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BES Test 4

Study for exam #4

Insurance Protection from LOSS + Peace of Mind
Premium cost of risk sharing
Risk chance or uncertainty of loss
Peril of possible loss {fire, windstorm, robbery, disease, or death.}
Hazard a FACTOR that INCREASES likelihood of loss through some peril {driving drunk, smoking in bed, or defective house wiring.}
Pure Risk Personal risks, property risks, and liability risks are types of pure risk
Speculative Risk Chance of loss or gain
Liability legal responsibility for financial cost of another person’s losses and injuries
Basic form (HO-1) home and cartilage
Special form (HO-3) All risk (- flood, war, earthquake, nuclear)
Tenant’s form (HO-4) personally protection at HO-1 and HO-2 levels
Modified coverage form (HO-8) older home, restoration costs high
Bodily injury coverage Accident: YOU’RE FAULT. Medical expense: YOU / PASSENGERS Lost Wages: YOU and PASSENGERS
Medical payment coverage Home insurance that pays the cost of minor accidental injuries on one’s property
Uninsured motorist Accident: OTHERS FAULT-they have no insurance Medical loss and wage loss; NOT cover property loss
Underinsured motorist Pays costs if your car is hit by a person who doesn’t have enough insurance to cover the damage they did to you and your car.
Collision Coverage NO FAULT NEEDED. Repair/replace YOUR CAR. ;If other’s fault, your insurance will collect from others
Comprehensive FAULT not considered; Loss other than collision; Fire, theft, lass breakage, hail, vandalism
HIPPA standards for health insurance portability, nondiscrimination in health insurance, and guaranteed renewability
COBRA integrating the benefits payable under more than one health insurance plan so that the benefits received from all sources are limited to 100 percent of allowable medical expenses
exclusion provision specifies the conditions or circumstances for which the policy does not provide benefits
assignment benefits paid directly to care provider, not you
copayment amount patient pays for each medical services: ranges from 2-50$
HMO A health maintenance organization (HMO) is a health insurance plan that directly employs or contracts with selected physicians, surgeons, dentists, and optometrists to provide health care services in exchange for a fixed, prepaid monthly premium.
PPO A preferred provider organization (PPO) is a group of doctors and hospitals that agree to provide health care at rates approved by the insurer.
Blue Cross plans provide hospital care benefits on essentially a "service type" basis. Through a separate contract with each member hospital, Blue Cross reimburses the hospital for covered services provided to the insured.
Blue Shield plans provide benefits for surgical and medical services performed by physicians.
Medicare Medicare, established in 1965, is a federal health insurance program for people 65 or older, people of any age with permanent kidney failure, and people with certain disabilities.
Medicaid Title XIX of the Social Security Act provides for a program of medical assistance to certain low-income individuals and families. In 1965 the program, known as Medicaid, became federal law.
Medigap Medicare was never intended to pay all medical costs. To fill the gap between Medicare payments and medical costs not covered by Medicare, many companies sell medigap insurance policies.
mortality tables have been prepared to show the number of deaths among various age groups during any year
term insurance is protection for a specified period of time, usually 1, 5, 10, or 20 years or up to age 70
whole life insurance policy (also called a straight life policy, a cash-value life policy, or an ordinary life policy), for which you pay a specified premium each year for as long as you live.
cash value is an amount that increases over the years that you receive if you give up the insurance
universal life insurance designed to let you pay premiums at any time in virtually any amount.
credit life insurance used to repay a personal debt should the borrower die before doing so
endowment life insurance the money is paid to the policyholder (the insured) if he or she is alive on the future date (the maturity date) named in the policy.
grace period grace period allows 28 to 31 days to elapse, during which time you may pay the premium without penalty
riders to Life Insurance Policies (1) Waiver of Premium Disability Benefit; (2) Accidental Death Benefit; (3) Guaranteed Insurability Option; (4) Cost of Living Protection ; (5)Accelerated Benefits ; (6) Second-to-Die Option
annuity financial contract written by an insurance company that provides you with a regular income.
Inflation risk increased prices may rise faster than investment income
Interest rate risk increased cost of borrowed may make bonds more valuable and stocks less valuable
