Personal Finance Section Buying Insurance Fireman’s Fund Insurance Company

Personal Finance Section We hate to pay for insurance, BUT we’re sometimes glad we did. When you’re young, you tend to think that nothing bad will ever happen to you. But sooner or later you usually find yourself wanting the benefits that insurance offers.

Personal Finance Section How Insurance Works: –Insurance is essentially a bet between you and your insurance company. –You are betting that some type of accident will happen to you: illness or damage to your home or car. –The Company is betting that you will not have such a problem.

Personal Finance Section The Insurance Company is basing their judgment on complicated formulas or probable risk.

Personal Finance Section Insurance Costs: –In the event of an accident, you could suffer devastating financial losses. So you pay the insurance company a sum of money called a premium. –The company promises to pay compensation in the event of an accident. The amount the insurance company will pay out could be many times what you paid in premiums.

Personal Finance Section If you are accident-free – the company makes money on you. It uses part of that money to pay policy- holders who do sustain some type of loss. Most insurance policies include a deductible – an amount of expenses that you must pay before the insurer will cover any expenses.

Personal Finance Section Most car insurance policies have a $ deductible. That means you pay the first $ 250 of the cost of repair to your car. * If you want lower monthly payments for your auto insurance, raise your deductible to say $ 1,

Personal Finance Section Home Owners Insurance usually goes by a percentage. Say 1% of the total home cost is covered by the person owning the house and then the insurance company pays for the rest.

Personal Finance Section Coverage: –Before you buy coverage, you need to know if the policy covers replacement costs – the amount of money needed to buy a new item to replace the lost of damaged item. –Some companies only cover the actual cash value (ACV) – the amount that the lost or damage item would have been worth on the market before the accident.

Personal Finance Section Coverage: –Example: a 2-year old computer is not worth as much as a new computer with the same features. –Insurance policies contain complicated language that is hard to understand what they mean. Have your agent explain everything clearly to you before you sign the policy. –The Fine Print – the small print that comes with the policy that is usually at the bottom. Get an explanation on all that print before you sign anything.

Personal Finance Section Coverage: –Get estimates from 3 or 4 or 5 companies before you decide what you want to do.

Personal Finance Section Auto Insurance: –If you drive in any state in the US, you have to have an insurance policy on your car. –There are several types of insurance policies out there. Collision – covers damage to your vehicle regardless of who is at fault in the accident. Comprehensive – covers other types of damage to your car. i.e. theft, vandalism, broken glass, and etc. Liability – covers property damage and bodily injuries to people who are not on you policy, as well as your court costs.

Personal Finance Section Health Insurance: –Even if you are healthy – having health insurance is a good idea. Insurance plans cover a variety of health-care needs. i.e. routine medical costs, surgeries, hospitalization, preventive care, visits to a specialist, medicines, mental health care, and dental care. Insurance Group

Personal Finance Section Health Insurance: –The problem people encounter is finding affordable health insurance. –Health Insurance is VERY, VERY Costly. –The costs keep going up every year. –Your employer will usually offer you some type of coverage. –Dental Plans cover your routine and not so routine visits to the dentist.

Personal Finance Section Health Insurance: –The factors for the cost of insurance plans. 1. degree to which you can choose your own doctor. 2. the types of procedures covered. 3. the amount of deductible. 4. the amount of co-payment – which is the percentage of each visit or procedure that the patient must pay. 5. Annual limits on the total amount of care covered.

Personal Finance Section Property Insurance: –Think about all the things that you own. What is the total cost of those items. –What if your apartment caught fire and destroyed everything you own. –How much money would you need to replace all those items? –Renter’s Insurance would cover those belongings from fire, wind, lightning, etc.

Personal Finance Section Property Insurance: –Renter’s Insurance – also covers liability if someone is injured in your home. –Most – if not ALL – policies do not cover against floods. You have to buy that through the Federal Government. You can buy it from any insurance agent who can file the paper work for you.

Personal Finance Section Review: –Explain the difference between a premium, a deductible, and a co-payment. –Why is a policy that covers replacement cost better than one that covers actual cash value? –Why do you think states require drivers to carry liability insurance but not collision insurance or comprehensive insurance?