Take Charge Insurance Test Review

Risk

The chance of loss from an event that cannot be entirely controlled

Emergency Savings

at least six months of expenses set aside to cover costs of unexpected expenses

Risk Management

How someone deal with the chance of a potential personal or financial loss

Risk Management options

Avoid, Reduce, Share/transfer, Accept

Risk Pooling

The spreading of financial risk evenly among a large number of contributors to the program

Insurable Interest

Any financial interest in life or property such that, if the life or property were lost or harmed, the insured would suffer financially.

Insurance Policy

A contract that outlines coverage plans and protects a person against financial loss or damage.

Coverage

Applies to the amount of protection you have through an insurance company in the event of a loss

Policy Holder

one who owns the insurance

Premium

Amount you pay monthly, quarterly, semiannually or annually to purchase different types of insurance

Benefits of Insurance

Payments received from an insurance policy can far exceed the premiums paid Provides financial security and peace of mind

Types of Insurance

-Automobile -Health -Life -Disability -Homeowner's/ Renter's

claim on the insurance

a demand for compensation as the result of loss, injury, or damage

Deductible

Amount you must pay before you begin receiving any benefits from your insurance company

Co-insurance

Requires the insured individual to pay a fixed percentage of the loss after the deductible has been paid

Sources of Insurance

Individual, Employer, Government

Individual Insurances

Long term care, property and liability insurance

Employer Insurances

Health, Disability, and occasionally life insurance

Government Insurances

Special Programs for those who qualify and during catastrophe

Employee Benefits

Employers may offer employee benefits in the form of products or services that add extra value for employees beyond earned wages

Automobile Insurance

Provides payments for both liability and property insurance on a vehicle

25/50/25

-25,000 for per person injured -50,000 for entire accident -25,000 for property damages

Bodily Injury insurance

a type of liability insurance that covers drivers who are at fault for injuries to other people up to specified limits

Property Damage

Physical injury to, destruction of, or loss of use of tangible property.

Liability Insurance

insurance that provides protection from claims arising from injuries or damage to other people or property

Collision insurance

protection for damage to your car resulting from a collision with another car or object

comprehensive insurance

Damaged by anything other than a collision, insurance pays bill, covers theft, damage caused by fire, explosions, natural disasters, or riots.

Uninsured/Underinsured Motorists

Vehicle insurance that covers you and your family if you are involved in an accident with a driver who does not have insurance.

Auto Insurance's costs are based on

Type of coverage, driving record of insured, age, type of car, how often you drive and claim record

Life Insurance

insurance paid to named beneficiaries when the insured person dies

Beneficiary

one who benefits from something; a person who is left money or other property in a will or the like

Dependent

Someone who relies on someone else for income and care

Term Life Insurance

Insurance that provides financial protection from losses resulting from a death during a definite period, or term.

Whole Life Insurance

Insurance that is kept in force for a person's entire life and pays a benefit upon the person's death, whenever that may be.

Disability Insurance

A type of insurance paid to an individual if he/she is injured and is unable to work for a specified length of time.

Long-Term Care Insurance

Provides payment for extended nursing care due to accidents, illness, or old age

Health Insurance

Provides money to pay for health care for illness, injury, or, in some cases, preventive care

Dental Insurance

A plan that financially assists in the expense of treatment and care of dental disease and, in some cases, accidents to teeth NOT COVER COSMETICS

Vision Insurance

Provides coverage for optometry visits, contacts, glasses, and other eye-care needs.

5 General Areas of Health Coverage

Hospitalization, Surgical and Medical, Major-Medical, Dental and Vision, Mental Health

Medicare

A federal program of health insurance for persons 65 years of age and older

Medicaid

A federal and state assistance program that pays for health care services for people who cannot afford them.

Real Property

physical property such as land and buildings

Personal Property

possessions such as jewelry, furniture, and boats

Homeowners Insurance

Provides payment to cover liability losses as well as damage and loss of the home structure and its contents

Renters Insurance

a type of insurance that covers the loss of a tenant's personal property as a result of damage or theft

Earned Income

Money earned from working for pay

Unearned Income

Income received from sources other than employment

Alimony

payments made regularly to an ex-spouse after divorce

Paycheck Withholding

Money that your employer takes out of your check to pay for taxes

Types of paycheck withholding

Federal Income tax, state income tax, social security tax, medicare

FICA

Federal Insurance Contributions Act; tax levied on both employers and employees to pay for Social Security and medicare

Social Security

federal program of disability and retirement benefits that covers most working people

Gross Pay

the total amount of an employee's earnings before deductions are taken out

Net Pay

Amount of income left after taxes and deductions have been taken out.

Overtime Pay

Required for nonexempt workers under FLSA at 1.5 times the regular rate of pay for hours over 40 in a workweek

Annual Salary

the amount an employee gets paid once a year.

Sara worked 42 hours in one week, and makes $10 per hour. What is her gross pay for the week?

$400

IRS

(Internal Revenue Service) Governmental agency responsible for collecting federal taxes, issuing regulations, and enforcing tax laws

IRS Duties

Collect and process tax returns, ensure taxes are being paid, issue refunds for overpaid taxes, oversee retirement plans

Federal Income Tax

the taxes that the federal government imposes on personal income in order to provide services

What is Federal Income Tax used for?

Infrastructure, fund pension and benefits of government workers, housing and food to poor, emergency disaster relief

State Income Tax

A pay deduction required by law that supports the state government.

Separate Return

A return filed by a married individual reflecting his or her independent activity and tax liability for the year. The tax liability is based on the married filing separately rate schedule.

Tax Bracket

a specified interval of income to which a specific and unique marginal tax rate is applied

Progressive Tax System

a tax whose average tax rate increases as the taxpayer's income increases and decreases as the taxpayer's income decreases

Marginal Tax Rates

the tax rate on an additional dollar of income

Effective Tax Rates

the tax liability divided by the property's market value or sale price

Form 1040

The standard Internal Revenue Service (IRS) form that individuals use to file their annual income tax returns.

Form W-4

A form that you fill out to provide the information your employer needs to determine the proper amount to withhold from your paycheck

Form W-2

A summary of the income you earned during the year and all amounts the employer withheld for taxes.

Form 1099 INT

a statement of the interest your bank paid on your savings for the year

What do you need to file your taxes?

Personal Information, W-2, 1099 INT, 1040 Tax form, Tax Table, Banking Information