1. Insurance: Protecting What You Have

2. In your life, What Disasters could happen tomorrow?
PESSIMISTIC
In your life, What Disasters could happen tomorrow?

3. In this Unit, We will: Identify ways to manage risk
Describe how insurance is used to protect against potential financial loss
Explain the features and processes related to automobile insurance
Examine how insurance needs vary from person to person because of lifestyle and life situation
Assess how insurance fits into your financial plan

4. Common Exposures to Loss
Risk
Potential Loss
Loss of income from inability to work; uninsured medical bills; death
Accident or
Illness
UNLIMITED
Your property is damaged, destroyed, lost, or stolen
Amount needed to replace your property
Property
Ownership
You are found liable for injuries to other people or damages to their property
Liability
UNLIMITED

5. Risk Management: refers to how you deal with the chance of a potential personal or financial loss.
Avoid the Risk
Reduce the Risk
Accept the Risk
Share the Risk

6. Why is It important to have insurance?
Emergency savings - at least six months of expenses set aside to cover costs of unexpected events
Risk - chance of loss from an event that cannot be entirely controlled
is managed by
Insurance - transfers risk from an individual to an insurance organization
What are examples of unexpected events that may result in a financial loss?

7. Insurance Policy
Policy - A contract that specifies what risks are covered and how much will be paid for losses
Insurance: a means of guaranteeing your financial protection against various risks
Coverage - The risks covered and amount of money paid for losses under an insurance policy
Policyholder - Person who owns the policy
Premium - Money paid to purchase the policy
Experts say that buying insurance is buying financial security. Do you think this is true? Why or why not?

8. An Illustration of How Insurance Works
Suppose there are 100 people in a group
With a 1% chance that any one of them could get sick and require $10,000 in medical care
But, no one knows who will get sick
If each person pays $100 into a “pool” they will collectively have $10,000 to cover the medical costs of the person who gets sick
99 people do not collect anything, but they gain peace of mind and important protection against a large loss
So, everyone gives up $100, but nobody loses more than $100
Insurance shifts the risk of big loss from the individual to the insurance company

9. The benefits of Insurance
Types of Insurance
Property & Liability
Payments received from an insurance policy can far exceed the premiums paid
Provides financial security and peace of mind
Life
Health
Long-term Care
Disability
Why is the best outcome to have insurance but never collect on it?

10. The Insurance Process
Claim - paperwork submitted to insurance organization describing the accident, illness or injury
Event occurs resulting in loss
Deductible - amount of money paid out of pocket by policyholder before the insurance coverage begins
Remaining amount owed is paid by co-insurance (if applicable)
Policyholder makes claim to insurance organization
Co-insurance - amount of money, after deductible, that is paid jointly by the insured and the insurance company
Insurance organization determines if event is covered by policy
If so, policyholder pays a deductible

11. What Do You Think? True True False False
One in 10 Americans visits the emergency room each year.
Nearly 80% of crashes and 65% of near-crashes involve some form of driver inattention in the 3 seconds before the event.
Nearly one in three Americans will become disabled for one year or more before the age of 65.
In the United States, an automobile is stolen every 60 seconds.
Seventy percent of all fatal bicycle crashes involve head injuries.
Using lap and shoulder safety belts reduces the risk of fatal injury to front-seat auto occupants by 45% and the risk of moderate-to-critical injury by 50%.
Sixteen-year-old drivers have crash rates that are three times greater than those of 17-year-old drivers and five times greater than those of 18-year-old drivers.
A disabling injury occurs every minute.

12. Types of Insurance Automobile Homeowners Renters Health Life
Disability
Long-Term Care
Identity theft Protection

13. Auto Insurance

14. ? ? ? ? ? MANAGING LOSS FROM INJURY ALWAYS WEAR SEATBELTS INJURY OBEY
IN A
CAR
ACCIDENT
OBEY
SPEED
LIMITS
MANAGING LOSS
FROM INJURY ?
AVOID
NIGHT
DRIVING ?

15. What’s in Your Wallet! Driver’s License Health Insurance
Auto Insurance

16. IT IS AGAINST THE LAW TO DRIVE WITHOUT CAR INSURANCE!!!

17. Factors Affecting Automobile Insurance Costs
How much you use the car
If you’re a good student
Make of car
Driver’s education
Credit rating
Factors Affecting Automobile Insurance Costs
Gender
Type of car
Where you live
Marital status
Driving record
Your age
Do you take the car to work?

