Life, health, disability, property insurance, risk assessment, and coverage strategies.
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Foundation terms you need to know first (15 terms)
Loss of income in real estate refers to a situation where an investor's expected rental revenue from a property is reduced or eliminated, often due to vacancies, tenant issues, or property damage.
Risk transfer is a strategy in real estate investing where the potential financial burden of a risk is shifted from the investor to another party, often through insurance policies or contractual agreements, to protect assets and limit liability.
Downside protection in real estate investing refers to strategies and measures taken to minimize potential financial losses or negative outcomes in an investment, safeguarding capital against adverse events.
Water damage refers to any destructive impact on a property caused by unwanted water, ranging from minor leaks to major flooding, leading to structural issues, mold, and significant repair costs for real estate investors.
Vacancy risk is the potential for a rental property to remain unoccupied for a period, leading to a loss of rental income and increased holding costs for the investor. It's a key factor in real estate investment analysis.
Complex strategies and professional concepts (4 terms)
Indexed Universal Life (IUL) is a type of permanent life insurance that offers a death benefit and a cash value component, where the cash value growth is linked to the performance of a market index, such as the S&P 500, typically with a floor and a cap on returns.
Counterparty risk is the risk that a party to a contractual agreement will fail to fulfill its obligations, potentially leading to financial loss for the other party. In real estate, this can arise from various stakeholders, including lenders, borrowers, tenants, or joint venture partners.
The Infinite Banking Concept (IBC) is a financial strategy where individuals or businesses use a specially designed participating whole life insurance policy to become their own bank, financing major purchases and investments, including real estate, with policy loans.
Environmental insurance provides coverage for liabilities and costs associated with pollution incidents, contamination, and environmental damage, crucial for real estate investors managing properties with potential environmental risks.
A contingency plan in real estate investing is a proactive strategy to prepare for unexpected events or challenges that could negatively impact an investment, ensuring business continuity and financial protection.
A death benefit is the sum of money paid to the designated beneficiary or beneficiaries upon the death of an insured person, typically from a life insurance policy. It provides financial protection to loved ones.
Downside protection in real estate investing refers to strategies and measures taken to minimize potential financial losses or negative outcomes in an investment, safeguarding capital against adverse events.
A readily accessible pool of money set aside to cover unexpected financial challenges, crucial for both personal and real estate investment stability.
Liability insurance protects property owners from financial losses due to claims of injury or property damage caused to others on their property, covering legal costs and settlements.
Loss of income in real estate refers to a situation where an investor's expected rental revenue from a property is reduced or eliminated, often due to vacancies, tenant issues, or property damage.
Market risk refers to the possibility of losses in real estate investments due to factors affecting the overall market, rather than specific property issues. These broad economic forces can impact property values, rental income, and investor returns.
A policy premium is the amount of money an individual or entity pays to an insurance company for coverage against specific risks, typically paid regularly (monthly, quarterly, or annually).
Property insurance provides financial protection against physical damage to real estate assets and liability for injuries on the property, crucial for safeguarding real estate investments.
Real estate fraud involves intentional deception or misrepresentation in a real estate transaction for personal or financial gain, often leading to significant losses for victims.
Risk transfer is a strategy in real estate investing where the potential financial burden of a risk is shifted from the investor to another party, often through insurance policies or contractual agreements, to protect assets and limit liability.
Term life insurance provides coverage for a specific period, or 'term,' and pays a death benefit to your beneficiaries if you pass away during that time, offering financial protection without a cash value component.
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