estate planning chapter 15: wills & insurance. understanding business and personal law estate...
TRANSCRIPT
Estate Planning Estate Planning Chapter 15: Wills & InsuranceChapter 15: Wills & Insurance
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
What You’ll Learn
How to describe what happens when How to describe what happens when someone dies with and without a will someone dies with and without a will (p 783)(p 783)
How to outline the legal procedures that How to outline the legal procedures that apply when someone dies owning apply when someone dies owning property (p. 785)property (p. 785)
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Why It’s Important
Knowledge of wills and estates will help you Knowledge of wills and estates will help you when the time comes in your life.when the time comes in your life.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Making a Will Section OutlineSection Outline
Who May Make a WillFormal Requirements of a Will
Revoking or Changing a Will
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Family Protection Section OutlineSection Outline
Protection of SpousesProtection of Children
Dying Without a Will Settling an Estate
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Pre-Learning Question Pre-Learning Question
What is a will?
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Making a Will Making a Will
A A willwill is a document that is signed is a document that is signed during your lifetime that provides for during your lifetime that provides for the distribution of your property upon the distribution of your property upon death. Each state has it own death. Each state has it own requirements for making a will.requirements for making a will.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Making a Will Making a Will
A person who dies with a will is said to A person who dies with a will is said to die die testatetestate and is called a testator and is called a testator (male) or testatrix (female). (male) or testatrix (female).
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Making a Will Making a Will
A gift of personal property that is A gift of personal property that is made by will is called a made by will is called a bequestbequest, or , or legacy.legacy.A gift of real property that is made A gift of real property that is made by will is called a by will is called a devisedevise in most in most states.states.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Making a Will Making a Will
Those who receive property by will Those who receive property by will are referred to as beneficiaries.are referred to as beneficiaries.The term The term heirheir refers to one who refers to one who inherits property under a will or from inherits property under a will or from someone dying without a will. someone dying without a will.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Who May Make a Will Who May Make a Will
Any person of sound mind who has Any person of sound mind who has reached the age of adulthood reached the age of adulthood (eighteen years) may make a will.(eighteen years) may make a will.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Formal Requirements of a Will Formal Requirements of a Will
To be valid, a will must conform To be valid, a will must conform exactly to the law of the state where it exactly to the law of the state where it is made. is made.
A will that is legally made in one state A will that is legally made in one state will be recognized as valid in every will be recognized as valid in every state.state.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Formal Requirements of a Will Formal Requirements of a Will
With some exceptions, a will must With some exceptions, a will must be in writing.be in writing.It must be signed and witnessed by It must be signed and witnessed by the number of witnesses required the number of witnesses required by state law.by state law.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Pre-Learning Question Pre-Learning Question
What do you think it means to revoke a will?
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
In some states, a will may be revoked In some states, a will may be revoked by by
Revoking or Changing a Will Revoking or Changing a Will
Burning, tearing, canceling, or Burning, tearing, canceling, or obliterating the will with intent to obliterating the will with intent to revoke itrevoke itExecuting a new oneExecuting a new oneMarrying after the will was created Marrying after the will was created
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Pre-Learning Question Pre-Learning Question
How are families protected when someone dies?
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
State laws contain provisions State laws contain provisions designed to protect surviving family designed to protect surviving family members when a spouse dies.members when a spouse dies.
Family Protection Family Protection
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Some states provide for a family Some states provide for a family allowance, or money taken from the allowance, or money taken from the decedent’s estate to meet the family’s decedent’s estate to meet the family’s needs while the estate is being needs while the estate is being settled.settled.
Family Protection Family Protection
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Another family protection is the Another family protection is the homestead exemption, which puts the homestead exemption, which puts the family home beyond the reach of family home beyond the reach of creditors up to a certain limit.creditors up to a certain limit.
Family Protection Family Protection
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
A surviving spouse who doesn’t like A surviving spouse who doesn’t like the provisions of a deceased spouse’s the provisions of a deceased spouse’s will may choose to take a different will may choose to take a different portion of the estate set by state portion of the estate set by state statute. statute.
Protection of Spouses Protection of Spouses
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Children who can prove that they were Children who can prove that they were mistakenly left out of a parent’s will mistakenly left out of a parent’s will are protected by the laws of most are protected by the laws of most states. states.
Children who are intentionally left out Children who are intentionally left out do not have this protection.do not have this protection.
