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Your State Insurance Department’s Mission

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  1. Your State Insurance Department’s Mission • To protect the public interest • To promote competitive markets • To facilitate the fair and equitable treatment of insurance consumers • To promote the reliability, solvency and financial solidity of insurance institutions • To support and improve state regulation of insurance

  2. Survey of U.S. Consumers • Young singles • Young families • Established families • Empty nesters/seniors Young Singles Young Families Established Families Empty Nesters/ Seniors

  3. Did You Know… • 20% of young singles say they would let their auto insurance policies lapse to save money • 18% would decline employer health insurance to save money

  4. Did You Know… • Among young families • Fewer than half have life insurance –purchased on their own – foreither spouse • Over a third do not see the importance of both spouses havinglife insurance

  5. Did You Know… • More than half of established families do not understand terms of health insurance continuation under COBRA • They have to pay the full cost of their premiums • Coverage ends after 18 months

  6. Did You Know… • Only 12 % of empty nesters/seniors think they are likely to need long-term care • They significantly underestimate the cost of such care • Their annual estimate: $35,000 • Actual annual cost: $70,000* * Source: MetLife Mature Market Institute

  7. Did You Know... • Broad need for greater awareness about fake insurance • 45% of consumers not suspicious about policy that costs significantly less than comparable ones

  8. Public Education Initiative

  9. Get Smart about Insurance • Learn some special considerations that relate to your life-stage Young Singles Young Families Established Families Empty Nesters/ Seniors • Learn the basics Auto Home Life Health

  10. Basics Tips Shop around Protect yourself against fake insurance companies Review your coverage annually

  11. Introduction to Auto Insurance

  12. Introduction to Auto Insurance • Policy components • Liability • Bodily injury to others • Damage to others’ property • Uninsured motorist’s injury/damage to you • Property damage • Collision • Damage to your car from colliding with object • Comprehensive • Damage to your car from other causes

  13. Introduction to Auto Insurance • Premiums affected by… • Type/model/age of car • Safety features • Anti-theft devices • Where you park • Geographic region • Weather conditions • Traffic patterns • Risk of theft • Driving record • Your claims history • Deductible

  14. Introduction to Home Insurance

  15. Introduction to Home Insurance • Homeowner’s • Home structure, personal property • Renter’s • Only personal property • Actual cash value • Replacement cost • Flood insurance • Not included in home owner’s/renters policies • Available via National Flood Insurance Program (NFIP) • Tip: Inventory your personal property

  16. Introduction to Home Insurance • Premiums affected by… • Home’s characteristics • Age, type of structure, wiring, roof, garage • Location, e.g. • Proximity to a fire station • Exposure to extreme weather • Theft-prone area • Home protective devices, e.g. • Burglar alarms • Smoke detectors/fire extinguisher • Sprinkler systems • Dead-bolt locks • Homeowner’s characteristics • Non-smoker • Good credit history • Previous claim history

  17. Introduction to Life Insurance

  18. Introduction to Life Insurance • Term insurance • Covers you for term of one or more years • Pays death benefit only if you die in that term • Generally offers largest insurance protection per dollar • Does not build up cash value • May not be renewable • Permanent insurance (whole life, universal life, variable universal life) • Provides long-term financial protection • Typically combines both death benefit and cash savings • Premiums tend to be higher 

  19. Introduction to Life Insurance • Premiums affected by… • Age you purchase your policy • Overall health • Pre-existing/chronic health problems, e.g. • Diabetes, heart disease, cancer, sexually transmitted diseases • Poor health habits, e.g. • Smoking, excessive drinking • Dangerous hobbies, e.g. • Skydiving, skiing, rock climbing • Driving record, e.g. • Accidents, DWIs, claims, tickets • Your geographic area

  20. Introduction to Health Insurance

  21. Introduction to Health Insurance • Types of plans • Major medical plans • Indemnity • Preferred provider organization (PPO) • Health maintenance organization (HMO) • Point of service plans (POS) • Limited benefit plans • Provide coverage for particular health care setting,ailment or disease, e.g. • Basic hospital expense coverage • Accident only coverage

  22. Introduction to Health Insurance • Additional coverage options, e.g. • Disability • Long-term care • Medicare supplemental • Non-insurance options • Discount plans • Non-licensed risk-sharing plans