18. Auto Insurance What affects your premiums?
Age: Younger you are, the higher the premium
Gender: Males under the age of 25 have significantly higher accident rates than females under the age of 25, therefore higher premiums
Marital Status: Married people are more careful drivers because they tend to have fewer accidents
Type of Car

19. Auto Insurance What affects your premiums?
How Often You Use Your Car
Location: High populated areas = more accidents
Driving Record: Speeding tickets and other traffic violations = higher premiums
Claim Record: No accidents = lower premiums
Credit History: Poor credit history = higher premiums

20. Did You Know?
In the first year of driving, one in five 16-yearold drivers has an accident.
Male teens are much less likely to wear their seat belts than female teens. And 7.7% of guys said they either rarely or never wear their seat belts compared with 2.8% of girls.
Sixty-two percent of high school drivers say they talk on a cell phone while driving.
Two-thirds of high school drivers say they speed.
Injury claim frequencies and overall collision losses for cars driven by insured teenagers are more than double those of cars driven only by insured adults.

21. Main types of Auto Insurance Coverage's:
General Liability: Covers damage you cause to other people’s property and bodily injuries you cause to people outside of your car
Medical Payments: Cover immediate compensation for bodily injury expenses to you and your passengers regardless of who is at fault.
Also covers you and members of your household in any accident involving an automobile, whether you are on foot, on a bicycle, or in a friend’s car

22. Main types of Auto Insurance Coverage's:
Collision: Covers repairs for damage you cause to your car caused by an accident, whether it involves another vehicle or an object, such as a tree.
A deductible applies to collision payments. This means that you pay the deductible amount first; your insurance company pays the amount over your deductible.

23. Main types of Auto Insurance Coverage's:
Comprehensive: (other non-collision damage) This covers fire damage to your vehicle, break-ins, vandalism, or theft, as well as natural disasters such as an earthquake, hail, hurricane, or flood.
Covers everything
EXCEPT
an actual collision.

24. Main types of Auto Insurance Coverage's:
Uninsured Motorist: 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 the cost of repairs from an accident caused by another driver exceeds his or her coverage limits

25. Can You Lose Your Insurance?
Fail to pay your premium
Lose your driver’s license
Lied on your insurance application
Fail to report a change in your circumstances, such as buying a sports car to replace a family sedan.
Too many claims
YES!

26. Homeowner’s Insurance

27. Renter’s Insurance

28. Homeowner’s Insurance
Insurance that protects property owners from property and liability risks
Includes coverage for the building as well as personal possessions inside the building
3 Types of Risks:
Fire, water, wind, and smoke
Criminal activity
Liability

29. Renter’s Insurance The landlord is responsible for the building
Personal possessions that you keep in your rented home are YOUR responsibility to protect – not the landlord’s.
Renter’s Policy – insurance that protects renters from property and liability risks.
Protects from loss due to fire, smoke, water, etc
Protects items at work or in your car
Liability

30. Health Insurance

31. Health Insurance
Provides protection against financial losses resulting from injury, illness, and disability.
Provide coverage for emergency or routine medical expenses.
May cover hospital, surgical, dental, vision, long-term care, prescription, etc.
If your parents have health insurance, it will cover you until you turn 19 years old, or until age 26 if you’re a full-time student
May be purchased by an individual, or through their employer

32. Health Insurance
Co-Payment – amount of coverage that is shared between the insured and the insurer.
Deductible
Covered Expenses – expenses the insurer has agreed to pay in the policy
Claims – requests for payments (doctors, hospitals, etc)
Exclusions – exceptions to coverage agreed to in the policy
Premiums

33. life Insurance

34. Life Insurance
A contract between an insurer and policyholder specifying a sum to be paid to a beneficiary upon the insured’s death.
Beneficiary: the recipient of any policy proceeds if the insured person dies.
Purpose is to provide money for family members or dependents when a wage earner dies.

35. Disability Insurance

36. Disability Insurance
Replaces a portion of one’s income if they become unable to work due to illness or injury
Typically pays between 60% – 70% of one’s full time wage
Many employers offer disability insurance as part of the benefits package

37. Employee Benefits Hospitalization, Medical, & Disability Insurance
Dental and Vision Insurance
Accidental Death Insurance
Sick Leave
Paid Vacation Time and Holidays
Parental Leave
Worker’s Compensation Insurance
Life Insurance
Retirement Benefits
Retirement Savings Plans
Employee Assistance Programs