Ch. 18 Insurance Law

Pages 318 – 339Insurance FundamentalsProperty and Casualty

InsuranceLife and Social Insurance

Ch. 18-3Life and Social Insurance

Life Insurance – contractual arrangement under which an insured promises to pay an agreed-upon amount of money to a named party upon the death of a particular person.

Exemptions – provisions that exempt the insurer from liability when death is due to certain causes, such as the crash of a private airplane or scuba-diving.

Life Insurance continued… Incontestability Clause – prohibits

the insurer from refusing to perform due to misrepresentation or fraud after the policy has been in effect for a specified period of time…usually one or two years. If due to age…it is modified to be

correct representation If due to suicide before the limited

one or two years of policy…premiums are paid to beneficiary

Social Insurance Primary is federal government’s

Social Security Act. RSDHI (Retirement, Survivors’,

Disability, and Health Insurance) Unemployment compensation

Retirement Insurance Eligible person checks as early as age 62 Amount of the check is a percentage of the

full retirement check available between age 65-67 Full retirement is 65 if born in 1937 or before Full retirement is 67 if born in 1960 or later

Checks are meant only as supplemental income, not sole support of retirement

Survivor’s Insurance

Survivors of a person eligible for benefits under the system also may receive benefits if they are A widow or widower age 60 or older A widow or widower of any age if

caring for a child under age 16 or a child that is disabled

A dependent child

Disability Insurance

A severe, long-lasting disability that prevents the eligible person from being able to do “any substantial work.” Loss of both arms, legs, or a leg and an arm Heart and lung diseases that cause pain or

fatigue on slight exertion Progressive cancer Brain damage resulting in loss of judgment

or memory Loss of vision, inability to speak, deafness

Health Insurance Indemnifies against the cost of medical care necessary to regain physical well-being

after an illness MEDICARE – two basic programs

Hospital insurance, helps pay for hospital expenses and the costs of follow-up treatment

Must enter a hospital for treatment Must have enough work credits and be age 65 or older

(under age 65 if on permanent kidney failure or covered for an extended period of time under Medicare)

Medical insurance, pays for items not covered by hospital insurance

Physicians, surgeons, ambulance charges, X-rays, radium treatments, lab tests, surgical dressings, casts, home visits by nurses or therapists

Patients pay relatively small yearly deductibles, and then medical insurance generally pays either a large percentage or all of the costs of the covered services.