Protection of Children Protection of Children
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Adopted children are treated, in most Adopted children are treated, in most states, as though they were the states, as though they were the naturally born children of their naturally born children of their adoptive parents. adoptive parents.
They inherit from the adoptive parents They inherit from the adoptive parents rather than from their natural parents.rather than from their natural parents.
Protection of Children Protection of Children
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Pre-Learning Question Pre-Learning Question
What happens if you die without a will?
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
A person who dies without a will is A person who dies without a will is said to have died said to have died intestateintestate. The . The deceased’s personal property is deceased’s personal property is distributed according to the laws of distributed according to the laws of intestate succession of the state in intestate succession of the state in which the deceased was domiciled.which the deceased was domiciled.
Dying Without a Will Dying Without a Will
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
In contrast, the real property passes In contrast, the real property passes according to the law where the according to the law where the property is located.property is located.
Dying Without a Will Dying Without a Will
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
In general, the surviving spouse is In general, the surviving spouse is entitled to one-third or one-half of the entitled to one-third or one-half of the estate. estate.
The balance of the estate is usually The balance of the estate is usually divided equally among the deceased’s divided equally among the deceased’s children.children.
Dying Without a Will Dying Without a Will
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
If any of the deceased’s children are If any of the deceased’s children are deceased, the estate is distributed in deceased, the estate is distributed in the following order.the following order.
Dying Without a Will Dying Without a Will
1.1. Decedent’s grandchildrenDecedent’s grandchildren2.2. Decedent’s parentsDecedent’s parents
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
3.3. Decedent’s brothers and sistersDecedent’s brothers and sisters4.4. Children of decedent’s brothers and Children of decedent’s brothers and
sisterssisters5.5. Decedent’s aunts and unclesDecedent’s aunts and uncles6.6. Decedent’s cousinsDecedent’s cousins
Dying Without a Will Dying Without a Will
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Pre-Learning Question Pre-Learning Question
What legal procedure takes place to distribute assets when a person dies?
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
When people die owning assets, their When people die owning assets, their estate must be probated; that is, it estate must be probated; that is, it must be settled under the supervision must be settled under the supervision of the probate court. of the probate court.
Settling an Estate Settling an Estate
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
First, the probate court establishes the First, the probate court establishes the validity of the will. A will usually names validity of the will. A will usually names a personal representative called an a personal representative called an executorexecutor (male) or (male) or executrixexecutrix (female) (female) to carry out the terms of the will. to carry out the terms of the will.
Settling an Estate Settling an Estate
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
If there is no will, or if the executor or If there is no will, or if the executor or executrix named in the will fails to executrix named in the will fails to perform, someone must petition the perform, someone must petition the court to settle the estate. That person court to settle the estate. That person is called an administrator or is called an administrator or administratrix.administratrix.
Settling an Estate Settling an Estate
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
The executor or administrator gathers The executor or administrator gathers the estate assets, pays the debts and the estate assets, pays the debts and taxes, and distributes the remainder of taxes, and distributes the remainder of the assets according to the terms of the assets according to the terms of the will or state law. the will or state law.
Settling an Estate Settling an Estate
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Read the following scenario and answer the questions below.
Petunia Appleby died without a will. Her husband, Clark, had preceded her in death, and they had no children.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Petunia had a sister, Daisy, and a brother, Duke. Daisy was still living, but Duke was dead. He had three children, all of whom were still living.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Both of Petunia’s parents were dead, but she had one living uncle, Trey. Trey had two sons, both living. After Petunia’s debts and taxes are paid there is $1,000,000.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
1. Who inherits from Petunia, if you follow the general guidelines from the text?
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
ANSWERANSWER
Daisy and Duke’s three children.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
2. How much does the heir or heirs inherit?
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
ANSWERANSWER
Daisy inherits $500,000, and Duke’s three children divide the other $500,000 ($166,667 each).
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
3. Who is the executor of the estate? How do you know?
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
ANSWERANSWER
There is no executor because there was no will naming an executor.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Reviewing What You Learned
2. What are the formal requirements of a will?
Section 36.2 Assessment
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Reviewing What You Learned
Must conform exactly to the law of the state where it is made to be valid (in writing, signed, and witnessed).
