financial literacy - unit 3

budget

a way to keep track of your money

wants

things you do not necessarily need

needs

things you have to have; necessary

gross income

your money before taxes and deductions get taken out

net income

your money after taxes and deductions get taken out

revenue

money that is coming in/that you are making

expenditures

money that is being taken out/that you are spending

50% needs

half your money should go into what is necessary

30% needs

spending money on what you like

20% savings

money stored for later

transfer risk

what is the purpose of insurance?

premium

the amount you are charged for your insurance policy

deductible

if you file an insurance claim for a covered loss, your ___ is the amount you’ll pay out of pocket before your insurance benefits kick in

coverage limit

the amount of money that the company can pay for you depending on the situation

inverse relationship

what is the relationship between premium and deductible?

auto-insurance

understanding how policies work and how to make informed decisions to protect yourself from financial loss while minimizing costs

liability, collision, comprehensive, personal injury protection, and uninsured and underinsured motorist

what are the different types of coverage?

liability coverage

covers the damage you make

collision coverage

covers the damage that is done on your property

comprehensive coverage

covers things that are out of your control

personal injury protection coverage

covers health insurance if it is the other person’s fault

uninsured and underinsured motorist coverage

this is if someone’s insurance is not covered or the person does not have car insurance. the person also may not have enough money coverage

renters insurance

covers personal property someplace other than one’s house

homeowners insurance

provides financial protection against unexpected damage to your home, personal belongings, and liability for injuries or property damage caused to others

dwelling, personal property, loss of use, personal liability, medical payments, and other structures

what are the six coverage areas for homeowners insurance?

dwelling coverage

covers the house itself

other structures coverage

covers privacy sheds, pools, etc.

personal property coverage

anything damaged in the house is covered

loss of use coverage

covers any sort of expense you cannot use at home

personal liability coverage

covering any expenses for people who try to sue you for property

medical payments coverage

paying for anybody who gets hurt but does not sue you

health insurance

the ability to understand this, make informed decisions about expenses, and effectively use the plan to access care

co-pay insurance

a fixed, flat fee paid for a covered service at the time of service

co-insurance

a percentage of the cost you pay for a covered health care service after you have met your deductible

out of pocket maximum

the most you will pay for covered health services in a plan year; this limit includes your spending on deductibles, copayments, and coinsurance, but it does not include premiums, which are separate monthly payments

high-deductible health plan

low premium with high out of pocket expenses

health savings account (hsa)

money taken out of pre-packs to help for health expenses

heath maintenance organization (hmo)

allows you to see doctors in network and it is usually pretty cheap

preferred provider organization (ppo)

you can go to any doctor you want, but you would have to pay higher premiums

disability insurance

unable to work but provides income

term and whole life insurance

what are the two types of life insurances?

term life insurance

money given to your descendants after you pass away

whole life insurance

set for the rest of our lives, but it is more expensive

short term insurance

a few months of not working depending on the situation

long term insurance

something preventing you from working