unit 5

Pure Risk 

a chance of loss with no chance of gain 

Speculative Risk

results in either gain or loss

Economic Risk 

may result in gain or loss because of changing economic conditions

Insurable Risk

a pure risk that is faced by a large number of people, and for which the amount of the loss can be predicted 

Personal Risk

the chance of loss involving your income and standard of living 

Property Risk

the chance of loss or harm to personal or real property is called

Liability Risk

the chance of loss that may occur when your error or actions result in injuries to others or damages to their property 

Premium

risk for a fee; the cost of potential future losses in exchange for regular fee payments 

Risk Mangement

An organized strategy for controlling financial loss from pure risks and insurable risks 

Risk Assessment

understanding the types of risk you will face and their potential consequences 

What are the 3 steps of Risk Assessment?

identify risks of loss

assess seriousness of risks

handle risks

Risk Shifting

risk transfer; when you buy insurance to cover financial losses caused by damaging events such as fire, theft, injury, or death 

Risk Avoidance

lowers the chance of loss by not doing the activity that could result in the loss 

Risk Reduction

lowers the chance of loss by taking measures to lessen the frequency or severity of losses that may occur 

Risk Assumption

the process of accepting the consequences of risk

Deductible

the specified amount of a loss that you must pay 

What can you do to reduce insurance costs?  (List the 5 things you can do - strategies in italics)

increase deductibles

purchase group insurance 

consider payment options

looks for discount opportunities 

comparison shop 

Renter’s Policy

insurance that protects renters from property and liability risks

Example of personal property

couch, chairs, bed, clothing 

Example of liability

paying someone’s expenses who is injured in your house 

What is extended coverage?

renter’s policy will protect your personal possessions while they are in your car or at work 

Homeowner’s Policy

insurance that protects property owners from poetry and liability risks (like the building they own)  

Examples Hazards

fire, water, wind, and smoke

Examples Crimes

criminal activity, robbery, burglary, arson, and vandalism 

Examples Liabilities

the cost of another person’ losses for injuries at your property

Liability Coverage

insurance to protect against claims for bodily injury to another person or damage to another person’s property 

Un-invited guest

presumed to have permission to be on your property 

attractive nuisance

a dangerous place, condition, or object that is particularly attractive to children 

The cost of Automobile Insurance (premiums) are based on what factors?

model, style, and age of car

driver classification (age, sex, marital status, driving record)

Location (city, country) of driver and car 

distance driver

Purpose of driving (such as work)

Age, sex, and marital status of other regular drivers of the car

Driving Record

the number and type of traffic tickets you’ve received for driving infractions and misdemeanors along with the number of accidents in which you’ve been involved. 

Types of Automobile Insurance Coverage

Liability Coverage

to protect the insured against claims for bodily injury to another person or damage to another person’s property

Collision Coverage

automobile insurance that protects your own car against damage from ancient of vehicle overturning 

Comprehensive Coverage

protects you from damage to your car from causes other than collisions or vehicle overturning 

Personal Injury Protection (PIP)

automobile insurance that pays for medical, hospital, and funeral costs of the insured and his or her family and passengers, regardless of fault 

Uninsured/Underinsured Coverage

automobile insurance that pays for your injuries when the other driver is legally liable but unable to pay 

No-Fault Insurance

automobile insurance in which drivers receive reimbursement for their expenses from their own insurer, no matter who caused the accident 

***this term is very important to remember moving forward in life***  :-)

Umbrella Liability Insurance

supplements your basic auto and property liability coverage by exempting limits and including additional risks. 

Health Insurance

a plan for sharing the risk of high medical costs resulting from injury and illness

COBRA

The Consolidated Omnibus Budget Reconciliation Act; a law that allows people who leave employment to continue their health insurance under the company plan for a limited period of time (usually 18 months)

Double Coverage

a group health insurance provision that specifies how the insurers will share the cost when more than one policy covers a claim 

Flex Plans

An employer benefit program that allows employees to set aside money, or pretax, to help pay deductibles 

Define and/or write some facts about each policy type in the space below.  

High or low premiums 

compared to one another.

Group Policies

all those insured have the same coverage and pay a set premium 

lower 

Individual Policies

buying individual health insurance policies 

higher

Basic Health Insurance

Includes medical, hospital, and surgical costs 

Major Medical Insurance

provides protections against the catastrophic expenses of a serious injury or illness

Dental and Vision Insurance

covers basic dental services, such as exams, cleanings, x-rays, and fillings. Vision insurance pays for exams for eye disease as well as for prescription adjustments and lenses 

Stop-loss provision

an insurance clause that caps or sets a maximum that the insured has to pay during any calendar year. 

Unmanaged Care

allows participants to choose any doctor and to be reimbursed for a portion of the expenses incurred after a deductible is met.

Managed Care

rely on a network of health care provides

What are the 3 types of Managed Care Plans?  (ORANGE headings)

health maintenance organization (HMO)

Preferred Provider Organization (PPO)

Point of Serice (POS) plan

Medicare

Medicaid

Disability Insurance

What are the 3 types of Disability Insurance listed?  (PURPLE headings)

Life Insurance

Portability

Double Indeminity

What are the 2 types of life insurance?  (ORANGE headings)