Section 36.2 Assessment
Answer
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Reviewing What You Learned
3. How can a will be changed or revoked?
Section 36.2 Assessment
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Reviewing What You Learned
(1) Burning, tearing, canceling or obliterating the will with intent to revoke; (2) executing a new one; and (3) subsequent marriage. A codicil is a formal document used to supplement or change an existing will.
Section 36.2 Assessment
Answer
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Reviewing What You Learned
4. Explain how surviving families are protected legally when a spouse dies.
Section 36.2 Assessment
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Reviewing What You Learned
Some states provide for a family allowance (money taken from the decedent’s estate for the family to meet its needs while the estate is being settled).
Section 36.2 Assessment
Answer
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Reviewing What You Learned
The homestead exemption puts the family home beyond the reach of creditors up to a certain limit.
Section 36.2 Assessment
Answer
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Reviewing What You Learned
5. What happens when a person dies without a will?
Section 36.2 Assessment
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Reviewing What You Learned
The deceased’s personal property is distributed according to the laws of intestate succession of the state where the deceased was domiciled. The real property passes according to the law where the property is located.
Section 36.2 Assessment
Answer
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Reviewing What You Learned
6. Discuss the legal procedure that must be followed when someone dies owning property.
Section 36.2 Assessment
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Reviewing What You Learned
The estate must be probated. If a will exists, an executor/executrix carries out the terms.
Section 36.2 Assessment
Answer
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Reviewing What You Learned
If there is no will, an administrator/administratrix is appointed. The executor or administrator gathers the estate assets, pays the debts and taxes, and distributes the remainder according to the terms of will or state law.
Section 36.2 Assessment
Answer
Estate Planning Estate Planning End of Section 36.2End of Section 36.2
Estate Planning Estate Planning Section 16.2 Motor InsuranceSection 16.2 Motor Insurance
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Financial Responsibility
Types of Motor Vehicle Insurance Bodily Injury CoverageProperty Damage CoverageNo-Fault Insurance
Section OutlineSection Outline
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Pre-Learning Question Pre-Learning Question
What are the different types of motor vehicle insurance?
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
16.216.2
Types of Motor Vehicle Insurance Types of Motor Vehicle Insurance
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
The main types of bodily injury The main types of bodily injury coverage are coverage are
Bodily Injury Coverage Bodily Injury Coverage
Bodily injury liability insuranceBodily injury liability insuranceMedical payments insuranceMedical payments insuranceUninsured motorist insuranceUninsured motorist insuranceUnderinsured motorist insuranceUnderinsured motorist insurance
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Bodily injury liability insurance Bodily injury liability insurance protects the insured against claims or protects the insured against claims or lawsuits for injuries or death caused lawsuits for injuries or death caused by negligence.by negligence.
Bodily Injury Coverage Bodily Injury Coverage
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Medical payments insuranceMedical payments insurance pays pays for medical, and sometimes funeral, for medical, and sometimes funeral, expenses resulting from bodily injuries expenses resulting from bodily injuries to anyone occupying the to anyone occupying the policyholder’s car in an accident. policyholder’s car in an accident.
Bodily Injury Coverage Bodily Injury Coverage
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Uninsured motorist insuranceUninsured motorist insurance provides protection when the insured provides protection when the insured is injured in an automobile accident is injured in an automobile accident that is caused by a driver who has no that is caused by a driver who has no insurance. insurance. It also protects parties who are injured It also protects parties who are injured by a hit-and-run driver.by a hit-and-run driver.
Bodily Injury Coverage Bodily Injury Coverage
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Underinsured motorist insurance Underinsured motorist insurance protects you when another driver has protects you when another driver has insurance, but not enough to pay for insurance, but not enough to pay for any injuries.any injuries.
Bodily Injury Coverage Bodily Injury Coverage
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Collision insuranceCollision insurance covers damage covers damage to your vehicle when it is in an to your vehicle when it is in an accident and pays for vehicle repairs, accident and pays for vehicle repairs, regardless of who was at fault. regardless of who was at fault.
Property Damage Coverage Property Damage Coverage
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Comprehensive insuranceComprehensive insurance covers covers damage to your vehicle from sources damage to your vehicle from sources other than collision, including fire, other than collision, including fire, theft, lightning, flood, hail, windstorm, theft, lightning, flood, hail, windstorm, riot, and vandalism.riot, and vandalism.
