Protects the standard of living of the survivors Policyholder dies = ins. co. pays survivors Proceeds: the money paid to survivors Beneficiary: each

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2 Protects the standard of living of the survivors Policyholder dies = ins. co. pays survivors Proceeds: the money paid to survivors Beneficiary: each person who receives part of the proceeds Policyholder names beneficiaries

3 Cash-value insurance: provides savings and death benefits Part of premium Part of premium Cash value death benefits builds up cash value (savings acct) over life of policy Cancel policy, claim collected cash-value Emergency borrow part/all of cash value, pay interest Different kinds of cash value insurance

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5 Policyholder pays premium that stays the same throughout his/her lifetime Provides savings during policyholder s life and pays benefits after death

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7 Pay premiums for certain number of years EX. 20-payment life policy, you pay premiums for 20 years Paid up at age 65 - many retire at 65 & won t have to pay premiums after paychecks stop

8 Cash value part of premium is invested Stocks, bonds, and mutual funds rather than savings Rest of premium is used for death benefits Increases or decreases depending on value of investments

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10 Based more on savings over death benefits Coverage for specific period of time Proceeds go to policyholder if alive at the end of period If policyholder dies during endowment period, beneficiaries receive proceeds Usually used to provide income for retirement or education More expensive

11 Term Insurance: life insurance that covers a person for a specific period of time Could be 5, 10, or 20 years Only pays benefits if person dies within the term If the insurer lives longer, policy has no value Can be renewed.higher premium Pure protection only pays death benefits, no cash value Low cost

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13 How it works: Your friend purchases a 5 year, $10,000 policy (covers him for 5 years) If your friend dies within those first five years, his/her beneficiary will receive $10,000. After five years his/her coverage ends The policy can be renewed over time but with a higher premium Term insurance is often used as a part of group life insurance Offered by employers; if you leave company, you lose coverage Group policies are cheaper than individual policies

14 Term insurance < cash value insurance Factors that effect premium: Age, health, occupation Many have to take a physical first Older = higher cost Dangerous occupations = higher cost

15 Protects against the cost of illness/accidents Avg. cost of one hospital day stay = $5,000

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17 Private Health Care Plans Government-Sponsored Health Care Plans

18 Fee-For-Service or Traditional Indemnity Plans Managed Health Care Plans Health maintenance organizations (HMOs) Preferred provider organizations (PPOs)

19 Least expensive Co./org. provides for employees/members Employees/members can add extra coverage at their own exp. Health maintenance organization (HMO): provides health care at its own health center for a fixed fee per month you must go to its own clinic/choose one of their doctors

20 Coinsurance Clause requires you to pay a certain % of medical exp.s beyond deductible Copayment: fee paid each time a service is used More people covered = higher premium (i.e. dependents) Many policies won t cover a pre-existing condition: a serious health condition diagnosed before a person obtained health ins. EX. Someone suffers from a heart condition, an insurance company might refuse to cover it

21 Major Types of Health Care Coverage Basic health insurance Hospital insurance Surgical insurance Medical expense insurance Major medical insurance

22 Pays hospital care for a given period of time Covers: room & board, tests, x-rays, operating room costs, nursing care, and fees for drugs & treatments Could have deductible Some policies have limits for specific exp.s Some set a max per day for max # of days Most popular

23 Pays part of a surgeons entire fee for operation Max payment for particular surgical exp. Policy lists surgeries & costs allowed Major Medical Ins. picks up where Surgical Exp. doesn t Usually bought w/ Hospital Exp.

24 Covers costs of a doctor s care not involving surgery Usually purchased w/ Hospital Exp. & Surgical Exp. Ins. Co. could combine all 3 types into 1 basic health ins. plan

25 = catastrophe ins. Most important coverage for a serious illness/accident Covers: hospital care, doctor s bills, tests, x-rays, and nursing care Deductible Some plans have coinsurance: % of medical exp. a policyholder must pay beyond the deductible Insurance 75-80%, policyholder 20-25% EX. $1,000 deductible and coinsurance of 20%. Bills are $6,000, you pay $2,000 ($1,000 deductible and 20 % of $5,000)

26 Medicare: major health ins. program set up by the federal gov t (2 parts) Part A: hospital ins. (covers hospital care) Pay a deductible Part B: medical ins. (covers doctor s fees/tests) Pay a deductible Coinsurance Monthly premium

27 Medicaid: another gov t health care plan for certain groups of citizens Provides care for those who are unable to pay for ins. or health care Much more comprehensive than medicare

28 The act provides comprehensive health ins. reforms that hold ins. companies more accountable President Obama signed the Act on Mar. 23, 2010 Lower costs More choices Enhance the quality of healthcare

29 Lower Costs creation of a competitive private health ins. market Stabilizes economy Expected to reduce deficit over next ten years by $100 billion End Ins. Co. denial & abuse of care (Americans w/ pre-existing conditions) Will be rolled out through 2014 Covers: Individuals Families Seniors Businesses Reduced premiums for families & small businesses

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