COA 4131 1st Edition Lecture 18 Outline of Last LectureI. Liability and Auto Insurance II. Costs of Auto Insurance III. Health Care Costs IV. Health Care Coverage V. Providers: Three Main ChoicesVI. Long-term Care Insurance Outline of Current Lecture VII. Review of Health CareVIII. Life Insurance Defined IX. How does Life Insurance Work?Current LectureA. Review of Health Carea. Accidental death and dismemberment is a separate kind of insurancei. You say exactly what might happen to you1. Speech problems, Psoriasis, lose a limb 2. Something runs in your family and is kind of odd3. Don’t really need itb. Better off with general insurance versus specified one unless you have an odd, at-risk job or odd family history/some kind of diseasec. Do not want to over insure!d. COBRAi. Law that was passed that allows a person to extend their health insuranceafter the person loses their jobii. Protects against life events, such as job loss or divorcee. Confidentiality statementi. Sign a contract saying you will not go to work for competitor for 6 monthsto 1 yearii. Will not reveal certain details about the companyiii. Helpful to those majoring in retailf. Different departments of insurance are there that you can call if you ever have a question or concern and someone will talk to you and explain it to youi. They are there to help you and take care of you B. Life Insurance Defineda. Life Insurancei. Really about the survivors of the deceased1. Setting up their financial burdens and other important things2. The people who are left behind can keep up life style and be okay financially3. 70% of American adults have life insurance 4. Can get it on own or through employera. Can be free from employerb. About $5,000 a year if you buy it on your own5. New life insurance is being bought by people 25-44 years olda. Spouse and kids during this age6. About 25% of life insurance policies are not collecteda. People bought it and did not know or forgot they had itb. People who move a lot, are unorganized ii. Contract between insurance company or insurer1. Sum to be paid when policy holder passes on2. Insurance company is taking a risk on you depending on your age, lifestyle, and occupationiii. Face amount1. Stated sum of money on a policyiv. Beneficiary1. Recipient of policy proceeds if insured dies 2. Can be a business or business partner a. Keep the business going 3. Can write it for husband/wife and future children if you do not have children yet 4. Contingent beneficiary a. The person does not want the moneyb. The person could hate them, got in a fight, or have issues with them 5. Married couple who gets in a car accident has to prove who died first b. Purposei. Cash value1. Accumulated savings that provide a refund to the owner of the policy if the contract is terminated prior to death ii. Whole Life Insurance1. Has a cash value2. Accumulate life earnings and can take some money out before youeven die if you really need the money C. How Does Life Insurance Work?a. Men in their 20’s are the healthiest people in the United Statesb. Pooling of riskc. Preferred risks i. 80 years old and loves sky diving1. Not a preferred risk!2. If they try to buy life insurance, either won’t insure them or will beextremely expensived. Underwriting process i. Takes about 2-8 weeks before insurance kicks in ii. Lapsed Policies 1. Termination of a policy because of non-payment2. If you haven’t been paying the past few months the policy can be put on hold and they can potential drop youiii. Grace Periods1. Time allowed for overdue payment without penalty2. Check for grace periods before
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