Property Damage Coverage Property Damage Coverage
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Under Under no-fault insuranceno-fault insurance, regardless , regardless of who caused the accident, all drivers of who caused the accident, all drivers involved collect money from their own involved collect money from their own insurance companies. insurance companies.
No-Fault Insurance No-Fault Insurance
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Because no-fault systems vary by Because no-fault systems vary by state, you should investigate the state, you should investigate the coverage provided by no-fault coverage provided by no-fault insurance in your state.insurance in your state.
No-Fault Insurance No-Fault Insurance
Estate Planning Estate Planning Section 35.1Section 35.1
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Why It’s Important
Understanding how insurance works and Understanding how insurance works and knowing key insurance terms will help you knowing key insurance terms will help you choose good policies throughout your life.choose good policies throughout your life.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
What is Insurance? Section OutlineSection Outline
Insurance Terms
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Pre-Learning Question Pre-Learning Question
What is insurance?
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
What Is Insurance? What Is Insurance?
Our lives are filled with risks, including Our lives are filled with risks, including the loss of:the loss of:
PropertyPropertyHealthHealthIncomeIncomeLifeLife
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
What Is Insurance? What Is Insurance?
Insurance can protect you against Insurance can protect you against such losses. such losses.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
What Is Insurance? What Is Insurance?
The basic purpose of insurance is to The basic purpose of insurance is to spread the losses among a greater spread the losses among a greater number of people.number of people.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
What Is Insurance? What Is Insurance?
InsuranceInsurance is a contract under which, is a contract under which, for consideration, the for consideration, the insurerinsurer, or the , or the insurance company, agrees to insurance company, agrees to compensate you for a specific loss.compensate you for a specific loss.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Insurance Terms Insurance Terms
The The policypolicy is the written contract is the written contract between a person buying insurance between a person buying insurance and the insurance company that sells and the insurance company that sells it. it.
When you buy the policy, you are the When you buy the policy, you are the policyholder.policyholder.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Insurance Terms Insurance Terms
The The insuredinsured is the person whose life is the person whose life or property is insured.or property is insured.
The The beneficiarybeneficiary is the person named is the person named in the policy to receive benefits paid in the policy to receive benefits paid by the insurer in the event of a loss.by the insurer in the event of a loss.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Insurance Terms Insurance Terms
A A riderrider is an attachment to an is an attachment to an insurance policy that modifies the insurance policy that modifies the policy’s terms.policy’s terms.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Insurance Terms Insurance Terms
You can’t take out insurance unless You can’t take out insurance unless you have an you have an insurable interestinsurable interest in the in the person or property you want to insure. person or property you want to insure.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Insurance Terms Insurance Terms
Consequently, you can only take out Consequently, you can only take out insurance on a person or property if insurance on a person or property if the loss of that person or property the loss of that person or property would pose a financial burden to you.would pose a financial burden to you.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Insurance Terms Insurance Terms
The The premiumpremium is the amount of money is the amount of money you pay to the insurance company for you pay to the insurance company for insurance coverage. Proceeds are insurance coverage. Proceeds are payments by insurance companies to payments by insurance companies to beneficiaries for losses covered by the beneficiaries for losses covered by the policy.policy.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Insurance Terms Insurance Terms
The The face valueface value is the amount of is the amount of protection stated in a life insurance protection stated in a life insurance policy, meaning the amount of money policy, meaning the amount of money a beneficiary would receive if the a beneficiary would receive if the insured died.insured died.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Reviewing What You Learned
1. What is the purpose of insurance?
Section 35.1 Assessment
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Reviewing What You Learned
To spread losses among a greater number of people.
Section 35.1 Assessment
Answer
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Reviewing What You Learned
2. Explain why insurance is a contract.
Section 35.1 Assessment
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Reviewing What You Learned
Insurance is a contract under which, for consideration, the insurer (the insurance company) agrees to compensate you for a specific loss.
Section 35.1 Assessment
Answer
Estate Planning Estate Planning Section 35.2Section 35.2
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Why It’s Important
Knowing how to determine your life and Knowing how to determine your life and health insurance needs will help you handle health insurance needs will help you handle your finances when dealing with unexpected your finances when dealing with unexpected events.events.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Life Insurance Section OutlineSection Outline
Straight Life InsuranceLimited-Payment Life InsuranceEndowment InsuranceAnnuity
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Life Insurance, continued Section OutlineSection Outline
Accidental Death and Dismemberment Insurance
Term InsuranceExemptions from Risk
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Health Insurance Section OutlineSection Outline
Insurance PlansHMOs and PPOsGovernment Health Care PlansDisability Insurance
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Pre-Learning Question Pre-Learning Question
What is life insurance?
