A government act that lets employees continue their health insurance through a group plan for 6 months after their employment ends.

Define Medicare and Medicaid.

Medicare- a federally funded health insurance program for people over 65.

Medicaid- a medical insurance program for low income households/families.

Explain Life Insurance.

Provides income to your relatives in the event that you die in your workers years.

Define Worker’s Compensation.

Covers lost income and medical bills if you are unable to work as a result of a workplace injury.

What is Disability Insurance?

Provides income in the event that you suffer a non-work related disability.

Explain Umbrella Policy.

Extra liability insurance designed to protect you from lawsuits as a result of major claims.