Questions and Answers
What is a deductible?
Money that you have to pay before the insurance kicks in.
Explain the relationship between premiums and deductibles.
A premium is what you pay to get the insurance. The lower the deductible, the higher the premium and vice versa.
Explain how insurance works including the concept of shared risk.
A policy in a group where everyone pays something, but if one needs to claim, the collector pays for that one claim.
_______ insurance coverage pays a portion of your salary when you are unable to work due to an injury that did not happen at work.
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Explain a preferred provider organization (PPO).
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Explain a Health Maintenance Organization (HMO).
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Explain worker's compensation.
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How do a deductible and coinsurance determine how much you pay for a medical procedure?
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List the three forms of social security benefits (excluding Medicare and Medicaid).
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Explain what happens to the social security taxes deducted from your paycheck.
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Is the retirement benefit of social security a primary source of income?
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What is the difference between Medicare and Medicaid?
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What does renter's insurance cover?
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Explain and give an example of home liability insurance coverage.
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What is a home insurance floater policy?
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What is the difference between replacement cost coverage and actual cash value coverage?
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What is a beneficiary in life insurance?
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Should everyone buy individual life insurance? Why or why not?
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What factors should be considered in determining how much life insurance to purchase?
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What is term life insurance?
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Study Notes
Insurance Basics
- Deductible: Amount paid out-of-pocket before insurance coverage starts.
- Premiums vs. Deductibles: Higher premiums correlate with lower deductibles and vice versa.
Shared Risk Concept
- Insurances pool funds from many individuals, covering claims for members in need.
- Pricing based on risk assessment; higher risk leads to higher premiums.
Types of Insurance
- Disability Insurance: Offers partial salary coverage for non-work-related injuries.
Health Insurance Models
- Preferred Provider Organization (PPO): Flexibility to choose between in-network or out-of-network providers, with higher costs for out-of-network services.
- Health Maintenance Organization (HMO): In-network coverage requiring a primary care physician's referral for specialists; typically costs less with set copays.
Worker's Compensation
- Insurance covering work-related injuries, funded by employers.
Medical Costs
- Deductibles and coinsurance determine out-of-pocket expenses for procedures.
Social Security Benefits
- Three forms: Retirement benefits, Disability benefits, Survivor benefits.
- Social security taxes fund current beneficiaries from the worker's paycheck.
- Retirement benefits are supplementary; additional income sources are typically necessary.
Medicare vs. Medicaid
- Medicare: Health insurance for the elderly and disabled (65+ years); covers 80% of expenses, requiring supplemental insurance for remaining costs.
- Medicaid: Health insurance for low-income individuals, covering total medical costs.
Property Insurance
- Renter's Insurance: Covers personal property damages; affordable insurance option.
- Home Liability Insurance: Covers medical bills and legal fees if someone is injured on your property.
- Home Insurance Floater Policy: Covers valuable movable items, such as jewelry or collectibles.
Coverage Types
- Replacement Cost Coverage: Reimburses the full cost of replacing items without depreciation deductions.
- Actual Cash Value Coverage: Considers depreciation, providing less than original purchase cost.
Life Insurance
- Beneficiary: Individual designated to receive life insurance proceeds upon the policyholder's death (can be primary or secondary).
- Individual vs. Group Life Insurance: Group plans are employer-sponsored, while individual plans are personally purchased. Not everyone needs individual life insurance based on personal circumstances.
- Factors to consider for life insurance needs: gender, dependents, debts, savings, college costs, and funeral expenses.
- Term Life Insurance: Provides benefits only if death occurs within a specified period; premiums increase with age.
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Description
Test your knowledge on essential insurance concepts with these flashcards. Understand key terms like deductible, premiums, and shared risk. Perfect for anyone looking to grasp the fundamentals of insurance.