© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 1 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 *Insurance* Discussion questions: Why is insurance important? What if nothing ever happens to me and I don’t need insurance? Isn’t is just a waste of money?

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 2 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 Risk Risk is the uncertainty about a situation’s outcome This can be an unpredictable event which leads to loss or damage

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 3 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 Insurance Terminology Insurance is an arrangement between an individual (consumer) and an insurer (insurance company) to protect the individual against risk A policy is a contract between the individual and the insurer specifying the terms of the insurance arrangements

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 4 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 Insurance Terminology A policyholder is a consumer who purchases the policy A premium is a fee paid to the insurer to be covered under specified terms A deductible is the amount paid out of pocket by the policy holder for the initial portion of a loss before the insurance coverage begins

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 5 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 Types of Insurance Health Life Disability Automobile Homeowners/Renters

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 6 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 8 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 Health Insurance In 2010 there were more than 49 million Americans, or 18.4 percent of the population under age 65, without health insurance (source: CNN)(source: CNN) Health insurance provides protection against financial losses resulting from injury, illness, and disability Health insurance may cover hospital, surgical, dental, vision, long-term care, prescription, or other major expenditures Health insurance may be purchased by the individual or through their employer

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 9 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 Average cost of an ER Visit… $ $ …ouch…

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 10 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 11 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 12 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 Life Insurance Life insurance is a contract between an insurer and policyholder specifying a sum to be paid to a beneficiary upon the insured’s death The contract is a policy which states the amount to be paid to the beneficiary upon the insured person’s death

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 13 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 Life Insurance A beneficiary is the recipient of any policy proceeds if the insured person dies A dependent is a person who relies on someone else financially

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 14 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 15 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 Disability Insurance replaces a portion of one’s income if they become unable to work due to illness or injury

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 16 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 17 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 What Covers This Risk? After losing her husband to a heart attack, the wife is left alone to care for 2 children Life!

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 18 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 What Covers This Risk? You need a cast after breaking an ankle while roller-blading Health!

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 19 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 What Covers This Risk? You are injured in an automobile accident and are unable to work for 2 months Disability!

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 20 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 What Covers This Risk? Sick at home from food poisoning after eating a carnival corndog Nothing!

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 21 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 What Covers This Risk? A daughter, who is financially responsible for her mother’s nursing home bills, dies from an undetected heart defect Life!

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 22 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 What Covers This Risk? A doctor diagnoses a child with tonsillitis during a visit to a clinic Health!

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 23 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 24 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 Statistics show more than 12 million motor vehicle accidents occur annually in the United States. The average driver will experience a "near automobile accident" once or twice a month and will actually be involved in a collision about every six years!

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 25 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 Automobile Insurance Automobile Insurance is an arrangement between an individual (consumer) and insurer (insurance company) to protect the individual against risk from automobile accidents

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 26 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 Automobile Insurance Types There are four types of coverage for Automobile Insurance: 1. Liability insurance 2. Medical payment insurance 3. Uninsured or underinsured motorists insurance 4. Physical damage insurance Collision Comprehensive

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 27 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 Liability Insurance Liability Insurance covers the insured if injuries or damages are caused to other people or their property It is the minimum amount of insurance required by law for automobiles

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 28 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 Liability Insurance The minimum liability amounts in an auto policy: $25,000 for bodily injury per person, $50,000 for bodily injury per accident and $10,000 for property damage Typically referred to as 25/50/10. Before you get into an accident, you may wish to consider more than the required state minimum. Ask yourself this: “How many cars on the road today cost more than $10,000?”

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 29 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 Comparative Fault Missouri uses the rules of pure comparative fault. Pure comparative fault allows your damages to be reduced by the percentage you are at fault in a loss. Insurers are allowed to investigate an accident and make a decision as to the percentage of fault for all parties Many parking lot accidents are considered 50/50

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 30 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 Medical Payment insurance Medical Payment Insurance covers injuries sustained by the driver of the insured vehicle or any passenger regardless of fault It also covers family members injured as passengers or if injured as a pedestrian

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 31 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 Uninsured motorists insurance covers injury or damage to the driver, passengers, or the vehicle caused by a driver with insufficient insurance

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 32 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 Physical damage insurance Physical Damage Insurance covers damages caused to the vehicle Collision – covers a collision with another object, car, or from a rollover Comprehensive – covers all physical damage losses except collision and other specified losses

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 33 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 What do I do if I get in an accident? Make sure everyone in your car is OK Check the other car to see if they are OK Call the police Get the following information from the other driver: name, address, telephone number, license plate number, drivers license number, insurance information Give the same information to the other driver Get the name and phone number of any witnesses Take accident pictures Call your insurance agent as soon as possible

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 34 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 35 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 Homeowner’s/Renter’s Insurance Homeowner’s Insurance combines property and liability insurance into one policy to protect a home from damage costs due to perils. A peril is an event which can cause a financial loss like fire, falling trees, lightning and others

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 36 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 Property Insurance Property Insurance protects the insured from financial losses due to destruction or damage to property or possessions Liability Insurance protects the insured party from being held liable for other’s financial losses Homeowner’s insurance should cover the replacement cost which will pay to rebuild the home if it is completely destroyed

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 37 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 Renter’s Insurance Renter’s Insurance protects the insured from loss of the contents of the dwelling rather than the dwelling itself Renter’s insurance may be provided by a parent or guardian while an individual is still a full time student or under the age of 18 However, each policy is different and should be inspected by the policy holder

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 38 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 What Covers This Risk? Your apartment is broken into and your computer is stolen Renters!

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 39 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 What Covers This Risk? Your garage was destroyed by a fire which started by a lightning bolt hitting your home Homeowners!

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 40 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 What Covers This Risk? You have brake failure. You hit a telephone pole and cause damage to the front of the car Automobile!

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 41 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 What Covers This Risk? You get pulled over and receive a speeding ticket on your way to the mall Nothing!

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 42 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 What Covers This Risk? You hit and injure a pedestrian in a crosswalk Automobile!

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 43 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 Health Life Auto Disability Homeowner’s /Renters Homeowner’s /Renters Personal Property Liability

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance – Slide 44 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 Automobile Insurance Types There are four types of coverage for Automobile Insurance: 1. Liability insurance 2. Medical payment insurance 3. Uninsured or underinsured motorists insurance 4. Physical damage insurance Collision Comprehensive