The Health Insurance Primer

Front 1

Assumption of a risk (1 of 4)

Back 1

taking no action in advance and suffering the loss if it occurs

Hint 1

take the hit (1-1)

Front 2

Elimination of a risk (2 of 4)

Back 2

avoid its cause

Hint 2

give up skiing so you don't have an accident/physical injury (1-1)

Front 3

Reduction of a risk (3 of 4)

Back 3

taking steps that minimize (but do not eliminate) the likelihood that the hazard will occur

Hint 3

minimize the risk of burglary by installing an alarm system (1-1)

Front 4

Transfer all or a part of the risk (4 of 4)

Back 4

to another entity, such as an insurance company, in return for payment of a premium

Hint 4

what the whole book is about (1-1)

Front 5

Insurer (term)

Back 5

Usually an insurance company, sells a coverge to a person or org (the insured).

Hint 5

(1-2)

Front 6

A coverage (term)

Back 6

a contractual arrangement that states that the insurer will make a payment to the insured of a certain event occurs.

Hint 6

i.e., an insured with fire coverage would be paid in the event of fire. (1-2)

Front 7

Benefit

Back 7

A payment by the insurer to the insured.

Hint 7

(1-2)

Front 8

Claim

Back 8

a demand by the insured for payment of a benefit

Hint 8

(1-2)

Front 9

Premium

Back 9

In exchange for coverage, the insured makes payments (usually at regular interals) to the insurer

Hint 9

(1-2)

Front 10

Policy (or contract)

Back 10

The legal document that sets the terms of this arrangement

Hint 10

(1-2)

Front 11

Policy holder

Back 11

The insured is sometimes called this too

Hint 11

Fine distinctions twx insurance policy and insurance contract. Also twx policy holder and insured. (1-2)

Front 12

Principles of Insurance

Back 12

1 - uncertaintly of loss
2 - measurability of loss
3 - large naumer of insured
4 - significant size of potential loss
5 - equitable method of sharing the risk

Hint 12

there are 5 (1-3)

Front 13

Uncertainty of loss

Back 13

(1 of 5 Principles of Insurance) Insured event must be unpredictable, and beyond the control of the insured.

Hint 13

(1-3)

Front 14

Measurablilty of loss

Back 14

(2 of 5 Principles of Insurance) Insurer must be able to place an exact ddollar value on the loss.

Hint 14

(1-3) Cost or repair car, or cost of surgery, both are known. Life insurance: $$ must be agreed upon in advance.

Front 15

Large number of insureds

Back 15

(3 of 5 Principles of Insurance) to spread risk across large numbers of people.

Hint 15

Also allows accurate prediction of occurrence of losses, so the insurer knows how much to charge for premiums.

Front 16

Significant size of potential loss

Back 16

(4 of 5 Principles of Insurance) must be large enough to make a significant impact on the financial well-being of the insured.

Hint 16

It is against catastrophic losses that insurance is most necessary. (1-4)

Front 17

Equitable sharing

Back 17

(5 of 5 Principles of Insurance) Risk must be shared in a fair way, thus the expense of the cost of the losses for a few people is not a huge burden on everybody.

Hint 17

Those with a greater potential loss must pay more than those with a smaller potential loss. (1-4)

Front 18

Speculative risk

Back 18

An investor accepts speculative risk in return for a sizable gain.

Hint 18

NOT part of health insurance. (1-5)

Front 19

Pure risk

Back 19

no possibility of gain. Only the possibility of no loss, or or loss due to unforeseen hazards beyond the control of the one for whom the risk exists.

Hint 19

This is the kind of risk that insurance is designed to recover. (1-5)

Front 20

How many types of Insurance?

Back 20

4 major types:
Life and Health
Property and Casualty
(usually grouped together like this)

Hint 20

These can be bought on on an individual or group basis. (1-5)

Front 21

individual or group insurance

Back 21

individual: a person buys coverage and is the policy holder. For group, an association or a union buys insurance for its members, or a business buys for its employees. The mebers of the group receive coverage, but the policyholder is the goup or business. members or employees may pay premiums, but they do so thru the policyholder.

Hint 21

(1-5)

Front 22

life and health insurance

Back 22

usually grouped together cuz both are personal insurance.

Hint 22

(1-5)

Front 23

Ordinary life insurance

Back 23

Most widely purchased, 2 sub types:
permanent and term

Hint 23

(1-6)

Front 24

Permanent life insurance

Back 24

(aka whole life insurance) offers protection for the entire life of the insured

Hint 24

(1-6) Build up cash value and used by many as a way to save money

Front 25

Term life insurance

Back 25

generally offer protection for a specified period of time

Hint 25

most do not build up cash value (1-6)

Front 26

Credit life insurance

Back 26

may be used to pay down the balance of loans that may be outstanding if a borrower dies

Hint 26

(1-6)

Front 27

Annuity contract

Back 27

guarantees payments to a designated party for a specific time period or for life.

Hint 27

Often used to provide retirement income or income for a surviving spouse. (1-6)

Front 28

Health Insurance

Back 28

pays benefits in the event of sickness or injury. aka accident and health insurane, or sickness and accident ins.

Hint 28

Covers medical, hospital, surgical, and dental. May also compensate for loss of income if sick person is unable to work. (1-6)

Front 29

Property and Casualty insurance

Back 29

grouped together cuz they are NOT personal insurance. They cover property and events, not people.

Hint 29

Bought by both business and people.

Front 30

Property and Casualty insurance: PROPERTY

Back 30

pays benefits to compensate for loss and damage to homes and contents, commercial and industrial bldgs, equipment, furniture, fixtures, inventories, business records, supplies, autos, other physical items.

Hint 30

2 types: direct and indirect

Front 31

Direct Property insurance

Back 31

the lost value of stolen, damaged, lost or destroyed property

Hint 31

(1-7)

Front 32

Indirect Property insurance

Back 32

expenses incurred cuz of the loss, such as temporary housing after a fire, loss of rental income, and loss of profits

Hint 32

(1-7)

Front 33

Casualty insurance

Back 33

protects the insured against costs arising from legal liabilities. Costs to another person who suffers injury or damage cuz of the insured's actions.

Hint 33

auto liability insuance: if you are liable for the accident, your insurance pays for the repair to the other person's car. (1-7)

Front 34

Needs Met by Health Insurance (3)

Back 34

1 - reimbursing for medical expenses
2 - providing a set amount of income replacement
3 - providing a lump-sum payment for losses

Hint 34

(1-7)

Front 35

Medical Expense insurance

Back 35

medical care can be substantial, easily in the 10's of thousands.

Hint 35

(1-7) more in chap 3

Front 36

Supplemental insurance

Back 36

many costs of hospitalization and medical care are not covered by Medical Expense insurance. Supplemental helps cover these costs.

Hint 36

(1-7) also supplemental coverage for other types of care (like dental and vision). More in chap 4
(1-8)

Front 37

Disability Income insurance

Back 37

protects adults against the possibility of not being able to earn a full salary cuz of sickness or injury.

Hint 37

Injured guy 30 years old, makes $3000 per month. Loses $1.2 million by age 65. More in chap 5.(1-8)

Front 38

Long-Term Care insurance

Back 38

Charges for skilled care in a nursing home or care provided by nurses at home.

Hint 38

1 in 5 Americans over 50 will need this care in the next year! More in chap 5. (1-8)