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It should be read carefully to make sure all things are stated with accuracy. There are two basic types of homeowner’s coverage: “Named perils coverage” which insures only the exact losses named under the policy, such as fire or theft. All risk coverage covers all risks, unless they are specifically excluded. A homeowner’s policy generally does not cover an on site business. In this case, a home business is specifically excluded so there is no coverage for Fiona’s Fun Physics. They can get a rider to expand coverage or Fiona can get separate insurance for her business. Read it and keep it accessible because it explains the basics about her healthcare plan and can keep her from running up uncovered medical costs. No. Managed care plans have premiums and copays. Some also have a deductible and coinsurance. The insured always bears some portion of their own medical care costs. No! That is the point of insurance! Their auto insurance covers injury to someone else as a result of the insured’s errors. 10. Collision coverage should pay for the repairs, but they will have to pay their deductible. 11. HMO = Health Maintenance Organization. Warning 1: She cannot go out of the HMO’s network of approved care providers and Warning 2: to see a specialist she must have a referral from her primary care doctor or she risks that these charges will not be covered. 12. PCP= Primary Care Provider or Physician. The network is like the HMO’s roster of players, a negotiated network of providers who have agreed to provide care at a reduced cost. If Fiona goes out of network, her HMO will not pay her medical bill. amounts of money the insurance company is obligated to pay out in an accident. They are in thousands. (ie. 100 = $100,000.) The first sum indicates policy limits for bodily injury per person. The second indicates the maximum amount payable for bodily injury per accident. The third number indicates the property damage liability limit. 14. It means there is no need to determine fault. Each party is responsible to have insurance and to seek recovery from their own insurer after an accident. 5. 6. 7. 8. 9. 13. These numbers indicate the maximum
15. Yes a copay is a fee paid at the time of service. It can be about $10 - $40 depending on the plan. 16. He appears to have met his annual maximum out of pocket under the plan, so the surgery costs should be covered. 17. He’s maxed out his out of pocket for the year. If he waits, the deductible will reset and he’ll have to meet the $500 deductible for the new year. 18. Term life insurance is a substitute for income in the event the insured dies. Benefits are paid in a lump sum not on a pay check schedule. Many employers offer term life coverage as an employee benefit. 19. A whole life policy because it builds cash value and the premiums are fixed. They can use the cash later to help pay for Baby Fred’s college costs. 20. Disability insurance. They can and should acquire full coverage through the disability insurance plan offered by their employers. The person who represents companies that provide insurance policies and helps compare programs and select the ones that best suit needs, suggested Alan read the part of the policy that includes the name of the insured, the name of the insurance company, what property is covered and up to how much coverage is provided under the policy. Mallory was concerned that her policy’s liability limits of $25,000 bodily injury per person, $50,000 bodily injury per accident and property damage of $10,000 wouldn’t be enough to protect her for potential losses. Andrew’s standard form that all insurers provide to their insured explaining the details of coverage, confirmed that his insurer has entered into contracts with a whole bunch of doctors, clinics and hospitals 1. 2. 3. setting the prices at which they provide services and was a Health Maintenance Organization not a Preferred Provider Organization. The minute Ann walked into her Primary Care Physician’s office, she was asked for a fixed amount the insured is required to pay at time of service regardless of whether the deductible is met. When Katrina tried to make an appointment with her previous doctor she was told “sorry 4. 5.
that doctor is not in your plan’s group of doctors, clinics and hospitals with whom the insurance company has entered into contracts setting the prices at which they provide services — like the plan’s roster of players. Lower monthly, quarterly or annual payments to the insurer usually result in a larger fixed percentage of the claim which the insured is responsible for paying out of pocket before the insurance company pays. After paying the percentage of medical expenses Otto which is responsible for and meeting his deductible, Otto reached his absolute maximum amount he has to pay out of pocket in a year for medical care. Leo is considering life insurance options and can’t decide between the type of life insurance designed to provide financial protection for a specific period of time, with increasing premiums, and then expire, or the type of life insurance that is permanent, with fixed premiums, providing coverage for the insured’s whole lifetime. Leo likes the fact that part of his payment goes toward his premium and part builds savings, and that the policy has flexibility of premiums. 10. After the hurricane Lydia tried to inform the insurance company of the damages and collect costs for repair or replacement but was shocked to discover a hurricane was a peril or loss not covered by the policy so she would receive no payment. 6. 7.
How to Speak Insurance PRODUCT PREVIEW 8. 9.
Are You Financially Literate? Chapter 15 Quiz
1. 2. 3. 4. 5. 6. 7. 8. 9.
Yes, it should.
F
T F F
B A B
Student's answer should indicate that a network is a list of doctors, labs, hospitals and clinics that the insurer has contracted with for prices. Out of network refers to doctors, labs, hospitals and clinics that are not insurer-approved.
10. F
Answer Key 384
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