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57 Cards in this Set
- Front
- Back
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Down Payment
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The amount of money outside of or not covered by mortgage funds that the homebuyer puts down on a home at the time of sale
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Closing Costs or Settlement Costs
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Expenses associated with finalizing the transfer of ownership of the house.
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Loan Organization Fee
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A fee of generally one point, of one percent of the loan amount. Its purpose is to compensate the lender for the cost of reviewing and finalizing the loan.
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Points
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Each point is equal to 1% percent of the mortgage loan.
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Title Search
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An investigation of the public land records to determine the legal ownership rights to property or a home.
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Escrow Account
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A reserve account in which funds are deposited, generally on a monthly basis and accumulate over time until they are drawn out to pay property taxes and insurance.
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Renting vs. Buying
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Renting-
Mobillity can relocate without incurring real estate selling costs No down payment required May involve lower monthly cash flow Avoids risks Extensive Amenities No property tax, maintence fees or groundskeeping Buying- Build equity over time Possible property appriciation Personal freedom, remodle Significant tax advantage including deduction of intrest and property taxes No chance rent raising over time Potential source of cash in the way of a home equity loan |
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Adjustable Rate Mortgage (Arm)
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A morgage in which the intrest rate changed fluctuates with the level of current intrest rates. The loan fluctuates or is adjusted at set intervals (say,every year) and only withen set limits.
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15 year vs. 30 year mortgage
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15-
Lower intrest rates provides a discipline to force savings saves quite a bit of intrest over the life of the morgage Equity is built up at a faster pace Increased equity may allow you to trade up to a more expensive house 30- Lower payments more finacial flexibality more uncommited money to put towards emergencies if something happens Provides affordability you may no tbe able to afford the house you want with a 15 year loan If the mortgage contains a prepayment provision you can mimic the payment pattern on a 15-year mortgage while maintaining financial flexability If you are borrowing on credit cards wich are a much more expensive for debt before you took on higher mrtgage payments If your investment alternative earns returns well above the mortgage intrest rate and you are a disciplined saver that along with the tax advantage associated with the mortgage debt makes a longterm mortgage more attractive |
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Earnest Money
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A deposit on the home purchase to assure the seller that the buyer is serious about buying the house
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Policy Owner
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The individual or business that owns the life incurance policy
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Benificiary
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The individual designated to recieve the insurance policy's proceeds upon the death of the insured.
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Who needs health insurance?
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People who have dependants and that are not wealthy.
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Needs Approach
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A method of determining how much life insurance you need based on funds your family would require to mantain their lifestyle after your death.
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Term Insurance
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A type of insurance that pays your benificiary a specific amount of money if you die while covered by the policy.
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Multiple Earnings Approach/Earnings Multiple Approach
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A method of determining exactly how much life insurance you need by using a multiple of your yearly earnings.
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Group Term Insurance
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Term insurance usually provided without a medical exam, to a specific group of individuals such as company employees who are associated for some purpose other then to buy insurance.
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Decreasing Term Insurance
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Term Insurance in which the annual premium remains constant but the face amount of the policy declines each year.
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Credit Life Insurance/Mortgage Life Insurance
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Group life insurance that's provided by a lender for its debtors. This is so if the person dies the amount they owe their debtors will be paid off by their life insurance (if they are covered when they die)
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Whole Life Insurance
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Cash-value insurance that provides permanent coverage and a death benefit when the insured dies If the insured turns 100 (or reaches the max. stated age) the policy pays off even though the insured hasn't died.
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Universal Life Insurance
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A type of cash value insurance that's much more flexible than whole life. It allows you to vary the premium payments and the level of protection.
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Nonforfeiture Right
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The right of a policyholder to choose to recieve the policy's cash value in exchange for the policyholder giving up his or her right to a death benefit.
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Variable Life Insurance
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Insurance that provides permanent insurance coverage as whole life does; however, the policy holder rather then the insurance company takes on the investemnt risk
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Coverage Grace Period/ Grace Period
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The late-payment period for premiums during which time the policy stays in effect and no intrest is charged. If payments still aren't made, the policy can be canceled after the grace period.
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Policy Reinstatement Clause
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A clause that provides the right to restore a policy that has lapsed after the grace period has expired. Generally reinstatement is provided for withen a specified period (usually 3 to 5 years after the policy has expired) you must pay past-due premiums, intrest, abd policy loans
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Stop-Loss Provision
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A medical insurance feature that limits the total dollar amount that the policyholder is responsible for paying.
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Major Medical Expense Insurance/ Major Medical Insurance
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Insurance that covers medical costs beyond those covered by basic health insurance.