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Life Insurance Life Insurance
Life insuranceLife insurance is an insurance is an insurance contract that provides monetary contract that provides monetary compensation for losses suffered as a compensation for losses suffered as a result of someone’s death. result of someone’s death.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Life Insurance Life Insurance
Premiums for life insurance are based Premiums for life insurance are based on several factors.on several factors.
Age and health of insuredAge and health of insuredCoverageCoverageType of policyType of policy
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Straight Life Insurance Straight Life Insurance
Straight life insuranceStraight life insurance, also called , also called ordinary life insurance and whole life ordinary life insurance and whole life insurance, requires the payment of insurance, requires the payment of premiums throughout the insured’s premiums throughout the insured’s life. The premiums remain constant life. The premiums remain constant throughout the policy.throughout the policy.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Straight Life Insurance Straight Life Insurance
Upon the insured’s death, the Upon the insured’s death, the beneficiary is paid the face value of beneficiary is paid the face value of the policy. Because straight life the policy. Because straight life insurance builds up a cash and loan insurance builds up a cash and loan value, it provides savings as well as value, it provides savings as well as protection.protection.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Straight Life Insurance Straight Life Insurance
Universal life insuranceUniversal life insurance, a form of , a form of straight life insurance, allows straight life insurance, allows policyholders to change the terms of policyholders to change the terms of the policy as their needs change.the policy as their needs change.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Limited-Payment Life Insurance Limited-Payment Life Insurance
Limited-payment life insuranceLimited-payment life insurance allows you to stop paying premiums allows you to stop paying premiums after a stated length of time—usually after a stated length of time—usually 10, 20, or 30 years. 10, 20, or 30 years.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Limited-Payment Life Insurance Limited-Payment Life Insurance
The beneficiary will receive the The beneficiary will receive the amount of the policy upon the death of amount of the policy upon the death of the insured, whether it occurs during the insured, whether it occurs during the payment period or after.the payment period or after.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Endowment Insurance Endowment Insurance
Endowment insuranceEndowment insurance provides provides protection for a stated time, generally protection for a stated time, generally 20 to 30 years. The face value of the 20 to 30 years. The face value of the policy is paid to the insured at the end policy is paid to the insured at the end of the agreed period.of the agreed period.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Endowment Insurance Endowment Insurance
If the insured dies before the end of If the insured dies before the end of the agreed period, the full amount is the agreed period, the full amount is paid to the beneficiary at the time of paid to the beneficiary at the time of death.death.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Accidental Death and Accidental Death and Dismemberment Insurance Dismemberment Insurance
Accidental death and dismemberment Accidental death and dismemberment insurance provides benefits only when insurance provides benefits only when the insured is killed in an accident, the insured is killed in an accident, loses the use of one or more limbs, or loses the use of one or more limbs, or loses sight in one or both eyes.loses sight in one or both eyes.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Term Insurance Term Insurance
Term insuranceTerm insurance is issued for a is issued for a particular period, usually five or ten particular period, usually five or ten years. years.
It is the least expensive kind of life It is the least expensive kind of life insurance because it has no cash or insurance because it has no cash or loan value.loan value.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Term Insurance Term Insurance
Premiums for term insurance increase Premiums for term insurance increase at the end of each term because the at the end of each term because the insured is older and is considered a insured is older and is considered a greater risk.greater risk.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Exemptions from Risk Exemptions from Risk
Some states do not allow beneficiaries Some states do not allow beneficiaries to receive life insurance proceeds if to receive life insurance proceeds if the insured is legally executed or if the the insured is legally executed or if the insured is killed by the police while insured is killed by the police while trying to avoid capture.trying to avoid capture.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Exemptions from Risk Exemptions from Risk
In most cases, the courts allow a In most cases, the courts allow a beneficiary to receive benefits under a beneficiary to receive benefits under a life insurance policy when the insured life insurance policy when the insured is murdered, except when the is murdered, except when the murderer is the beneficiary.murderer is the beneficiary.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Name the type of insurance described below.