  23. Introduction to Health Insurance • Controlling your costs… • If both spouses have employer-provided coverage, carefully compare costs/benefits • Regularly review your specific needs and adjust coverage options • Stay in network as much as possible • Obtain referrals, as required • Comply with pre-certification requirements • Hold onto receipts, should you exceed your deductible • Participate in flexible spending account, if offered by your employer • Consider combining a high-deductible catastrophic plan with an HSA, if offered by your employer

  24. Pop Quiz! Which of the following actions may help reduce your auto insurance premiums: • Completing a defensive driving “refresher” course • Dropping collision insurance if your car is older • Raising your deductible • Parking your car in an indoor garage or locked parking lot • All of the above

  25. Pop Quiz! Which of the following actions may help reduce your auto insurance premiums: • Completing a defensive driving “refresher” course • Dropping collision insurance if your car is older • Raising your deductible • Parking your car in an indoor garage or locked parking lot • All of the above

  26. Pop Quiz! You have the option to insure your home and belongings for their replacement costs. Which of the following statements is TRUE? • Replacement cost coverage takes into account the amountof time you have owned the home or your belongings. • Replacement cost coverage provides payment to replace or rebuild your home or repair damages as you please,without restrictions on the kind or quality of materials used. • Replacement cost is the amount it would take to replace or rebuild your home or repair damages, without deducting for depreciation.

  27. Pop Quiz! You have the option to insure your home and belongings for their replacement costs. Which of the following statements is TRUE? • Replacement cost coverage takes into account the amountof time you have owned the home or your belongings. • Replacement cost coverage provides payment to replace or rebuild your home or repair damages as you please,without restrictions on the kind or quality of materials used. • Replacement cost is the amount it would take to replace or rebuild your home or repair damages, without deducting for depreciation.

  28. Pop Quiz! Which of the following definitions of term life insurance is TRUE? • Term life insurance is coverage that typically ends at the age of 40, while whole life insurance covers you until you reach the age of 65. • Term life insurance is coverage at a guaranteed rate for a specified period of time, while whole life insurance covers you for as long as you live if your premiums are paid. • Term life insurance is a flexible policy that lets you vary your premium payments. • Term life insurance allows you to borrow against the policy.

  29. Pop Quiz! Which of the following definitions of term life insurance is TRUE? • Term life insurance is coverage that typically ends at the age of 40, while whole life insurance covers you until you reach the age of 65. • Term life insurance is coverage at a guaranteed rate for a specified period of time, while whole life insurance covers you for as long as you live if your premiums are paid. • Term life insurance is a flexible policy that lets you vary your premium payments. • Term life insurance allows you to borrow against the policy.

  30. Special ConsiderationsYoung Singles

  31. Auto 101: Car & Driver • Stay on your parents’ policy, if possible • Don’t let coverage lapse • Control costs prudently • Consider how insurance rates vary with type/model/features of car • Don’t go overboard with liability coverage • Consider dropping collision coverage for older car • Raise your deductible • Commute via public transportation • Suspend coverage if you’ll be traveling or deployed in military • Take defensive driving course • Maintain good driving record • Maintain good grades

  32. Home 101: Living Single • Understand renter’s insurance • What’s covered, what’s not • Who’s liable • Owning your own policy • Control costs prudently • Install smoke detectors/place fire extinguishers in key locations

  33. Life 101: Lessons for Life • Weigh costs/benefits of purchasing at a young age • Permanent, term • Serviceman’s Group Life Insurance (SGLI) • Control costs prudently • Understand impact of… • Pre-existing/chronic health problems • Poor health habits • Smoking, excessive drinking • Driving record • Dangerous hobbies, e.g. • Skydiving, skiing, rock climbing

  34. Health 101: I Got a Job…and Health Insurance Too • Even though you’re young/healthy, never forgo coverage • Know your family’s health history • Understand when… • Parents/school coverage ends • Employment coverage begins • Weigh health coverage in assessing job offers • To control costs or cover interim period, consider… • High-deductible major medical policy • Catastrophic health coverage • Health Savings Account (HSA) • For physically demanding jobs, consider disability coverage • Provides lost income in event of injury that prevents you from working

