1. An Introduction to Insurance

2. What is Insurance?  Insurance is a means of guaranteeing you financial protection against various risks.  In exchange for a relatively small payment, you gain protection against a potentially large loss.  Some examples of a large loss would include your house burning down or spending weeks in the hospital recovering from an automobile accident.

3. Important Insurance Related Terms  We are going to discuss some important terms related to insurance. These terms include: insurance policy, premium, coverage limit, and deductible.  We will also examine specific types of insurance including: auto, homeowners, property, life, health, and disability.

4. What is an Insurance Policy  This is a written contract detailing what an insurance company will cover, how much it will pay, and how much you will pay.

5. What is a premium?  This is the amount of money that you pay for an insurance policy.  Premiums can be paid monthly, quarterly, semi-annually, or annually.  The premium is based on the type and amount of coverage you choose and varies from one insurance company to another.

6. Factors that affect insurance premiums  These include:  Your age  Marital status  Whether you live in an urban or rural area  Your credit history  Also, each special type of insurance is going to consider other factors.

7. Coverage Limit  This is the maximum amount the insurance company will pay if you file a claim.  It is important that you select an appropriate coverage limit because any amount over your coverage limit becomes your responsibility.  An example of this would be if you were insured with a coverage limit of $50,000 and a claim against you was for $60,000. You would be responsible for the additional $10,000.

8. Deductible  This is the amount of a loss you must pay out of your own pocket before the insurance company will step in and pay the rest.  An example of this would be if you were in an auto accident and it caused $1000 worth of damage and your deductible was $500.00. After you paid the initial $500.00, the insurance company would then pay the remainder of the bill.

9. Auto Insurance  This is insurance that protects your financial interests in the event that you are involved in an automobile accident.  It is extremely important to have automobile insurance because the damage done to your or another’s vehicle can be extremely expensive to repair.  Also, if you hurt someone else while driving, there’s virtually no limit to what they can sue you for.

10. Homeowners/Property Insurance  This is insurance that protects you financially if your house is damaged.  Also, this type of insurance protects your possessions that are located within your home.  Renters insurance protects your property within a rented home or apartment.

11. Life Insurance  This type of insurance provides financial support for the people who depend on you in the event of your untimely death.  There are different types of life insurance policies. Some of these are designed to just provide insurance benefits (term), while others (whole life, variable life, universal life, etc…) are designed to serve as insurance and a type of investment.

12. Health Insurance  This type of insurance pays medical bills when you or your family becomes sick or injured.  You can purchase an individual health insurance policy for yourself and your family, but its usually much more expensive than the coverage an employer offers.

13. Disability Insurance  This type of insurance pays you an income when an illness or injury prevents you from working for several weeks or even years.  Disability insurance is often a type of insurance that people don’t purchase. However, according to the NAIC, people in their 30s are three times more likely to suffer a disability than they are to die.