insurance jeopardy ® joan koonce, ph.d., afc ® extension financial planning specialist

Insurance Jeopardy®

Joan Koonce, Ph.D., AFC®

Extension Financial Planning Specialist

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Terminology & Concepts

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Health & Disability Insurance

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500

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Life Insurance

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Property & Liability Insurance

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400

500

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Other/Supplemental

Insurance

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500

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This is the dollar amount you pay towards your expenses before the

insurance company pays their portion.

What is the deductible?

Terminology & Concepts - 100

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This is the percent of your expenses you pay after the

deductible.

What is coinsurance?


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Many insurance companies will not cover these until after a waiting period has expired.

What are pre-existing conditions?


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This provision in an insurance policy puts a limit on the total

amount you will pay out of pocket for your loss.

What is a coinsurance cap or stop-loss provision?


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This provision in an insurance contract prevents you from being reimbursed

for more than 100 percent of your loss.

What is a coordination of benefits clause?


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You use this type of account to pay for medical expenses with pre-tax

dollars.

What is a flexible spending account?

Health & Disability - 100

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This is the most liberal definition of disability found in disability income insurance contracts.

What is own occupation?


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Long-term care insurance companies assess the need for

long-term care by using these as benefit triggers.

What are Activities of Daily Living (ADLs)?


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This type of health insurance plan costs more but provides you with the greatest choices of doctors.

What is fee-for-service or indemnity plan?


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These health care plans limit your choice of doctors. Health

Maintenance Organizations (HMOs) and Preferred Provider Organizations

(PPOs) are in this category.

What are managed health care plans?


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Because it is temporary insurance protection and has no savings

component, it costs less than other types of life insurance.

What is term life insurance?

Life Insurance - 100

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Doing this will cause the death benefit of a life insurance policy to be less than the original face value

when purchased.

What is taking out a policy loan?


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Lump sum, interest only and life annuity are examples.

What are settlement options?


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This feature in a life insurance policy allows you to exchange a

term life insurance policy for one that has a cash value.

What is a convertibility feature?


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These two types of life insurance have a savings component and allow you to choose your own

investments.

What is variable life and variable-universal life?


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25/50/25

What is the minimum amount of automobile bodily injury/property

damage liability coverage required in Georgia?

Property & Liability - 100

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This type of automobile insurance covers your losses if you are hit

by a hit-and-run driver.

What is uninsured/underinsured motorist coverage?


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When purchasing homeowner’s insurance to cover your home,

this is uninsurable.

What is land?


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You add these to your standard homeowner’s policy to increase

coverage on items that are inadequately covered.

What are floaters?


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These two types of automobile insurance coverage are required

by lenders.

What is collision and comprehensive?


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Low-income, blind or elderly persons can obtain health care through this program funded by the state and

federal government.

What is Medicaid?

Other/Supplemental - 100

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This type of insurance only covers specific illnesses or accidents.

What is dread disease and accident insurance?


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It is a type of insurance that must be purchased if you don’t pay at least 20

percent down when purchasing a home.

What is private mortgage insurance?


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This coverage pays for the difference between the vehicle’s value and what you may still owe

on the loan.

What is gap insurance?


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People purchase these types of insurance to pay off their mortgage in

the event of their death and make their mortgage payment if they

become disabled.

What is credit (mortgage) life and credit (mortgage) disability income insurance?


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Insurance Terminology and Concepts

• Risk– The uncertainty that you will incur

a financial loss and the uncertainty regarding the size of the financial loss

• Pure Risk• Speculative Risk

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• Ways to Manage Risk– Avoid risk

•Example: Don’t drive– Reduce risk

•Example: Wear seat belts– Retain or accept risk

•Example: Pay all or a portion of the loss

– Transfer or share risk •Example: Purchase insurance

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• Premium• Deductible• Coinsurance• Co-payment• Coinsurance Cap or Stop-Loss Provision• Pre-existing Conditions• Waiting Period• Policy Limits• Policy Provisions• Coordination-of-benefits Clause

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• Types of Insurance– Health, Disability Income and Long-Term

Care Insurance– Life Insurance– Property and Liability Insurance

•Automobile insurance•Homeowner’s insurance•Personal umbrella liability insurance

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Health Insurance

• Major Types of Health Care Coverage– Basic health insurance

•Hospital insurance•Surgical insurance•Medical expense insurance

– Major medical insurance

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Health Care Plans

• Private Health Care Plans• Government-Sponsored Health

Care Plans

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Private Health Care Plans

• Fee-For-Service or Traditional Indemnity Plans

• Managed Health Care Plans– Health maintenance organizations

(HMOs)– Preferred provider organizations

(PPOs)

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Government-Sponsored Health Care Plans

• Medicaid• Medicare• Worker’s Compensation

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Medical Flexible Spending Accounts

• These accounts allow you to pay for medical expenses with pre-tax dollars.

