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INSURANCE. How it works… Why YOU need it…. ALL ABOUT RISK. The chance of financial loss from some type of danger. RISK MANAGEMENT AVOID THE RISK Don’t do risky things REDUCE THE RISK Take steps to protect yourself ACCEPT THE RISK

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Insurance

INSURANCE

How it works…

Why YOU need it…


All about risk
ALL ABOUT RISK

The chance of financial loss from some type of danger

RISK MANAGEMENT

AVOID THE RISK

  • Don’t do risky things

    REDUCE THE RISK

  • Take steps to protect yourself

    ACCEPT THE RISK

  • If the potential for future financial loss is small, don’t worry about it

    SHARE THE RISK

  • Buy insurance



Sharing the risk
SHARING THE RISK

INSURANCE

  • A means of guaranteeing your financial protection against various risks. In exchange for a relatively a small monthly payment, you gain protection against a potentially large loss

    INSURANCE POLICY

  • A written contract detailing what an insurance company will cover, how much it will pay, and how much you will pay


Sharing the risk1
SHARING THE RISK

PREMIUM

The amount you pay for an insurance policy

  • Paid monthly, quarterly, semi-annually, or annually

  • Based on the type and amount of coverage you choose

  • Varies from one insurance company to another – shop around!

  • Credit score can play a part in how much you pay (higher score = lower premium)


Your task
YOUR TASK:

  • Find out what the average American pays for:

    • Health Insurance Premiums

    • Automobile Insurance Premiums

    • Homeowner’s Insurance Premiums

    • Life Insurance Premiums


Sharing the risk2
SHARING THE RISK

COVERAGE LIMIT

The maximum amount the insurance company will pay if you file a claim

DEDUCTIBLE

  • The amount of a loss YOU must pay out of your own pocket before the insurance company will step in and pay the rest


Automobile insurance video 101 what are the 6 forms of coverage
AUTOMOBILE INSURANCEVideo 101 – What are the 6 forms of coverage?


What affects the price
What Affects the Price?

  • AGE

  • GENDER

  • MARITAL STATUS

  • TYPE OF CAR

  • HOW OFTEN YOU USE THE CAR

  • LOCATION

  • DRIVING RECORD

  • CLAIM RECORD

  • CREDIT HISTORY


Main types of auto ins
Main Types of Auto INS:

  • GENERAL LIABILITY

    • Covers damage YOU cause to other people’s property and bodily injuries you cause to people outside your car

    • If you damage someone else car, your liability coverage pays to cost to have it repaired

    • If you hurt someone outside your car, and he/she sues you, general liability covers your legal bills

  • MEDICAL PAYMENTS (Personal Injury Protection)

    • Covers immediate compensation for bodily injury expenses to you and your passengers regardless of who is at fault

  • COLLISION

    • Covers repairs for damage you cause to your car.


Main types of auto ins1
Main Types of Auto INS:

  • COMPREHENSIVE (NON-COLLISION)

    • Covers damage to your vehicle, break-ins, vandalism, theft, natural disasters, etc…

  • UNINSURED MOTORIST (video)

    • Covers your lost wages and medical expenses if you are in an accident with someone who doesn’t have auto insurance

  • UNDERINSURED MOTORIST

    • Covers you when cost to repair damages exceeds other persons coverage limit


Home owner s insurance not in notes
HOME OWNER’S INSURANCE (NOT IN NOTES!!)

investopedia video =

WATCH NOW!



Health insurance1
HEALTH INSURANCE

  • Your, and/or your employer pay a premium and the insurance company pays part of your medical bills


Health insurance2
HEALTH INSURANCE

WHAT YOU NEED:

  • Hospital/surgical/physician expenses

  • Dental/Vision/Long-term care

    WHERE TO GET IT:

  • Private Health Care Plans (Insurance co, Health Maintenance Organizations)

  • Government Health Care Programs (Medicare, Medicaid)


Health insurance3
HEALTH INSURANCE

Choosing WiselyIf you have a choice from more than one plan, compare how each plan handles the following:

  • Coverages - what they cover

  • Co-payments – what you have to pay to see Dr.

  • Coinsurance - % you have to pay after deductible is met

  • Deductibles - amt you pay before insurance kicks in

  • Pre-existing conditions

  • Limitations on devices, drugs, and access to specialists.


Disability insurance
DISABILITY INSURANCE

Provides regular cash income when an employee is unable to work due to pregnancy, a non-work-related accident, or an illness


Disability insurance1
DISABILITY INSURANCE

WHAT YOU NEED:

  • Day-to-day living expenses for your and your family

    WHERE TO GET IT:

  • Worker’s compensation

  • Employer group insurance plans

  • Social Security (only for over 12 months)

  • Private income insurance programs


Disability insurance2
DISABILITY INSURANCE

Short-Term Disability

  • Six months or less of work.

  • Replaces close to 100% of wages for the first payouts.

  • Payments will eventually drop, often to 60% of wages.

    Long-Term Disability

  • More than 6 months out of work

  • Can be purchased to replace 50-70% of salary.

  • Some policies have monthly maximum payouts

  • Some policies will only pay out for 5 or 10 years, some will pay out until age 65.


Disability insurance3
DISABILITY INSURANCE

Meredith Moore’s Story


Life insurance
Lifeinsurance


Life insurance1
LIFE INSURANCE

You pay a premium and the insurance company pays a death benefit when you die

You really need it if… Other people depend on you (married, children)


Life insurance2
LIFE INSURANCE

WHAT YOU NEED:

  • Burial costs 2011 (average = $7,000-$10,000)

  • Money to pay off debt (medical expenses, mortgage, car loans, credit cards, taxes)

  • And provide income for survivors (food, housing, utilities, transportation, health care, clothing, insurance, college, retirement)

    The bigger your lifestyle, the more you need.

    Some experts recommend 10-15 times your gross annual income. $45,000= $450,000-675,000


Life insurance3
LIFE INSURANCE

WHERE TO GET IT:

  • Insurance Professionals

  • At Work

  • Direct Purchasing over the Internet


Life insurance4
LIFE INSURANCE

TERM:

  • A specified term (10,20,30 years)

  • Lower Cost

  • No cash value

    PERMANENT:

  • Until age 100 or later, as long as premiums are paid

  • Higher initial cost

  • Can accumulate cash value – and then access it

  • Whole Life, Variable Life, Universal Life, Variable Universal Life


Life insurance5
LIFE INSURANCE

Melissa Knoll’s Story


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