Renée Morris, who is a firefighter in New York City, purchased insurance that pays her a benefit if she loses a limb or her eyesight.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Pre-Learning Question Pre-Learning Question
What benefits does health insurance include?
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Basic health insurance often includes Basic health insurance often includes the following benefits: the following benefits:
Health Insurance Health Insurance
Inpatient and outpatient hospital Inpatient and outpatient hospital carecarePhysician carePhysician care
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
SurgerySurgeryPrescription drugsPrescription drugsDental and vision care Dental and vision care
Health Insurance Health Insurance
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Major medical coverage pays for Major medical coverage pays for expenses beyond those covered by a expenses beyond those covered by a basic plan, including long-term basic plan, including long-term hospitalization and the cost of hospitalization and the cost of catastrophic illness.catastrophic illness.
Health Insurance Health Insurance
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Health insurance companies offer a Health insurance companies offer a variety of health insurance plans to variety of health insurance plans to make some degree of health make some degree of health insurance coverage available to most insurance coverage available to most people. The type of coverage people people. The type of coverage people carry depends on their individual carry depends on their individual situations.situations.
Insurance Plans Insurance Plans
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
35.235.2
Health Insurance Must HavesHealth Insurance Must Haves A health insurance plan should:
Offer basic coverage for hospital and doctor bills.
Provide at least 120 days’ hospital room and board in full.
Provide at least $1 million lifetime maximum for each family member.
Pay at least 80 percent for out-of-hospital expenses after a yearly
deductible of $500 per person or $1,000 per family.
Impose no unreasonable exclusions.
Limit your out-of-pocket expenses to no more than $3,000 to $5,000 a year,
excluding dental, vision care, and prescription costs.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Many people get their health Many people get their health insurance through a group insurance insurance through a group insurance plan where they work. Insurance plan where they work. Insurance companies can offer lower premiums companies can offer lower premiums to large groups, and many employers to large groups, and many employers pay part of the premium for each pay part of the premium for each employee.employee.
Group Plans Group Plans
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
People who work for a company that People who work for a company that does not offer health insurance or who does not offer health insurance or who are self-employed can buy individual are self-employed can buy individual health insurance. health insurance.
Individual Plans Individual Plans
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
This insurance is more expensive than This insurance is more expensive than group insurance because the cost group insurance because the cost cannot be spread among a large cannot be spread among a large group of people.group of people.
Individual Plans Individual Plans
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
HMOs and PPOs are other types of HMOs and PPOs are other types of health insurance plans.health insurance plans.
HMOs and PPOs HMOs and PPOs
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Health Maintenance Organizations Health Maintenance Organizations (HMOs) contract with doctors and (HMOs) contract with doctors and other healthcare professionals to other healthcare professionals to provide healthcare services for their provide healthcare services for their members.members.
Health Maintenance Organizations Health Maintenance Organizations
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Members pay monthly premiums and Members pay monthly premiums and must choose from a list of doctors must choose from a list of doctors provided by the HMO.provided by the HMO.
Health Maintenance Organizations Health Maintenance Organizations
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
A Preferred Provider Organization A Preferred Provider Organization (PPO) is a group of healthcare (PPO) is a group of healthcare providers, such as doctors or providers, such as doctors or hospitals, who provide care for groups hospitals, who provide care for groups of employees at reduced rates.of employees at reduced rates.
Preferred Provider Organizations Preferred Provider Organizations
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
People over 65 who are covered by People over 65 who are covered by social security are eligible for social security are eligible for MedicareMedicare, a federally funded health , a federally funded health insurance program.insurance program.
Government Health Care PlansGovernment Health Care Plans
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
MedicaidMedicaid is a healthcare plan for low- is a healthcare plan for low-income people. State governments income people. State governments administer Medicaid, which is funded administer Medicaid, which is funded by both state and federal funds.by both state and federal funds.
Government Health Care PlansGovernment Health Care Plans
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Disability insurance pays you benefits Disability insurance pays you benefits when you can’t work because of a when you can’t work because of a disability.disability.
Disability InsuranceDisability Insurance
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Reviewing What You Learned
1. What are the principal types of life insurance? Briefly describe each one in your own words.
Section 35.2 Assessment
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Reviewing What You Learned
(1) Straight life—requires payment of premiums through the insured’s life. The premiums remain constant.
