MR ZIRKLE VIDEOS

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Gap insurance - The “gap” is paid between the car’s financial amount owed and the
actual cash value.

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BOOK
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The need for health insurance arises from principle 7, protect yourself against major
catastrophes.

Health insurance - Provides protection for family and you against high medical bills
Life insurance - Protects your family in case you die

Insurance bills haven’t changed for a couple of reasons:

● No need to economize, most people have insurance and there is no need to lower
prices
● Medical care is super pricey and costly

Life insurance is based on risk pooling, where everyone with a common risk pays into
the “pool” and when someone dies, they get a portion of the pool. The amount everyone
puts in is called a premium.

Actuaries - Statisticians who calculate probability of death based on specific

characteristics.
Face amount or face of policy - Amount of insurance provided by policy at death
Insured - The person who is insured
Policyholder - The individual or business that holds the life insurance policy
The beneficiary receives the proceeds after the policyholder’s death. Life insurance
probably has no benefit if you have no spouses or dependents.
Premiums - Amount you pay to keep insurance policy active

Earnings multiple approach - Method of determining how much life insurance you need
by using a multiple of your yearly earnings

Needs approach - Method of determining how much life insurance you need based on the
funds your family will need to maintain their lifestyle after the policyholder's death
- Cleanup funds
- Debt elimination funds
- Immediate transitional funds
- Dependency expenses
- Spousal life income
- Educational expenses for kids
- Retirement income
Term insurance - Pure life insurance (Affordable, costs rises every time policy is
renewed)
Cash-value insurance - More than life insurance, also includes a savings account that is
paid during premiums. Permanent type of insurance

Decreasing term insurance - Premium stays constant however face policy decreases
Group term insurance - Term insurance provided to an association of people.
Credit or mortgage group life insurance - Group life insurance provided by a lender to its
debtors
Convertible term life insurance - Term life insurance you can convert into cash value life
insurance

Whole life insurance - Death benefit and face of policy is paid when a person reaches
maximum stated age or dies. Premium is constant.
Cash value - Money the policyholder is entitled to if the policy is terminated

Nonforfeiture right - Person can terminate policy and rightfully access the cash value
Universal life insurance - Type of cash value insurance combining term insurance with a
tax-deferred savings and premiums and benefits are flexible.

Variable life insurance - Provides permanent insurance coverage like whole life
insurance, however policyholders take on the risk.

Contract clauses - Specific stipulations that occur on the insurance policy:

● Beneficiary provision
● Coverage grace period
● Loan clause - Borrow cash-value from policy
● Nonforfeiture clause
● Policy reinstatement clause
● Change of policy clause
● Suicide clause
● Incontestability clause

Riders - Extra benefits that can be added to your policy for certain amounts of money
● Waiver of Premium for Disability Rider
● Accidental death benefit rider
● Guaranteed insurability rider
● Cost-of-Living Adjustment Rider
● Living benefits rider

Settlement or Payout Options - Alternate ways the beneficiary can choose to receive the
money upon the death of the policyholder
- Lump sum payment (tax free) all at once
 - Interest-only payment (Left in a deposit where it earns upon the market interest
rate)
- Installment (Paid in installments, that part isn’t taxable, but interest is)
- A straight life annuity that pays the beneficiary for life

It’s important to choose the correct agent and don’t be pressured to buy it. Term
insurance is generally better for most people since it has low premiums.

Traditional net method - Sum premiums over period, and subtract all dividends in same
periods, and policy value, then divide by years to get final cost

Interest-adjusted net cost method - Just like the TNC method except it recognizes the
time value of money

Health insurance can help in cases of medical bills and also provide major discounts. But
its main purpose is to prevent financial ruin. There are no public health care options.

2010 Health-Care Reform (Obamacare) Patient Protection and Affordable Care Act:
- Prohibits companies from denying coverage to those with preexisting health
conditions
- Allows children to stay on their parent’s policy until they turn 26
- Sets up insurance exchanges to purchase insurance and get tax credits for
insurance purchases
- Prohibits companies from dropping when the insured becomes sick
- Prevents from setting annual and lifetime insurance limits

Basic health insurance - A term used to describe most health insurance, which includes
a combination of surgical, hospital, and physician expense insurance.
● Hospital insurance - Costs associated with hospital stay, room charges, and other
fees. Almost all plans impose limits on the daily hospital costs and number of
days covered
● Surgical policy - Covers part or all of the surgery. Policy generally lists specific
surgeries and maximum it will pay for each.
● Physician expense insurance - Covers physicians’ fees outside of surgery,
including lab and x-ray fees, and home and office visits

Major medical expense insurance - Aimed at covering medical costs not insured by basic
health insurance, meant to offset financial effects of catastrophic illness.

Dental and eye insurance is relatively minor, don’t bother if the employer doesn’t provide
them.
Two basic types of plans are available:
● Fee-for-service or traditional indemnity plan: You are reimbursed for all or part of
medical expenditures, and have a good deal of freedom with hospital and doctor
 ● Managed health-care or prepaid plan: Most of your expenses are already covered
and don’t need to be reimbursed, but limited to certain hospital and doctor

There are many private insurance companies willing to sell health care. Coinsurance or
percentage participation lists the amount or percentage companies are willing to pay for
certain things.

Co-payment or deductible - The amount of expenses the insured must pay until the
insurance policy kicks in and pays any insurance benefits

Managed health-care plans are offered by health organizations and allow members to
access the needed services from specified hospitals.

