Personal Finance TC Chapter 9

Risk Pooling

A basic principle of insurance whereby a large number contribute to cover the losses of a few.

Premium

payment for insurance

Actuaries

statisticians who specialize in estimating the probability of death based on personal characteristics.

Policyholder or Policy Owner

The individual or business that owns the life insurance policy

Beneficiary

person entitled to benefits or proceeds of an insurance policy

Term Insurance

Life insurance that provides coverage for a specified period, such as ten or twenty years, with no cash value.

Whole Life Insurance

the type of life insurance policy that has a premium that stays level, a fixed death benefit, and the ability to withdraw savings

Rider

A special provision that may be added to your policy, which either provides extra benefits to the beneficiary or limits the company's liability under certain conditions

Basic Health Insurance

describes most health insurance, includes a combination of hospital, surgical, and physician expense insurance

Hospital Insurance

insurance that usually pays most or all hospital charges if an illness or injury requires the insured to be hospitalized

Surgical Insurance

insurance that covers all or part of the surgeon's fees for an operation

Physician Expense Insurance

pays for physicion's care that does not include surgery, such as office visits, lab tests and X-rays

Major Medical Expense Insurance

insurance that covers medical costs beyond those covered by basic health insurance

Fee-for-Service or Traditional Indemnity Plan

An insurance plan that provides reimbursement for all or part of your medical expenditures. In general, it gives you a good deal of freedom to choose your doctor and hospital

Managed Health Care or Prepaid Care Plan

An insurance plan that entitles you to the health care provided by a specified group of participating doctors, hospitals, and clinics. These plans are usually offered by health maintenance organizations or variations of them

Coinsurance or Percentage Participant Provision

An insurance provision that defines the percentage of each claim that the insurance company will pay

Co-Payment

Payment that must occur at time of medical procedure (ex. Doctor visit, ER visit, etc.) in addition to any insurance payments

Health Maintenance Organization (HMO)

A prepaid insurance plan that entitles members to the services of participating doctors, hospitals, and clinics

Point-of-Service Plan

A health care plan that allows members to seek health care from both HMO-affiliated doctors and non-HMO affiliated doctors

Preferred Provider Organization (PPO)

An insurance plan under which an employer or insurer negotiates with a group of doctors and hospitals to provide health care for its employees or members at reduced rates

Group Health Insurance

health care coverage available through employers and other organizations; employees usually pay part or all of premium cost.

Individual Insurance Policy

An insurance policy that is tailor-made for you, reflecting your age, health (as determined by an examination), and chosen deductible size

Flexible Spending Account (FSA)

An employer-sponsored medical plan that allows each employee o have pre-tax earnings deposited into a specifically designed account for the purposes of paying health care bills

Disability Insurance

A form of health insurance that provides periodic payments to replace income when the insured is unable to work as a result of illness, injury, or disease-not as a result of a work-related accident or condition

Short Term Disability

A disability policy that provides benefits over a given period, generally 6 months to 2 years

Long Term Disability

A disability policy that provides benefits until the individual reaches an age specified in the contract, generally 65 or 70, or for the insured's lifetime

Elimination Period

The period after the disability during which no benefit occurs

Long-Term Care Insurance

Insurance coverage that provides a daily monetary benefit to people who are chronically ill and who require living assistance either at home or in a residential facility

Deductible

The amount of expenses that the insured must pay before the insurance company will pay any insurance benefits