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Workers Compensation/ Worker Compensation Laws
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State laws that provide payment for work related accidents and illness. Introduced in the early 1900s after we switched to mainly industrial economy accidents were frequent.
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Flexible Spending Accounts
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An employer-sponsored medical plan that allows each employee to have pretax earnings deposited into a specially designated account for the purposes of paying health care bills. The employee can withdraw funds from this account to offset unreimbursed medical or dental expenses or qualified child care expenses.
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Disability Insurance
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Health insurance that provides payments to the insured in the event that income is interupted by illness, sickness or accident.
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Long Term Disability (LTD)
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A disability policy that provides benefits until the individual reaches an age specified in the contract generally 65 or 70 or for the insuerd's lifetime.
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Short Term Disability (STD)
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A disability policy that provides benefits over given period generally from 6 months to 2 years.
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Definition of Disability
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If they can't preform the duties of their "own occupation" or preform the duties of "any occupation for which they are reasonably suited."
A cheaper option is also available were disabilty and what you cant preform are defined. |
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Long Term Care Insurance
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Insurance that is aimed at covering the costs associated with long term nursing home care, commonly associated with victims of stroke chronic illness or alzheimers disease or those who can simply no longer manage to live on their own.
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Hos
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The six standerized "homeowners" insurance policies available to homeowners and renters.
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Home owners insurance - HO1, HO2, HO3
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provide basic broad policies specifically for homeowners with insurance
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Personal Articles Floater
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An extension to a homeowners insurance policy that provides coverage for all personal property regardless of where it's located This coverage applies to the policyholder and all house hold residents except children away at school.
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Coinsurance Provision
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A provision or requirment of homeowner's insurance requiring the insured to pay a portion of the claim if he or she purchased an inadiquite amount of insurance (in this case less than 80 percent of the replacment cost.)
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Replacement Cost Coverage
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Additional homeowners coverage that provides for the actual replacment cost of a stolen or destroyed item as opposed to the actual cash value.
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Inflation Guard
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An endorsment that automatically updates the level of property coverage based on an index of replacement costs that continually updates the costs of building a home.
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Personal Umbrella Policy
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A homeowners policy that provides excess liabilty insurance with protection against lawsuits and judgments generally ranging from $1 million to $10 million
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Deductible
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The amount that you are responsible for paying before insurance coverage kicks in.
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Fixed Rate Mortgage
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In one on which the monthly payment doesn't change regardless of what happens to market intrest rates.
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Negative Amortization
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A situation which the monthly payments are less than the intrest that's due on the loan. As a result the unpaid intrest is added to the principal and you end up owing more at the end of the month than you did at the begining of the month.
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Incontestability Clause
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the insurance company cannot dispute the validity of the cntract after a specified period of time usually two years this clause is crucial it protects your beneficiary against policy made by the insured on the original application.
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Suicide Clause
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states that the insurance company won't pay off for suicide deaths that occur within the first two years of the contract.
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Living Benifits
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grant an early payout of a precentage of the anticipated death benifits to the terminally ill insured. It usually requires a doctors statment saying that you have six months to a year to live. Payments made to the policy holder and can often be added to the rider at any time generally with no extra feeoffering pecace of mind at a criticle time regarding medical costs.
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Settlement Options/ or payout options
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The alternative ways that a beneficiary can choose to recieve benifits upon the death of the insured.
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Premium
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A life insurance payment
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COBRA
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consolidated omnibus budget reconciliation act, if you work for a company with 20 employees you will have the choice to continue your coverage for up to 3 years after you leave depending on why you left however you are in charge of paying for it but it wil probably be less expensive then individual insurance
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Accident Insurance
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provide specific amount for every day you must stay in the hospital and a certain amount for the loss of any body parts
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Dread Disease Insurance
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provides additional coverage for the expences accociated for illnesses like cancer and such
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HSAs - Health Saving Accounts
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another option to help people pay for medical expenses, those who use it include small business owners, employees of small to medium sized businesses that offer only bare-bones health benifits and those uder the age of 65 who pay for health care on their own
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Activities of Daily Living (ADLs)
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For some one to qualify for health insurance that are claiming they cant work they have to prove that they cant do two daily activities which include things like walking, dressing and eating
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Comprehensive
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provides benifits to cover damages resulting from an accident with another vehical or object
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Uninsured/Underinsured Motorist Coverage
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Coverage against injuries caused by a hit and run driver or by an uninsured motorist or a negligent driver whose insurance company is insolvent
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Medical Expenses Coverage
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pays all reasonable medical and funeral expenses incurred withen three years of an accident by the policyholder his or her family and other persons injured in an accident involving a covered automobile
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