final Flashcards
4 steps to assessing risk (risk management process):
1) identify risk- what can go wrong 2) Measure the risk- what is the probability of it occurring? 3) Decision - transfer risk, transfer part of risk, or accept risk 4) ongoing management of risk
what percent of compounded interest should be achieved yearly?
7-8%
when Allstate pays out after a hurricane and stocks go down, this is an example of?
stock potential
To reduce risk with an insurance company (losing benefits you paid for due to bankruptcy, etc) one should:
analyze risk, breach of contracts and AM Best info on company
putting sprinkler in a house for a fire is an example of risk ……..
reduction
not going in the car to prevent having a car accident is an example of risk ……….
avoidance
an example of risk transfer would be …………
an insurance policy
an insurance agent acts as ……….. and works with………company (s) to find the customer a policy.
underwriter; 1
An insurance broker uses ……………….. to find the customers policy
multiple companies
what is the connection with risk and premiums?
Directly related
when there’s …………….on the policy, a circumstance may not be covered; such as with a home policy, ……………, though when carried by wind, water damage may still be covered. Or with a life insurance policy………
an exclusion; flooding; suicide
A rider endorsement makes your policy …………..and the phrase is to………
stronger; attach rider
……………..don’t need a life insurance policy unless they want ………..
Single people; to leave a legacy (scholarship)
gross income x (a #, 5-10)
calculating life insurance coverage by multiplying gross income by the multiplier, called the multiple earnings approach
Adding up the person’s family loans, education, and expenses- to then deduct sources such as a Group DB, S.S death benefits, and savings, is an example of
Needs Approach- to determine amount of insurance coverage needed
Are life insurance benefits taxable?
no tax free, & possibly estate tax free as well
a non-cancelable rider adds security that
the policy will remain at the same premium
to prevent getting denied for a renewal on your policy, one should
get a renewability rider
when choosing between whole life insurance consider the cons:
higher (nearly double) premiums, part of premium put into ‘savings’ account would be better spent at higher ROR
The CSV gained from a whole life policy refers to, ………. and the interest earned is …………
cash surrender value; tax-deferred
policies being sold is a billion dollar business called
life settlements
to mediate the risk is to …………….., a term used everyday in business
mitigate the risk
2 types of healthcare are
fee for service (less popular now) and managed care (HMO)
explains to the insured what the HMO paid and what is owed by insured:…………….., usually a ratio of :……. in network and ………..out of network
explanation of benefits; 80/20; 50/50
if someones in the hospital past their limit, do they still pay their deductible?
yes for every day they are there assume they owe a deductable
the standard of care given to a person would need to be considered ……………; therefore having a good relationship with your dr is advised.
reasonable and necessary;
government health insurance programs include:
medicare, AARP (over 50 can join, covers medigap), medicaid
the risk that a company may become bankrupt is called:
credit risk
workman’s comp policies that companies take out are based on :
the nature of the industry
with ………….., an insured person is able to keep their health insurance at its regular group rate after leaving a job for …………..You will stay pay your premium. This is a federal mandate for companies with …….+ employees
COBRA; 18 months to 2 years; 50
a policy that covers 60% of your income if you become disabled in which ……….. is considered long-term and…….. is considered short-term. If you become unemployed your policy goes with you.
Disability Group Policy; 6 months + ; up to 6 months
a ……………. policy adds another ………… of your income and sits on top of your group policy. This policy is non-taxable
supplemental disability; 15%
