 Life
insurance is a contract
specifying a sum to be paid to a
beneficiary upon the insured’s death
 Beneficiary- the recipient of any
policy proceeds if the insured
person dies
• To protect those who depend on you as a source
of income
 Pay off home and debt at time of death
 Money for children whey they reach specific age
 Education for children
 Retirement income
 Savings
A
term policy is life coverage only
• On the death of the insured it pays the face
amount of the policy to the named beneficiary.
• You can buy term for periods of one year to 30
years.
• Benefits
 Cheap
 know exact amount paid out at death
• Combination of a term policy with an investment
component.
 Guaranteed face value will be paid
 The policy builds cash value that you can borrow
against
 Riskier because of investment option
 Must stay in for 20 or more years to see benefits
 Expensive
 Disability
Insurance replaces a portion
of one’s income if they become unable to
work due to illness or injury


Short-Term Disability policies (STD) have
a waiting period of 0 to 14 days with a
maximum benefit period of no longer than
two years.
Long-Term Disability policies (LTD) have
a waiting period of several weeks to several
months with a maximum benefit period
ranging from a few years to the rest of your
life.
 based
on
• Age
• Sex
• Occupation
• amount of potential lost income
 If
you have paid in to SS, entitled to:
• Payment if unable to work
 Physical or mental condition to prevents work
 Condition is expected to last 12 months or more
• Benefits determined by
 Pay
 # of years covered by SS
Health
insurance provides
protection against financial losses
resulting from injury, illness, and
disability.
 Entire
group has same coverage
 Pay same premium
 Pro’s
• Negotiate better coverage and lower premiums
 Con’s
• If you are in good health pay more for others
• Maternity?
 Insurer
can’t cancel on any one person for
medical reasons
 1988
• 66% of large companies (200+ workers) offered
retiree coverage
 2009
• only 29% of large companies and 5% of smaller
companies in 2009
 Why
is there such a gap between 1988
and 2009?
 High
premiums/High deductibles
 Require a physical exam
 Insurer can refuse to cover certain health
problems
 Co-pays- The
amount an insured person is
expected to pay for a medical expense at
the time of the visit
 Co-insurance- the percentage of eligible
charges payable by the insured for covered
services
• 80/20- insurance pays 80%, you pay 20%
 Out
of Pocket Maximum- maximum dollar
amount per year of eligible medical charges
payable by the member directly to
providers
• Deductibles, co-pays, co-insurance
 Medical-
routine visits, x rays, lab test
• Prescription may be covered- use generic
 Hospital-
bills for room, food, drugs
 Surgical- surgeon’s fees for operation
• Cosmetic and elective no covered
• Some surgeries may exlcuded
 Gives
protection against catastrophic
expenses of serious illness or injury
 Usually has a specified lifetime maximum
 Requires co-insurance
• 20%
 Costs
extra
 Can choose whether to enroll
 Different coverage for different plans
 Group
of doctors and hospitals that work
together to provide services at a set fee
 You must choose from doctors on list or it
costs you more
 Co-payments
 Group
plan offering prepaid medical
care to members
 Has own facilities
 Must use a doctor on the HMO staff
 Routine physicals usually covered
 Co-pay required
 allows
people who change jobs
opportunity to continue group insurance
for limited period of time (18 months)
• Premiums paid by individual not
• Purpose- give time to obtain other insurance
from new employer or individual policy
 Medicare
• Health insurance for people 65 and older
• Are not fully covered until 67
• Paid for by employee payroll deductions
 Medicaid
• Health insurance for people with low incomes
and limited resources
• Are limits and exclusions
 You
hit and injure a pedestrian in a
crosswalk
Automobile!
 After
losing her husband to a heart
attack, the wife is left alone to care for 2
children
Life!
 You
need a cast after breaking an ankle
while roller-blading
Health!
 You
apartment is broken into and your
computer is stolen
Renters!
 You
are injured in an automobile accident
and are unable to work for 2 months
Disability!
 Your
garage was destroyed by a fire
which started by a lightning bolt hitting
your home
Homeowners!
A
daughter, who is financially
responsible for her mother’s nursing
home bills, dies from an undetected
heart defect
Life!
A
doctor diagnoses a child with
tonsillitis during a visit to a clinic
Health!
 Sick
at home from food poisoning
after eating a carnival corndog
Nothing!
 You
get pulled over and receive a
speeding ticket on your way to the
mall
Nothing!