  35. Pop Quiz! At this stage of your life, you might be considering buying your first car. Which of the following aspects of your vehicle does NOT affect your auto insurance premiums? • Make and model of the vehicle; whether it is an SUV, convertible or an economy car etc. • “Theft-ability Factor”: Whether the vehicle you are considering is prone to theft more than the others • Safety devices installed in the vehicle • Fuel efficiency of the vehicle

  36. Pop Quiz! At this stage of your life, you might be considering buying your first car. Which of the following aspects of your vehicle does NOT affect your auto insurance premiums? • Make and model of the vehicle; whether it is an SUV, convertible or an economy car etc. • “Theft-ability Factor”: Whether the vehicle you are considering is prone to theft more than the others • Safety devices installed in the vehicle • Fuel efficiency of the vehicle

  37. Pop Quiz! What is renter’s insurance? • An insurance policy aimed at covering the landlord’s possessions or property • Insurance on a rented car or rented boat • Insurance that protects the insured’s belongings and provides liability coverage against damages, losses and accidents that occur in a rented residence • There is no such thing. If you rent, you and your possessions are covered under the property owner’s insurance.

  38. Pop Quiz! What is renter’s insurance? • An insurance policy aimed at covering the landlord’s possessions or property • Insurance on a rented car or rented boat • Insurance that protects the insured’s belongings and provides liability coverage against damages, losses and accidents that occur in a rented residence • There is no such thing. If you rent, you and your possessions are covered under the property owner’s insurance.

  39. Pop Quiz! Often the health insurance coverage you have from your college or under your parents’ policy ceases when you graduate. Which of the following is the LEAST desirable option to obtain interim health coverage until you get coverage through an employer? • Using interim coverage offered by some colleges to their recent graduates • Purchasing the policy with the lowest premiums regardless of the coverage • Purchasing catastrophic health coverage as a short-term measure • All of these are good, risk-free options

  40. Pop Quiz! Often the health insurance coverage you have from your college or under your parents’ policy ceases when you graduate. Which of the following is the LEAST desirable option to obtain interim health coverage until you get coverage through an employer? • Using interim coverage offered by some colleges to their recent graduates • Purchasing the policy with the lowest premiums regardless of the coverage • Purchasing catastrophic health coverage as a short-term measure • All of these are good, risk-free options

  41. Q&A

  42. Special ConsiderationsYoung Families

  43. Auto 201: And Baby Makes Three • Consider increasing liability coverage as you transport children • Consider adding umbrella policy to protect your growing assets • Understand insurance costs of stepping up to larger vehicle • Control costs prudently • Merge separate spouse policies

  44. Home 201: Owning Up to Your Home • Understand why home’s insured value will likely be less than its market value • Insuring home/possessions, not land • Alert insurance company to major home improvements • Typically $5,000+ • Understand your legal liability • Consider increasing liability coverage for ‘backyard hazards,’ e.g. • Pool, trampoline, swing set • Consider rider to cover special valuables, e.g. • Jewelry, antiques, art • Control costs prudently • Consider raising deductible

  45. Life 201: We are Family • Consider coverage for both spouses • Consider child care costs in determining coverage amounts • Weigh costs/benefits of purchasing whole life vs. term • Update policies to name children as beneficiaries • Consider naming trustee for underage kids • Consider benefits of purchasing policy for newborn

  46. Life 201: We are Family • Control costs prudently • Seek discounts for healthy lifestyle improvements • Smoking cessation • Lowering cholesterol • Apply for Serviceman’s Group Life Insurance (SGLI), if eligible • Understand impact of… • Pre-existing/chronic health problems • Poor health habits • Driving record • Dangerous hobbies, e.g. • Skydiving, skiing, rock climbing

  47. Health 201: I Do! Health Insurance for Two+ • If both parents are working, compare health insurance policies to see which best meets family’s needs • Take advantage of flexible spending account, if available • If planning to start a family, fully familiarize yourself with coverage options, exclusions • Be aware of deadlines/requirements for covering newborns, adoptions

  48. Pop Quiz! Why do you need to inform your insurance company of backyard items, such as a swing set or trampoline? • These items will attract more visitors to your home. • These items are more likely to cause accidents on your property. • These items are expensive and will therefore raise your premiums. • These items are removable and can be stolen.