Section 35.2 Assessment
Answer
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Reviewing What You Learned
(2) Universal life—a form of straight life insurance but it allows policyholders to change the terms of the policy as their needs change. Premiums fluctuate according to the changes.
Section 35.2 Assessment
Answer
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Reviewing What You Learned
(3) Limited-payment life—provides that the payment of premiums will stop after a stated length of time. (4) Endowment—provides protection for a stated time.
Section 35.2 Assessment
Answer
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Reviewing What You Learned
(5) Term—issued for a particular period. It has no cash or loan value. (Answers may vary but should closely parallel the descriptions in the chapter.)
Section 35.2 Assessment
Answer
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Reviewing What You Learned
2. What risks are generally not covered by insurance?
Section 35.2 Assessment
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Reviewing What You Learned
Some states do not allow beneficiaries to receive life insurance proceeds when an insured is legally executed or killed by the police to avoid capture. When the beneficiary is the murderer of the insured, no proceeds are allowed.
Section 35.2 Assessment
Answer
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Reviewing What You Learned
3. What benefits are provided by basic health insurance? Major medical?
Section 35.2 Assessment
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Reviewing What You Learned
Basic—inpatient and outpatient hospital care, physician care, surgery, prescription drugs, and dental and vision care.
Section 35.2 Assessment
Answer
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Reviewing What You Learned
Major medical—covers expenses beyond those covered by a basic plan, including long-term hospitalization and catastrophic illness.
Section 35.2 Assessment
Answer
Estate Planning Estate Planning Section 35.3Section 35.3
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Why It’s Important
Understanding property insurance will help Understanding property insurance will help you protect your property at the lowest cost.you protect your property at the lowest cost.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Property Insurance Homeowner’s and Renter’s Insurance Fire Insurance
Section OutlineSection Outline
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Pre-Learning Question Pre-Learning Question
What is property insurance?
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Property Insurance Property Insurance
Property insuranceProperty insurance is a contract in is a contract in which the insurer promises, for a which the insurer promises, for a stated premium, to pay you a sum of stated premium, to pay you a sum of money if a particular piece of real or money if a particular piece of real or personal property is damaged or personal property is damaged or destroyed.destroyed.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Property Insurance Property Insurance
The policy becomes effective as soon The policy becomes effective as soon as the insurer accepts your as the insurer accepts your application, or even sooner if a binder application, or even sooner if a binder is issued. A is issued. A binderbinder gives you gives you temporary protection until a policy is temporary protection until a policy is issued.issued.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Property Insurance Property Insurance
A A floater policyfloater policy is one that insures is one that insures property that cannot be covered by property that cannot be covered by specific insurance because it is specific insurance because it is constantly changing in value or constantly changing in value or location. location.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Property Insurance Property Insurance
A personal property floater, for A personal property floater, for example, can cover a bicycle or laptop example, can cover a bicycle or laptop computer, no matter where the items computer, no matter where the items are located.are located.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Pre-Learning Question Pre-Learning Question
What does homeowner’s and renter’s insurance cover?
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Homeowner’s and Renter’s Homeowner’s and Renter’s Insurance Insurance
Homeowner’s insuranceHomeowner’s insurance protects protects against most types of losses and against most types of losses and liabilities related to home ownership.liabilities related to home ownership.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Homeowner’s Insurance Covers Homeowner’s Insurance Covers
FireFireWindstormWindstormVandalismVandalismBurglaryBurglaryInjuries suffered by other persons Injuries suffered by other persons while on the property while on the property
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Homeowner’s Insurance Covers Homeowner’s Insurance Covers
With certain limitations, homeowner’s With certain limitations, homeowner’s policies cover your personal property policies cover your personal property anywhere in the world.anywhere in the world.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Homeowner’s and Renter’s Homeowner’s and Renter’s Insurance Insurance
Renter’s insuranceRenter’s insurance protects you protects you against loss of personal property, against loss of personal property, liability for a visitor’s personal injury, liability for a visitor’s personal injury, and liability for negligent destruction of and liability for negligent destruction of the rented premises.the rented premises.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Pre-Learning Question Pre-Learning Question
What does fire insurance cover?
