Living on your own

INSURANCE TERMS (Please refer to the INSURANCE GROUP PRESENTATION NOTE SHEET for assistance): 

  • Premium

    • What you have to pay for insurance coverage

  • Deductible

    • Must pay the deductible before insurance 

  • Limit

    • The maximum amount that the insurance company will pay you

    • Limit goes up, premium goes up 

    • Deductible goes up, premium goes down 

-AUTO INSURANCE:

  • Comprehensive Coverage

    • Non accident damage coverage 

  • Liability Coverage

    • If it's your fault, covers damages to somebody else's car and covers legal expenses 

  • Collision Coverage

    • Protects your car 

  • Subrogation

-HOMEOWNERS INSURANCE:

  • What's covered and what's not.

    • Theft, fire, smoke covered

    • Natural disaster is not covered 

      • Earthquake 

      • flood

  • Mailman falls on your driveway?

    • Covers injury for you or anyone else on your property 

  • Actual Cash Value (ACV) vs Replacement Cost Value (RCV)

    • Actual cash value = gets paid very little 

    • Replacement cost value = insurance you want

  • Renters Insurance

    • Really cheap, covers all situations, usually unlikely to be used 

-LIFE INSURANCE:

  • Term Life Insurance 

    • Period of time, pay from like 33-50

  • Whole Life Insurance 

    • Entire life, pay no matter what

  • Benefit

    • Payout / get money  

  • Beneficiary vs Secondary Beneficiary

    • Beneficiary is the person who receives your money 

    • Secondary beneficiary are the second to get the money 

  • What is life insurance used for?

    • Helps you create an estate for your family / inheritance 

-DISABILITY INSURANCE

  • What does it cover

    • Bad accident, very sick, bad heath 

  • What does it normally replace (as a %)?

    • 60% 

    • If you get more insurance you can cover 90%

  • Employers generally pay for it

    • Pay for disability insurance 

-MEDICAL (HEALTH) INSURANCE:

  • What does it usually cover?

    • Doctor, physical, surgery, x ray

    • Medical procedures not covered are cosmetic

      • Plastic surgery

  • Preventative Services 

    • Usually paid in full by the insurance company

  •  vs Covered Services 

    • Covered by the Insurance company but not necessarily in full

  • Co-pay

    •  Usually a $25 or $50 payment due to the doctor no matter what

  •  vs a deductible 

    • the amount you have to pay for services before Insurance begins paying

  • Co-Insurance

    •  (usually a 80/20 split with insurer paying 80%) after deductible is satisfied

BUYING A CAR:

  • mileage effect on value of car

    • More miles on the car, the less valuable it is

    • The older the car, the less valuable it is 

  • MSRP (sticker)

    • Manufacturer's suggested retail price 

  •    Invoice price

    • The actual price that the end-customer retailer pays to the manufacturer or distributor for a product

  • TMV 

    • (true market value) and the process of NEGOTIATING the price.

  • VIN

    • Vehicle identification number 

    • Like a social security number 

  • Auto Loan

    • credit check done and may impact your APR

    • “trade in" (of your old car) will reduce the amount you need to borrow for your new car

    • What does a down payment do to the size of your car loan?

      • It decreases the size of your car loan 

  • Year, Make, Model, Trim

    • Year = 2025

    • Make = volvo 

    • Model = xcs1

    • Trim =

  • Sales price

    • What percent you have to pay

  • Lease vs Buy option

    • Monthly payment for lease is less expensive

    • Get a new car every 3 years 

    • Buy monthly payment is more each month

  • Cars almost always DEPRECIATE over time.

  • Should you buy a used car from someone other than a dealership??   What about a relative?

    • No, the dealer has to recognize all history with the car, selling separately they don't do that

BUYING A HOME:

  • Mortgage:    

    • credit check more significant 

  • 2 primary types of Mortgages: 

    •  FIXED (which is what we studied in the CREDIT UNIT)

    • ADJUSTABLE RATE (which resets to a new rate after 5 or 10 years)

      • It fluctuates, adjusts to where the current APR is 

  • Refinance your Mortgage? 

    • You can take advantage of a lower interest rate (APR) if they go down.  

  • Location, Location, Location

    • Location always matters

  • Down Payment on a house

    • 15-20%

    • Reduces your mortgage 

  • How to determine the EQUITY that one has in their house:     EQUITY =  (CURRENT) FAIR MARKET VALUE - YOUR OUTSTANDING LOAN BALANCE

  • EXAMPLE:     You pay $400,000 for a house.   you pay $50,000 as a downpayment.    after 10 years:    you have paid off $80,000 in principal on your mortgage.       The house is now valued at $500,000.             The "EQUITY" in your home is therefore $500,000 (the current fair market value)  less  $270,000 (your outstanding loan balance),   which =  $230,000

  • Renting an Apartment:    many different upfront costs. What are the 2 ways to determine if you can afford a specific monthly rental cost?

    • Can't exceed 30% of your gross monthly income