Health maintenance organization - A prepaid insurance plan that entitles members to the
services of participating hospitals, doctors, and clinics
● Individual practice association plan - Made up of independent doctors, you visit
them
● Group practice plan - Generally employed by HMO and work out of a central,
shared facility
● Point-of-service plan - Can visit affiliated and non-affiliated doctors

They are much cheaper, and focus on preventive medicines.

Preferred provider organization (PPO) - A bit like a cross between a fee-for-service plan
and an HMO. Big advantage is that it allows health care for a discount.

Group health insurance - Health insurance provided to a group or association of people

usually by an employer
Individual health insurance - Health coverage that you purchase for yourself personally
or your family

Individual policy is personalized, may require an exam and reflect upon your age. Group
policy costs less.

Workers’ compensation laws - Laws that provide compensation or payment for

work-related accidents and illnesses
Medicare - A program enacted in 1968 to provide medical benefits to those with
disabilities and to persons 65 and older who qualify for Social Security benefits.

Medicare:
- Part A: Provides basic hospital insurance benefits and is compulsory
- Part B: Supplemental Medical Insurance, voluntary and covers doctors’ fees and a
wide range of medical services and supplies
 - Part C: Medicare Advantage Plans, brings more to the table with comprehensive
care and other advantages not covered by original Medicare
- Part D: Medicare Prescription Drug Coverage - Plans to help with drug
prescription and requires a separate premium

Medigap Insurance - Policy sold by private insurance that is made to cover the costs of
some things Medicare doesn’t cover.

Medicaid is like Medicare but aimed at people with low income.

Flexible spending account - A savings plan established by an employer to deposit pretax

income into there and use in case of unreimbursed bills
Health savings accounts - Another option to help people pay for unreimbursed bills,
allows to pay for current and future qualified medical and retiree expenses on a tax-free
basis
Health reimbursement accounts - Employer deposits money solely for the purpose of
going towards qualified medical expenses

High deductible health plan - Has high deductibles but lower premium costs

Due to COBRA, if you work in a company with more than 20 members then you can
activate your health care coverage even 18 months to 3 years after you left.

Disability insurance - Provides in the case of a disability occuring, usually a must have.
The price varies on age, health, and occupation with the biggest share.
You should have enough to maintain your standard of living at an acceptable level.

Some disability insurance providers have partial payments when returning back to work
for some time

Short-term disability - Generally provides benefits on disabilities lasting from 6 months

to 2 years after a short wait of 8 to 30 days.

Long-term disability - Provides until you reach the age specified in your contract or
lifetime

Waiting period - Period after disability where no benefits occur. Long-term care insurance
pays for nursing home expenses as well as home health care.

Homeowner’s insurance - six basic types of policies

Named perils insurance - An insurance that covers for each of the named perils given

HO-1 Basic Form - Most narrow of all HO policies only listing 11 named perils, isn’t
available in most states
HO-2 Broad Form - Covers more than HO-1 and is also named, 5 to 10% more expensive.
HO-3 All-Risk Form - Covers all perils except those excluded. Costs 10-15% more than
HO-1.
HO-4 Renter’s Form - Aimed at renters or tenants and covers personal belongings but
doesn’t cover liability insurance
HO-6 Condominium Form - Provides personal property and liability insurance for co-op
or condominium owners
HO-8 Older Homes Form - Designed for older forms with repair costs and actual cash
value

Coverage A protects the house. Coverage B protects 10% of outside of house structures.
Coverage C protects personal property up to 50% of home insurance. Coverage D covers
loss of use up to 20% of house insurance.

Personal liability - Protects in case someone gets injured on their property or because of
one person’s actions.

Supplemental coverage:
- Endorsement
- Personal article floaters
- Earthquake coverage, flood protection
- Replacement cost coverage, personal umbrella policy (protects against lawsuits)

How much insurance do you need? Enough for full replacement

Coinsurance - Pay a portion of your own loss if underinsured.
80% Rule - Most companies require you to pay for 80% in insurance of house’s full cost

Property Insurance Costs:

- Credit score
- High deductible
- Security systems or home alarms
- Multiple policy discounts
- Pay annually
- Shop around!

For your homeowner’s insurance to provide effective protection against loss, you need
to establish proof of ownership and value your assets using a detailed inventory of
everything you own.
- Put a list of household items
- Videotape and describe the contents
- Note original cost and date of purchase for most items
- Take a careful shot at valuables

Actual cash value = Replacement cost - depreciation

Personal automobile policy - Standardized automobile insurance for an individual or
family:
● Part A Liability Coverage: Covers against any injuries and property damage
● Part B Medical Expenses Coverage: Covers for funeral expenses and medical bills
for you and passengers
● Part C Uninsured Motorist Coverage - Required in most states and covers bodily
injury and some property damage to uninsured drivers
● Part D Damage to your automobile coverage - Covers damage to collisions, theft
of auto, and almost every peril except collision

No-fault insurance - Insurance protects you no matter whose fault the accident is

Determinants of auto-insurance costs:

- Type of automobile
- Use of automobile
- Personal characteristics
- Location
- Discounts and credit score
- Insurance company you buy from

Consider inexpensive cars. SHOP AROUND! Deal with reputable companies. Improve
driving record. Raise deductibles. Have adequate liability insurance.

Limits are represented in this form:

X/y/z
X * 1000 = how much will be paid for bodily injury liabilities per person
Y * 1000 = how much will be paid for all bodily injury liabilities per accident
Z * 1000 = how much will be paid for all damages per accident