Chapter 35: Life and Health Insurance

Life Insurance

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Protecting Your Family

• People provide for their future by saving money and wisely investing their funds.
• Just as vehicle insurance and property insurance protect against losses to property, life insurance and health insurance protect people.

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Types of Life Insurance

• Life insurance is insurance that is paid to a person or people designated to receive the funds when the insured person dies.
  • Buying life insurance can help you protect the people who depend upon you from financial losses caused by your death.
• Upon the policyholder’s death, the insurance company pays the survivors the value of a life insurance policy, or the proceeds.
• A beneficiary, who is a survivor, is someone who receives part or all of the proceeds.
• Cash-value insurance, or permanent insurance, provides both savings and death benefits.
• With whole life insurance, a premium that stays the same is paid throughout the policyholder’s lifetime.
• With universal life insurance, a policyholder has more flexibility in premium payments and benefits once the policy has built cash value.
• With variable life insurance, the cash-value part of the premium is used for investments such as stocks, bonds, and mutual funds, rather than savings.
• Term insurance covers a person for a specific period of time. The length of the term might be five, 10, or 20 years.
• Workers or their companies usually pay less for a group policy than for individual policies.

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Costs of Life Insurance

• As with any type of insurance, the amount of the premium on a life insurance policy depends on the type of policy and the amount of coverage.
• Term insurance costs less than cash-value insurance
• Factors such as the policyholder’s age, health, and occupation also affect the cost of the premium.

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Health Insurance

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Protecting Your Health

• Few people have enough savings to pay for medical costs on their own.
• Health insurance provides protection against the costs of illness and accidents

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Paying for Health-Care Costs

• Many health insurance policies have coinsurance, a percentage of medical expenses that a policyholder must pay beyond the deductible.
• Many policies also require a copayment, or a fee paid each time a service is used.
• Some services, such as dental, vision, or mental health care, might not be covered by a health insurance policy.
• Many policies also will not cover a pre-existing condition, a serious health condition diagnosed before a person obtained health insurance.
• Major medical insurance, sometimes called catastrophic insurance, is the most important coverage for a serious illness or accident.
  • Major medical insurance is intended to cover health-care costs not covered by other types of insurance.
• Hospital expense insurance pays for hospital care for a given period of time.
• Surgical expense insurance pays part of a surgeon’s fee for an operation.
• Medical expense insurance covers the costs of a doctor’s care not involving surgery
• A group health insurance plan is the least expensive form of health insurance for most people.
• A health maintenance organization (HMO) provides health care at its own health center for a fixed fee per month.
• A preferred provider organization (PPO) is a group of doctors and hospitals that agree to provide specified medical services to members at pre arranged fees.
• Medicare is the U.S. government’s major health insurance program for the elderly.
• Medicaid is a federally and state-funded health-care plan for people who are unable to pay for insurance or health care.

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