Risk Management

1. Risk Management Introduction Property & Liability Insurance Health & Life Insurance

2. Types of Risk • _____ – A state of uncertainty where some of the possibilities may result in loss or another undesirable outcome. • ___________ – The likelihood that something will or will not happen. • _________ – A chance of loss with no chance for gain (accidents, Illnesses, acts of nature) • _____________ – May result in either gain or loss (investments)

3. Types of Risk • ___________ – May result in either gain or loss due to the state of the economy (jobs, financial positions) • Insurable Risk • ____________: loss of income or standard of living • ____________: harm to personal or real property • ____________: Loss that may occur when your error or actions injures others or their property

4. Reduce Insurance Costs • Increase ____________ – The specified loss you must pay. The higher the deductible, the lower the insurance premium • Purchase _____________ – Available through your job, credit union, social organization, etc. Less expensive than an individual plan.

5. Reduce Insurance Costs • Consider _______________– Monthly plans have a service charge. Automatic deductions may get you a discount • Look for ______________________– Nonsmokers (life), Drivers Ed. (auto), multiple policy discounts • _________________– shop around, get quotes

6. Property & Liability Insurance • Renters Insurance • _______________– Possessions that could be damaged by fire, smoke, water, moisture, freezing, or heat. • __________ – Someone is injured while in your rented home/apt. • _______________– additional personal property (car belongings, jewelry)

7. Property & Liability Insurance • Homeowner’s Insurance • ___________: fire, water, wind, and smoke that may cause physical damages • _______: criminal activity (robbery, burglary, arson, and vandalism) • ___________: the cost of another person’s losses for injuries at your property

8. Property & Liability Insurance • Homeowner’s Insurance • How much coverage do you need? • Amount of building • ½ of that amount for it’s contents • ___________ – things not covered by a policy • ________________– the amount you will collect based on market value (don’t over-insure) • ______________– determine the value • ______________________– look for evidence • _____________ – additions added later

9. Property & Liability Insurance • ___________________Coverage – protection against financial loss due to damage or destruction • _____________________Coverage – protects personal belongings against loss from criminal activity • ___________ Coverage – protects against claims for bodily injury to another person or damage to another person’s property • ________________– Many online sources available (insurancemachine.com, netquote & insure.com)

10. Property & Liability Insurance • Automobile Insurance • Factors of Cost: • ___________– number and type of traffic tickets • ___________– older cars (except antiques) are less because of replacement value • _________ – age, marital status, geographic location, sports cars • __________ – how much you drive on a daily basis, adding a teenager, number of accidents

11. Property & Liability Insurance • Types of Automobile Insurance Coverage • ________ Coverage – bodily injury to another • _________Coverage – damage from accidents • ____________ Coverage – damage due to fire, theft, natural disasters, acts of vandalism • __________________(PIP) – pays for medical, hospital and funeral costs • ___________________Coverage – pays for injuries when the other party is unable to pay

12. Property & Liability Insurance • _____________– automobile insurance in which drivers receive reimbursement for their expenses from their own insurer, no matter who caused the accident (avoids years of lawsuits). • ____________________– States require insurance coverage for those people who are unable to obtain automobile insurance due to the high risk they present.

13. Health Insurance • Group Policies • ______________: most common, provided by employers • __________: Consolidated Omnibus Budget Reconciliation Act – continued coverage when you leave a job • _________: Health Insurance Portability & Accountability Act of 1996 makes it illegal for an insurer to deny coverage based on health status

14. Health Insurance • _____________________: a group health insurance provision that specifies how the insurer will share the costs when more than one policy covers a claim. • _____________: An employee benefit program that allows employees to set aside money, PRETAX, to help pay deductibles, copayments, or other health expenses during the year that are not covered by insurance.

15. Health Insurance • Types of Coverage • _____________Insurance – medical, hospital, and surgical costs. Covers only necessary surgery and excludes some types of surgery. • _____________Insurance – provides protection against the catastrophic expenses of serious injury or illness. Covers above what Basic Insurance covers. • ______________Insurance – Additional premium, covers basics in most cases.

16. Health Insurance • Health Plans • Unmanaged Care – traditional fee-for service plan, choose any doctor and be reimbursed after deductible. • Managed Care • HMO: ________________________. Coverage for PCP (primary care physician) on their list. • PPO: ___________________________. Coverage for a group of providers. Can go outside the list for an additional fee • POS: _________________. More choice and more control.

17. Health Insurance • ____________ – A government-sponsored health insurance for people aged 65 or older run by the Social Security Administration and funded by employee payroll deductions. • ___________ – A government-sponsored health insurance for people with low incomes and limited resources.

18. Disability & Life Insurance • _________________: An insurance plan that makes regular payments to replace income lost when illness or injury prevents the insured from working. • __________Disability Insurance – covered by employer

19. Disability & Life Insurance • ______________Disability Insurance – you are entitled to payments from Social Security in the event you become disabled and cannot work. • ___________________Insurance – covers expenses if your injury or illness resulted from your job.

20. Disability & Life Insurance • Types of Life Insurance • Temporary Life Insurance • __________– specific length of time • ___________________– loses value over time • ___________– repays a specific debt (mortgages) • __________________– can renew each year without having to pass a physical exam. Premiums increase over time.

21. Disability & Life Insurance • Permanent Life Insurance • _________: pay fixed premiums throughout your life, get a stated sum a death • ___________: pay for a number of years or until age 65. Get face value at your death • ____________: combines a savings plan with a death benefit. Benefits are not fixed. • ___________: combines investment option with a death benefit. Varies according to the market.