• Money put into the account is used to pay for un-reimbursed medical expenses.

• Some expenses are not eligible for coverage.

• You either use the money or lose it.

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Disability Insurance

• Disability income insurance replaces 60 to 80 percent of your income if you are unable to work due to an illness or injury.– Own versus any occupation– Residual clause– Benefit period– Elimination (waiting) period– Short-term versus long-term disability

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Long-Term Care Insurance

• Long-term care services are provided when a person cannot perform certain activities of daily living (ADLs) and/or is cognitively impaired.

• What does long-term care insurance cover?– Skilled, intermediate and custodial care– Home care services, physical therapy,

homemakers, home health aides– Assisted living, adult daycare, other care in

the community– Alternate care (other physician recommended

services)– Respite care for the caregiver– These accounts allow you to pay for medical

expenses with pre-tax dollars.

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Life Insurance Terms

• Face Value: the benefit due upon death

• Insured: the person whose life is covered by the policy

• Policyholder or Policy Owner: the individual or business that pays for and owns the policy

• Beneficiary: the recipient of the benefit upon the death of the insured

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Two Basic Types of Life Insurance

• Term Insurance• Cash-Value Insurance

– www.trustedquote.comwww.trustedquote.com

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Types of Cash-Value Life Insurance

• Whole Life Insurance• Universal Life Insurance• Variable Life Insurance• Variable-Universal Life Insurance

– www.lifeinsuranceindepth.comwww.lifeinsuranceindepth.com

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Life Insurance Clauses

• Incontestability Clause– Places a time limit, usually two years, on

the right of the insurance company to deny a claim based on information provided in the application

• Suicide Clause– Gives the insurance company the right

to deny a claim if the inured dies by suicide within a certain period of time, usually two years

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Life Insurance Settlement Options

• Lump-Sum Settlement• Interest-Only Settlement• Period-Certain Settlement• Installment-Certain Settlement• Life-Annuity or Life Income

Settlement

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Types of Automobile Insurance

• Bodily Injury and Property Damage Liability– Required coverage in the amount of

25/50/25 in Georgia

• Medical Payments

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• Uninsured and Underinsured Motorist Bodily Injury and Property Damage

• Collision and Comprehensive– Deductibles apply to this coverage– Required by lenders if your car is

financed

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• No-Fault Insurance– Only available in “no-fault” states– Your insurance pays for your losses

and their insurance pays for their losses – no legal battles.

• www.autoinsuranceindepth.comwww.autoinsuranceindepth.com

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Homeowner’s Insurance Terms

• Replacement Cost/Value: the amount necessary to repair, rebuild or replace an asset at today’s prices

• Current Market Value (CMV): Original purchase price minus depreciation, also referred to as actual cash value

• Floater Policies• Inflation Protection Endorsement

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Six Basic Forms of Homeowner’s Insurance

• Basic Forms of Homeowner’s Insurance– Broad Form Homeowner’s Insurance– Special Form Homeowner’s Insurance– Renter’s Insurance– Condominium Owner’s Insurance– Older Homes Homeowner’s Insurance

• Policies differ based on the type of property, amount of coverage and number of perils (events that cause a loss such as fire, tornado, etc.) covered.

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Homeowner’s Insurance Coverage

• Property– Home– Other detached buildings– Personal property– Landscaping– Loss of use

• Liability– Comprehensive personal liability– No-fault medical payments– No-fault property damage

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Personal Umbrella Liability Insurance

• Covers liability costs after the underlying automobile and homeowner’s policies have been exhausted

• Standard amount of coverage is $1 million although higher amounts can be purchased

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Other/Supplemental Insurance

• Dental and Vision Insurance• Dread Disease and Accident Health and

Life Insurance• Private Mortgage Insurance• Gap Insurance

– www.autoinsuranceindepth.com/gap-insurance.htmlwww.autoinsuranceindepth.com/gap-insurance.html

• Credit Life and Disability Income Insurance• Children’s Life Insurance

www.gafamilies.com

1-800-ASK-UGA1

insurance jeopardy ® joan koonce, ph.d., afc ® extension financial planning specialist

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