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SFL 260 Final Exam
| Term | Definition |
|---|---|
| 4 ways of dealing with risk | avoid, reduce, transfer, assume |
| most risk is____ | unavoidable |
| avoid | way of dealing with risk, that you can't do for most risks |
| reduce | way of dealing with risk |
| transfer | way of dealing with risk, the financial responsibility for it, insurance is a form of this |
| assume | way of dealing with risk, taking it on financially |
| policy owner | the person who owns the policy |
| insured | the person whose life, health, or property is covered by the insurance |
| premiums | the regular payments you pay to keep the insurance active |
| claims | requests you send to the insurance company, that you ask them to pay for |
| deductible | the amount you must pay out of pocket before the insurance starts to pay |
| beneficiary | the person who receives the money from a life insurance policy when the insured dies |
| exclusions | things the insurance policy does not cover |
| rider | an add-on to a policy that gives extra coverage or benefits |
| when should you buy an insurance policy? | when the cost of the losses is high and the frequency is low |
| how to reduce insurance premium costs | get policies with higher deductibles |
| term life insurance | face value of policy paid to beneficiary upon death of insured |
| pros of term life insurance | least expensive, easiest to understand |
| cons of term life insurance | expires after a set time, insurance can charge people of different ages different premiums |
| Whole life insurance | has both a death benefit and a savings/investing component |
| pros of whole life insurance | remains in force for entire life, premiums are fixed |
| cons of whole life insurance | premiums are more expensive, have to keep on paying premiums or surrender the policy, beneficiary only gets the death benefit |
| when should you buy life insurance? | if you have anyone depending on your income, and if you don't have rough assets for them to live on after you die |
| how much do you need? | buy an insurance policy that is 6-10x your annual income |
| deductible-health insurance | the amount you must pay out of pocket before the insurance starts to pay |
| co-payment | a fixed amount you pay for a service (they usually do NOT go towards the deductible) |
| co-insurance | the percentage of costs you pay for a service after your deductible is met |
| maximum annual co-payment | the most you'll pay in co-pays in a year before the insurance starts covering more |
| maximum annual out-of-pocket cost | the most you have to pay in a year for covered services |
| where can you get health insurance? | employers, parents, gov't programs, private plans |
| benefit of having health insurance | health care providers will lower their costs of service if they are in your health insurance network |
| types of car insurance coverage | liability, medical payment, uninsured motorist, collision, comprehensive, no-fault insurance |
| liability | pays for damage or injuries you cause to other people or their property in an accident |
| medical payment | helps pay medical expenses for you and your passengers after an accident, no matter who is at fault |
| uninsured motorist | covers your costs if you're in an accident with a driver who has no insurance |
| comprehensive | covers damage to your car from things other than crashes |
| no-fault insurance | your insurance pays for your medical expenses after an accident, no matter who caused it |
| collision | pays for damage to your car from a crash regardless of who caused it |
| X/Y/Z | the maximum insurance will pay bodily per person/bodily per accident/property damage |
| how to reduce costs? | drive safely, comparison shop |
| how can we enhance our financial stewardship with taxes? | by minimizing the amount of money you pay in taxes so you can maximize your resources |
| if you want a refund from your employer then... | you have to file an income tax return no matter how much or little you make |
| Steps to file your taxes | gross income(addition), adjusted income(subtraction), deductions(subtraction), liability(multiplication), credits(subtraction), withholding, outcome |
| first step to filing taxes | add up your income to find gross income |
| second step to filing taxes | subtract adjustments to get your adjusted income |
| third step to filing taxes | subtract your deductions to find your taxable income |
| fourth step to filing taxes | multiply your taxable income to find your tax liability |
| fifth step to filing taxes | subtract non-refundable credits from your tax liability |
| sixth step to filing taxes | subtract how much tax your employer withheld, and subtract refundable credits |
| seventh step to filing taxes | outcome-if number is negative the govt owes you money, if number is positive you owe the govt money |
| what are refundable tax credits? | credits that are refundable, money that you can get back even if you don't own any taxes |
| What are non-refundable tax credits? | credits that can reduce your tax liability to zero, but cannot generate a tax refund, you cannot get any money back |
| scammers | they manipulate your emotions to get money |
| main emotions scammers manipulate | fear and panic, greed and desire for a product, love and need for companionship, sex |
| How to detect a scam-always a scam | reward is high and risk is low, have to use gift cards in a transaction, have to send them money, ask for information they should already know |
| how to detect a scam-probably a scam | obvious grammar mistakes, product being offered at a lower price, trying to get you to do something right away |
| do not click on a link in an email unless... | you were expecting an email on that topic, the email address checks out, the english is good, does not use phrases such as "suspicious activity" or "need information" |
| what does the IRS use | Mail, not email |
| why does money sometimes cause problems in marriage? | money is a stress point, spouses may have different orientations towards money-also not a good idea to go into debt |
| becoming one | studies have shown that joining bank accounts makes newlywed couples happier |
| Why do joining bank accounts make newlywed couples happier? | more trust and transparency, makes money management easier, grants access to better financial products |
| how to get on the same financial page? | make joint goals and work on them together, both be involved in budgeting, don't be afraid to explore your financial differences |
| parents are the primary source of financial learning | parents should share financial mistakes with their children |
| children model parents' financial behaviors, whether healthy or unhealthy | parents should be intentional about showing good financial management behavior |
Created by:
pworthen0723