|Name 2 companies where you could purchase auto insurance. | | | | |Answer: | |State Farm | |Progressive | |Name 2 companies that offer homeowner’s insurance. | | | | |Answer: | |Nationwide | |All State | |Name 2 companies that offer disability insurance. | | | | |Answer: | |Aflac | |MetLife | |Name 2 companies that offer life insurance. | | | | |Answer: | |Mutual of Omaha | |MetLife | | | | | | | | | | | | | |Auto insurance is purchased in four parts: A, B, C and D. What is the characteristic of each type | | | | |of coverage? What is covered by each part?
Answer: | |A) Liability coverage: covers losses related to bodily injury, property damage, lawsuits and defense costs. | |B) Medical Coverage: Covers all accident-related medical costs and funeral expenses | |C) Uninsured Motorist Coverage: covers hit-and-run accidents and injury from an uninsured motorist. | |D) Collision Coverage: covers damage from any collision regardless of who is at fault. | |Describe the types of health insurance available for purchase? What differentiates the different | | | | |types? How are they structured?
Be sure to draw on terms like copays and deductibles. | | | | |Answer: | |Basic Health Care Insurance (Fee-for-service plan): reimburses for the medical costs. No deductible has low maximum dollar limits of protection. | |Major Medical Insurance (Fee-For-Service): Adds to the protection offered by basic health insurance. Provides coverage for additional expenses and a larger range of medical services. Higher maximum limits. Annual | |deductibles and coinsurance provisions (insured person pays 10-30% up to an annual out-of pocket limit. | |HMO: Health Maintenance Organizations.
Normally does not require payment of deductible and usually only charges a copay. Limited number of choices of physicians and limited access to specialist care. Encourages | |preventive medicine. | |PPO: Preferred Provider Organizations. Medical care providers who have a contract with the insurer to provide services at a cheaper rate. Similar to the HMO because the limited number of doctors results in lower | |costs. The insured has to pay a deductible and a copay. Can go to any health care provider but the cost later down the road might be different. | |POS: Point of Service plan.
Similar to PPO because participants can seek treatment from both participating and nonparticipating providers but requires a greater cost share later. Someone would have to pay a copay. | |Government-sponsored plans: (workers’ compensation, Medicare, and Medicaid). Medicaid provides health care for the poor or anyone under the government determined poverty line. Medicare pays some health care costs for | |Social Security participants over the age of 65. Workers’ Compensation pays lost wages and medical costs connected with job-related illness or injury | |What is Disability Income Insurance?
What does it cover? How is it structured? Focus on plans | | | | |offered in the private sector (i. e. not government plans like Social Security) and not Employer’s | | | | |Compensation. Be sure to discuss waiting periods and benefit periods, as well as how the benefit | | | | |itself is determined. | | | | |Answer: | | | |Disability insurance replaces income lost during a period of disability. Government-sponsored disability insurance says someone must be unable to work at any job for at least 5 months and expect to remain disabled up | |to a year.
Income depends on the participation in the SS system and average income during the person’s working career. Employer-sponsored may provide disability income in ways like personal days, paid vacation time, | |sick leave, and short and long term disability income insurance. Normally these policies cover from 6 to 12 months and normally only pays a percentage of pre-disability income. There is a market for individual | |disability insurance. Because of fraud and abuse, the individual insurance has a smaller number of insurers and higher premiums.
The more disability income coverage, the higher the premium along with factors such as | |age, profession, and existing health status. The waiting period for individual insurance can range from 30 days to one whole year and the benefits can either be for a short time (e. g. 2 years) or until age 65 or for | |life. The cost of coverage can also go up based on how long the coverage is for. Someone buying insurance needs to consider income replacement and market inflation to determine the amount of coverage and also look for | |policies with a guaranteed renewability feature.
| |What is the function of Life Insurance? What are the different types? How are they structured? | | | | |How do they differ? | | | | |Answer: | |Life insurance is designed to replace income that would have been earned if death had not come prematurely. Life insurance can only be triggered by death. There is term life insurance with provides protection for a | |specific time frame designated by the policyholder and an annual premium is paid normally in month payments.
If death occurs, the beneficiary receives the face value of the policy. There is also permanent life | |insurance which does not need to be renewed and the policyholder will still pay a guaranteed premium to stay insured. | |How is Homeowner’s Insurance structured? What is typically covered in a Homeowner’s policy? What | | | | |is not covered? | | | | |Answer: | |Homeowner’s insurance normally protects the homeowner against property damage and theft to an extent. Different forms of insurance cover different things.
HO-1 basic covers fire, lightning, wind-storms, hail, | |explosions, riots, damage from aircraft or vehicles, smoke, vandalism, theft, glass breakage, and volcano damage. HO-2 covers all HO-1 perils plus falling objects, weight of ice/snow/sleet, discharge of water/steam, | |pipes bursting, and electrical damage. HO-3 covers both HO-1 and 2 along with flood damage, earthquakes, war, and nuclear accidents. HO-4 (renters) covers HO-2 perils but only the contents, not the buildings while the | |landlord’s insurance covers the building.
HO-6 is the same as HO-4 except it is for condominiums. HO-8 is coverage for older houses which might have high replacement costs compared for the market value. Typically | |property and liability (normally just jewelry, guns, collectibles and antique cars) is covered on the insurance but there are fine lines for both. Living expenses if the home needs to be left, is also covered. Cash is | |not covered, along with a lot of items that have no proof of existence, and normally there is a specific amount covered for jewelry.