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Insurance Basics Learning the Language of Insurance

The Insurance Policy A legal contract between a person buying insurance and an insurance company. Explains… Who is covered What is covered What the company will pay Cost of the policy Deductibles

Insurance Coverage Refers to losses that an insurance company will cover. Translates into an actual dollar amount. Exclusions Losses that are not covered under the policy

Premiums The amount a policyholder pays an insurance company for coverage. Can be paid in installments. Usually paid once a month on a six-month or yearly policy. If paying on installments, the company may charge an additional handling fee

Deductibles The portion of a loss that you pay. The insurance company then pays the remaining costs. The higher your deductible, the lower the premium (usually).

Claims An oral or written notification of a loss filed with the insurance company. Report a claim as soon as possible. If your losses are less than your deductible, it is not necessary to report a claim.

Kinds of Insurance You can purchase insurance for almost anything including… Marine insurance Space Flight insurance Disease insurance Dancers can insure their legs Pianists can insure their hands And so on…

Government Insurance Programs Unemployment Insurance Provides coverage if you lose your job Workers’ Compensation Provides coverage if you are injured on the job Medicare/Medicaid Provides health coverage for those who qualify due to low income.

Homeowner’s and Renter’s Insurance

Renter’s Insurance Necessary for persons who rent a home or apartment Covers personal belongings up to a given amount (minus deductible) Does not cover the cost of repairs to the home or apartment

Homeowner’s Insurance Protects your house and its contents against losses due to fire, theft, and accidents. Generally does not cover floods or earthquakes. Supplemental insurance policies are available for these and additional risks.

Types of Automobile Insurance Liability Collision Comprehensive Uninsured Motorists

Liability Insurance Required in the state of Louisiana Covers damage or injuries for which you are responsible. Includes injuries to any passengers in your vehicle. Also includes injuries to driver and/or passengers of the other vehicles involved. Also covers property damage to the other vehicle DOES NOT cover injuries to you or damage to your car.

Collision Insurance Not required if you own your car (no car note) Covers costs to repair your vehicle if damaged in a collision. Also covers costs of damage to your vehicle if the accident was caused by a driver without insurance.

Comprehensive Insurance Not required if you own your car (no car note) Covers your car for reasons other than a collision, such as Theft Fire Vandalism Stupidity

Uninsured Motorist Insurance Optional Covers you against drivers who do not have liability insurance.

In Case of an accident… 1. Stay Calm Move your car to the side of the road if possible. 2. Check for Injuries 3. Call the police Have your driver’s license, registration, and proof of insurance available when police arrive. 4. Get Information Exchange insurance information with the driver of the other vehicle. 5. Report the Accident Call your insurance company as soon as possible to file a claim.

Buying Automobile Insurance Shop Around Try to get prices from at least 3 different companies Drive Carefully Most companies offer safe-driver discounts Take Driver’s Education Most companies offer discounts for this too Buy only what you need Don’t buy collision if you have a $1000 deductible and your car is only worth $1500. Consider a higher deductible Look for discounts There are many additional discounts for which you may qualify.

Health and Life Insurance Major Medical Term Life Whole Life

Health Insurance Major Medical Hospital & Surgical expenses Doctor Visits Prescription Drugs Medical Tests/Diagnosis

Out of Pocket Expenses Premium The amount you pay the insurance company for coverage Copay The amount you pay for a doctor visit or prescription Deductible The amount you pay toward your medical expenses before the insurance company pays

HMO Health Maintenance organization Advantages No deductibles Low out of pocket Many things covered 100% Disadvantages Limited choice of doctors

PPO Preferred Provider Organization Advantages Wider choice of doctors No deductibles Disadvantages Higher premiums Higher copayments

Standard Coverage Advantages Lower Premiums Your choice of doctors Disadvantages Higher out-of-pocket expenses Higher Deductibles Insurance only pays a percentage of medical expenses  Percentages can vary  80/20  70/30  60/40

Types of Health Plans Group Offered through employer Lower premiums due to larger participation Employer sometimes pays a portion Individual Not part of a group Premiums can be expensive Can be more customized Typically students, self-employed, retirees or employees of very small companies

Disability Coverage Pays a percentage of your salary should you become unable to work for an extended period of time. Short-term Disability Insurance Lower premium Pays for only a few months Long-term Disability Insurance Higher premium Pays up to a lifetime of missed work

Life Insurance Provides money to loved ones in the event of your unfortunate death. Can assist in the cost of burial arrangements.

Term Life Insurance Less costly Protects your dependents if you die No cash value Provides coverage for a set number of years Beneficiary receives an amount of money known as the face value of the policy.

Whole Life Insurance Premiums are based on age, health, and policy type They may increase as you grow older Generally higher premiums than term life Pays a set amount to beneficiary if you die. Also works as a savings account You can borrow against the money you have actually invested You can close the policy and collect any money invested upon retirement.

Things to Consider When should you buy life insurance? If you have someone who depends on you. Some companies offer low “lock-in” rates at an earlier age. How much should you buy? Depends on how many dependents you have, your age and their age Also depends on how much will be required to pay off your debts if you die What are some important tips? Shop around Talk to others who have shopped and purchased Read up!