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Fire Insurance Fire Insurance
Fire insuranceFire insurance covers loss resulting covers loss resulting directly from an unfriendly or hostile directly from an unfriendly or hostile fire. fire.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Fire Insurance Fire Insurance
Damages that result from trying to put Damages that result from trying to put out a fire, or from theft or breakage out a fire, or from theft or breakage while attempting to remove insured while attempting to remove insured goods to a safe location are goods to a safe location are considered directly related to the fire considered directly related to the fire and are usually covered.and are usually covered.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Pre-Learning Question Pre-Learning Question
What is coinsurance?
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Coinsurance Clauses Coinsurance Clauses
CoinsuranceCoinsurance is a provision in an is a provision in an insurance policy that limits your insurance policy that limits your liability for a loss if the property is not liability for a loss if the property is not insured for its full replacement value.insured for its full replacement value.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Coinsurance Clauses Coinsurance Clauses
For example, if your insurance policy For example, if your insurance policy has an 80 percent coinsurance has an 80 percent coinsurance clause, your house must be insured clause, your house must be insured for 80 percent of its replacement value for 80 percent of its replacement value to receive full reimbursement for a to receive full reimbursement for a loss.loss.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
35.335.3
Coinsurance Clauses Coinsurance Clauses
COINSURANCE CLAUSECOINSURANCE CLAUSE
““The insurance company will pay that part of a loss that the insurance The insurance company will pay that part of a loss that the insurance
carrier bears to 80 percent of the replacement cost of the building.”carrier bears to 80 percent of the replacement cost of the building.”
It would cost $100,000 to replace Zelia’s house. If she insured it for $60,000, the It would cost $100,000 to replace Zelia’s house. If she insured it for $60,000, the
insurance company would pay only three-fourths of any loss, computed as follows:insurance company would pay only three-fourths of any loss, computed as follows:
$60,000$60,000 $60,000$60,000 33
80% of $100,00080% of $100,000 $80,000$80,000 44
A fire partially destroys the building, causing $40,000 worth of damage. Because A fire partially destroys the building, causing $40,000 worth of damage. Because
of the coinsurance clause, Zelia would recover $30,000 (3/4 of the loss) from the of the coinsurance clause, Zelia would recover $30,000 (3/4 of the loss) from the
insurance company.insurance company.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Pre-Learning Question Pre-Learning Question
What does marine insurance cover?
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Marine Insurance Marine Insurance
Marine insurance is one of the oldest Marine insurance is one of the oldest kinds of insurance coverage, dating kinds of insurance coverage, dating back to Venetian traders who sailed back to Venetian traders who sailed the Mediterranean Sea. the Mediterranean Sea.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Marine Insurance Marine Insurance
Ocean marine insuranceOcean marine insurance covers covers ships at sea.ships at sea.Inland marine insuranceInland marine insurance covers covers goods that are moved by land goods that are moved by land carriers such as trains, trucks, and carriers such as trains, trucks, and airplanes.airplanes.
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Reviewing What You Learned
1. What types of losses are covered by homeowner’s insurance? Fire insurance?
Section 35.3 Assessment
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Reviewing What You Learned
Homeowner’s insurance covers losses from fire, windstorm, vandalism, burglary, and injuries suffered by other persons while on the property.
Section 35.3 Assessment
Answer
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Reviewing What You Learned
With certain limitations, homeowner’s policies cover personal property owned by the insured anywhere in the world. Fire insurance covers loss resulting directly from an unfriendly or hostile fire.
Section 35.3 Assessment
Answer
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Reviewing What You Learned
2. What is a coinsurance clause? What does it mean if your policy has an 80 percent coinsurance clause?
Section 35.3 Assessment
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Reviewing What You Learned
Coinsurance is a provision in an insurance policy that limits the insurer’s liability for a loss if the property is not insured for its full replacement value.
Section 35.3 Assessment
Answer
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Reviewing What You Learned
If your policy has an 80 percent coinsurance clause, your house must be insured for 80 percent of its replacement value to receive full reimbursement for a loss.
Section 35.3 Assessment
Answer
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Reviewing What You Learned
3. Explain marine insurance coverage.
Section 35.3 Assessment
Understanding Business and Personal Law
Estate Planning Estate Planning Section 36.2Section 36.2
Retirement and Wills
Reviewing What You Learned
Ocean marine insurance covers ships at sea. Inland marine insurance covers goods that are moved by land carriers such as rail, truck, and airplane.
Section 35.3 Assessment
Answer
Estate Planning Estate Planning End of Section 35.3End of Section 35.3