Business failure risk business failure and bankruptcy – bad product or poor management
Market risk decrease in value of stocks and bonds in cyclical fashion
Global risk changes in currency affect the return on your investment
Liquidity ranges from near-cash to frozen investment
Equity capital money that a business obtains from its owners
Common stock most basic form of corporate ownership; it can provide a source of income if the company pays dividends
Preferred stock receives cash dividend before common stock holders
Dividends growth potential if the dollar value of the stock increases
Bonds a loan to a corporation, the federal government, or a municipality
Maturity dates most range between 1 and 30 years; the date when the corporation is to repay the borrowed money
Mutual Funds an investment alternative available to individuals who pool their money to by stocks, bonds, and other securities based on the selections of professional managers who work for an investment company.
Diversification process of spreading your assets among several types of investments to lessen risk
Balance the percent of your investments in stocks versus the percentage in bonds
Securities all investments such as stocks, bonds, mutual funds, options traded on securities and over the counter markets
proxy legal form that lists the issues to be decided at a stockholders meeting and request stockholder transfer voting right to other voters
preemptive right right of current stockholder to purchase new stock first before offered to the public in order to maintain percentage in the company
public corporation A public corporation is a corporation whose stock is traded openly in stock markets and may be purchased by an individual.
private corporation A corporation owned by few people and not openly traded in a market
dollar appreciation If the market value of the stock increases, you must decide whether to sell the stock at the higher price or continue to hold it
splits A stock split is a procedure in which the shares of stock owned by existing stockholders are divided into a larger number of shares.
par value is an assigned (and often arbitrary) dollar value that is printed on a stock certificate.
blue chip stock very safe investments that generally attract conservative investors. Stocks of this kind are issued by the strongest and most respected companies, such as AT&T, General Electric and Kellogg.
Core stock stocks that pay higher than average dividends. Stocks issued by Bristol-Myers Squibb, Dow Chemical, and Royal Dutch/Shell are often purchased for their higher-than-average dividends.
growth stock stocks issued by corporations that earn profits above the average profits of all the firms in the economy.
large cap stock stocks issued by a large corporation that has a large amount of stock outstanding and a large amount of capitalization.
small cap stock issued by a corporation that has a capitalization of $150 million or less.
earnings current profit; the projected profit of the most recent quarter (3 months period). HIGH=BETTER
PE ration price of share divided by earnings per share over last 12 months. LOW=BETTER
Beta an index that compares the risk associated with a specific stock issue with the risk of the stock market in general
diversification the number of different companies in which one owns stock or bonds
balance the ratio of stocks and bonds in the portfolio
Blend the ratio of income stock (lower risk) and growth stock (higher risk) in portfolio
defensive stock stocks that remain stable during declines in the economy.
cyclical stock stocks that follow the business cycle of advances and declines in the economy
penny stock stocks that typically sell for less than $1 a share
bull market when investors optimistic about economy and stock prices rise
bear market when investors pessimistic about economy and stock prices fall (bear= hibernate)
Blend the ratio of income stock (lower risk) and growth stock (higher risk) in portfolio
IPO Initial Public Offering
Broker account executives licensed to buy and sell.
Churning is excessive buying and selling of securities to generate commissions. Churning is illegal but difficult to prove.
DIJA Dow Jones Industrial Average- the weighted average of 30 blue chip stocks that represent 10-15% of the value on the stock market in New York (the New York Stock Exchange or NYSE).
S & P 500 Standard and Poor’s 500 (Index Funds)- the average of 500 companies listed on the NYSE and in the Chicago Board of Trade that represent about 80% pf the value on the stock market. The base year for these Index funds is 1941
NASDAQ-OTC National Association of Securities Dealers Automated which is all the over the counter stocks traded, or some 3500 companies. Over-the-Counter
Created by: SNUStudentJ



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