INSURANCE How it works… Why YOU need it…

ALL ABOUT RISK The chance of financial loss from some type of danger RISK MANAGEMENT AVOID THE RISK – Don’t do risky things REDUCE THE RISK – Take steps to protect yourself ACCEPT THE RISK – If the potential for future financial loss is small, don’t worry about it SHARE THE RISK – Buy insurance

HOW DOES INSURANCE WORK?

SHARING THE RISK INSURANCE A means of guaranteeing your financial protection against various risks. In exchange for a relatively a small monthly payment, you gain protection against a potentially large loss INSURANCE POLICY A written contract detailing what an insurance company will cover, how much it will pay, and how much you will pay

SHARING THE RISK PREMIUM The amount you pay for an insurance policy Paid monthly, quarterly, semi- annually, or annually Based on the type and amount of coverage you choose Varies from one insurance company to another – shop around! Credit score can play a part in how much you pay (higher score = lower premium)

YOUR TASK: Find out what the average American pays for: – Health Insurance Premiums Health Insurance Premiums – Automobile Insurance Premiums Automobile Insurance Premiums – Homeowner’s Insurance Premiums Homeowner’s Insurance Premiums – Life Insurance Premiums Life Insurance Premiums

SHARING THE RISK COVERAGE LIMIT The maximum amount the insurance company will pay if you file a claim DEDUCTIBLE The amount of a loss YOU must pay out of your own pocket before the insurance company will step in and pay the rest

AUTOMOBILE INSURANCE VIDEO 101 – WHAT ARE THE 6 FORMS OF COVERAGE? VIDEO 101

What Affects the Price? AGE GENDER MARITAL STATUS TYPE OF CAR HOW OFTEN YOU USE THE CAR LOCATION DRIVING RECORD CLAIM RECORD CREDIT HISTORY

Main Types of Auto INS: GENERAL LIABILITY Covers damage YOU cause to other people’s property and bodily injuries you cause to people outside your car If you damage someone else car, your liability coverage pays to cost to have it repaired If you hurt someone outside your car, and he/she sues you, general liability covers your legal bills MEDICAL PAYMENTS (Personal Injury Protection) Covers immediate compensation for bodily injury expenses to you and your passengers regardless of who is at fault COLLISION Covers repairs for damage you cause to your car.

Main Types of Auto INS: COMPREHENSIVE (NON-COLLISION) Covers damage to your vehicle, break-ins, vandalism, theft, natural disasters, etc… UNINSURED MOTORIST (video)(video) 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 cost to repair damages exceeds other persons coverage limit

HOME OWNER’S INSURANCE (NOT IN NOTES!!)

HEALTH INSURANCE

Your, and/or your employer pay a premium and the insurance company pays part of your medical bills

HEALTH INSURANCE WHAT YOU NEED: Hospital/surgical/physician expenses Dental/Vision/Long-term care WHERE TO GET IT: Private Health Care Plans (Insurance co, Health Maintenance Organizations) Government Health Care Programs (Medicare, Medicaid)

HEALTH INSURANCE Choosing Wisely If you have a choice from more than one plan, compare how each plan handles the following: Coverages - what they cover Co-payments – what you have to pay to see Dr. Coinsurance - % you have to pay after deductible is met Deductibles - amt you pay before insurance kicks in Pre-existing conditions Limitations on devices, drugs, and access to specialists.

DISABILITY INSURANCE Provides regular cash income when an employee is unable to work due to pregnancy, a non-work-related accident, or an illness

DISABILITY INSURANCE WHAT YOU NEED: Day-to-day living expenses for your and your family WHERE TO GET IT: Worker’s compensation Employer group insurance plans Social Security (only for over 12 months) Private income insurance programs

DISABILITY INSURANCE Short-Term Disability Six months or less of work. Replaces close to 100% of wages for the first payouts. Payments will eventually drop, often to 60% of wages. Long-Term Disability More than 6 months out of work Can be purchased to replace 50-70% of salary. Some policies have monthly maximum payouts Some policies will only pay out for 5 or 10 years, some will pay out until age 65.

DISABILITY INSURANCE Meredith Moore’s Story

LIFE INSURANCE

You pay a premium and the insurance company pays a death benefit when you die You really need it if… Other people depend on you (married, children)

LIFE INSURANCE WHAT YOU NEED: Burial costs 2011 (average = $7,000-$10,000) Money to pay off debt (medical expenses, mortgage, car loans, credit cards, taxes) And provide income for survivors (food, housing, utilities, transportation, health care, clothing, insurance, college, retirement) The bigger your lifestyle, the more you need. Some experts recommend times your gross annual income. $45,000= $450, ,000

LIFE INSURANCE WHERE TO GET IT: Insurance Professionals At Work Direct Purchasing over the Internet

LIFE INSURANCE TERM: A specified term (10,20,30 years) Lower Cost No cash value PERMANENT: Until age 100 or later, as long as premiums are paid Higher initial cost Can accumulate cash value – and then access it Whole Life, Variable Life, Universal Life, Variable Universal Life

LIFE INSURANCE Melissa Knoll’s Story