Chapter 35: Life and Health Insurance

Life Insurance

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.

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.

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.

Health Insurance

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

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.