Podcast
Questions and Answers
Which of the following would not be a huge financial risk (and, therefore would not require insurance) if you had a full emergency fund of $500 or more?
Which of the following would not be a huge financial risk (and, therefore would not require insurance) if you had a full emergency fund of $500 or more?
What is the time between the disabling event and the beginning of payments in your disability coverage called?
What is the time between the disabling event and the beginning of payments in your disability coverage called?
Elimination period
What is a life insurance policy for a specific period of time called?
What is a life insurance policy for a specific period of time called?
Term
What is the primary purpose of insurance?
What is the primary purpose of insurance?
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Which of the following is not a recommended way of lowering your car insurance premiums?
Which of the following is not a recommended way of lowering your car insurance premiums?
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Which of the following types of insurance is not recommended for a young single adult?
Which of the following types of insurance is not recommended for a young single adult?
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Which of the following is not a recommended way to save on your health insurance premium?
Which of the following is not a recommended way to save on your health insurance premium?
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When does a person become self-insured?
When does a person become self-insured?
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Any kind of duplicate insurance coverage is a bad idea.
Any kind of duplicate insurance coverage is a bad idea.
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You should not buy long-term care insurance until age 30.
You should not buy long-term care insurance until age 30.
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Disability insurance is not necessary if you have a good health insurance policy.
Disability insurance is not necessary if you have a good health insurance policy.
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Cash value insurance is normally for life and is more expensive than term life insurance because it funds a savings plan.
Cash value insurance is normally for life and is more expensive than term life insurance because it funds a savings plan.
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Which of the following is not a benefit of having a will?
Which of the following is not a benefit of having a will?
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Which of the following policies would be a duplicate coverage for your health insurance policy?
Which of the following policies would be a duplicate coverage for your health insurance policy?
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What type of insurance covers medical expenses of a victim in a car accident where you are at fault?
What type of insurance covers medical expenses of a victim in a car accident where you are at fault?
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Comprehensive coverage takes care of damage to your car that is not caused by a collision.
Comprehensive coverage takes care of damage to your car that is not caused by a collision.
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After high school, you should have the following types of insurance: auto, renter's, health, and long-term care insurance.
After high school, you should have the following types of insurance: auto, renter's, health, and long-term care insurance.
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Following the Five Foundations will help you to, one day, become self-insured.
Following the Five Foundations will help you to, one day, become self-insured.
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Renter's insurance is not necessary if you don't have a lot of expensive things.
Renter's insurance is not necessary if you don't have a lot of expensive things.
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Prepaid burial policies are a good idea.
Prepaid burial policies are a good idea.
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Duplicate coverage, or any extra insurance on top of your existing insurance, is not necessary.
Duplicate coverage, or any extra insurance on top of your existing insurance, is not necessary.
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Any insurance with cash value or that combines insurance with investments is a bad idea.
Any insurance with cash value or that combines insurance with investments is a bad idea.
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You should not buy identity theft protection that only provides credit report monitoring.
You should not buy identity theft protection that only provides credit report monitoring.
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Good identity theft protection includes restoration services.
Good identity theft protection includes restoration services.
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Disability insurance offered through your employer is usually the most expensive coverage option.
Disability insurance offered through your employer is usually the most expensive coverage option.
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What describes the type of coverage in an insurance agreement?
What describes the type of coverage in an insurance agreement?
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Who is the recipient of assets passed on from the death of a friend or relative?
Who is the recipient of assets passed on from the death of a friend or relative?
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What is a legally enforceable declaration of how a person wishes his or her property to be distributed after death called?
What is a legally enforceable declaration of how a person wishes his or her property to be distributed after death called?
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What is a specific amount of money that you pay when insurance only covers a portion of costs called?
What is a specific amount of money that you pay when insurance only covers a portion of costs called?
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What applies to the amount of protection you have through an insurance company in the event of a loss?
What applies to the amount of protection you have through an insurance company in the event of a loss?
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What is the paperwork filed with an insurance company in order to get them to cover a loss for someone they insure called?
What is the paperwork filed with an insurance company in order to get them to cover a loss for someone they insure called?
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What is the amount you pay monthly, quarterly, semiannually, or annually to purchase different types of insurance called?
What is the amount you pay monthly, quarterly, semiannually, or annually to purchase different types of insurance called?
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What type of insurance covers property damage and medical bills if you are at fault in a car accident?
What type of insurance covers property damage and medical bills if you are at fault in a car accident?
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What is the amount you must pay before you begin receiving any benefits from your insurance company called?
What is the amount you must pay before you begin receiving any benefits from your insurance company called?
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What is an amount of money you pay to help cover a portion of your medical costs called?
What is an amount of money you pay to help cover a portion of your medical costs called?
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Which types of insurance are included in the list?
Which types of insurance are included in the list?
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Study Notes
Personal Finance Insurance Concepts
- Having a full emergency fund negates the need for insurance on small personal losses, such as losing a cell phone.
- The elimination period is the timeframe between a disabling event and the start of disability insurance payments.
- Term life insurance provides coverage for a specified period and ceases when that time expires.
- The central aim of insurance is to transfer financial risk from an individual to the insurance provider.
Insurance Optimization Strategies
- Dropping auto insurance coverage entirely is not a recommended strategy to lower premiums.
- Life insurance is generally not necessary for young single adults due to fewer financial dependents.
- Keeping health insurance is critical, regardless of youth or perceived good health, to avoid substantial risks.
Self-Insurance and Coverage
- Individuals become self-insured when their children are independent, debts are cleared, and retirement is fully funded.
- Duplicate insurance coverage leads to unnecessary spending and is considered a poor choice.
Long-Term Care and Disability Insurance
- The notion that long-term care insurance should not be purchased before 30 is false; early consideration can be beneficial.
- Disability insurance is essential regardless of the robustness of health insurance, contrary to the belief that good health insurance makes it unnecessary.
Life Insurance Insights
- Cash value insurance is typically more expensive than term life insurance as it combines life coverage with a savings component.
- A will is important irrespective of the size of one’s estate; many assume it is only needed for larger wealth.
Understanding Policies and Beneficiaries
- Health insurance can have policies that provide duplicate coverage, such as cancer and hospital indemnity insurance.
- Liability insurance covers expenses for damages or injuries to others when you are at fault in an accident.
Misconceptions in Insurance
- Comprehensive coverage protects against damages not caused by collisions, confirming its importance in auto insurance.
- Renter's insurance remains essential even for those without expensive possessions, countering the belief that it is only necessary for high-value belongings.
- Prepaid burial plans are generally not advisable, along with other forms of duplicate coverage that inflate insurance costs unnecessarily.
Insurance Terms and Definitions
- Policy: The official document detailing coverage.
- Beneficiary: The individual entitled to receive assets after someone's death.
- Will: A legal document expressing a person's wishes regarding property distribution following death.
- Out-of-pocket expense: Costs an individual pays themselves when insurance only covers part of a service.
- Coverage: The extent of protection insurance provides against losses.
- Claim: A formal request to an insurance company for compensation due to a loss.
- Premium: The amount paid periodically for maintaining insurance policies.
- Deductible: The sum the insured must pay before the insurance company pays benefits.
- Co-payment: A fixed amount paid for medicare services or goods.
Essential Insurance Types
- Major types include homeowners, renters, auto, disability, health, long-term care (for those 60 and older), identity theft protection, and life insurance.
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Description
This quiz explores key concepts in personal finance related to insurance, including emergency funds, term life insurance, and self-insuring strategies. Understand the importance of insurance in transferring financial risk and optimizing coverage. Test your knowledge on how to effectively manage personal insurance needs.
