What is Personal Risk Management?

What is Risk? Risk is the chance of loss from some type of danger. Risk is the chance of loss from some type of danger. What are some types of “risky behaviors” that you or someone you know have been guilty of? What are some types of “risky behaviors” that you or someone you know have been guilty of?

What is “Risk Management?” Risk Management refers to how you deal with the chance of a potential personal or financial loss. Risk Management refers to how you deal with the chance of a potential personal or financial loss. Four options: Four options: Avoid the risk Avoid the risk Reduce the risk Reduce the risk Accept the risk Accept the risk Share the risk Share the risk

So what is “insurance?” Insurance is a means of guaranteeing your financial protection against various risks. Insurance is a means of guaranteeing your financial protection against various risks. An insurance policy is a written contract detailing what an insurance company will cover, how much it will pay, and how much YOU will pay. An insurance policy is a written contract detailing what an insurance company will cover, how much it will pay, and how much YOU will pay.

A premium is the amount you pay for an insurance policy. It can be paid monthly, quarterly, semi- annually, or annually. A premium is the amount you pay for an insurance policy. It 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. The premium is based on the type and amount of coverage you choose and varies from one insurance company to another.

Factors that affect your premium Age Age Marital status Marital status Urban vs rural area Urban vs rural area Others (depending on the type of insurance, ex: automobile, life/health, property/home) Others (depending on the type of insurance, ex: automobile, life/health, property/home)

In the United States, having insurance is considered a privilege NOT a right. Companies cannot reject your insurance application based on ethnicity or marital status, but they can reject your application for a variety of other reasons.

The coverage limit is the maximum amount the insurance company will pay if you file a claim. It can be just a few thousand dollars, or a few million! The coverage limit is the maximum amount the insurance company will pay if you file a claim. It can be just a few thousand dollars, or a few million! Amounts that exceed the coverage limit become your responsibility. Amounts that exceed the coverage limit become your responsibility. A deductible is the amount of loss you must pay before the insurance company will pay the rest. A deductible is the amount of loss you must pay before the insurance company will pay the rest.

Vehicle Insurance

Why is it important to get an insurance policy estimate before purchasing a vehicle? Why is it important to get an insurance policy estimate before purchasing a vehicle?

Vehicle Insurance Vehicle insurance is paid protection against losses due to injury or property damage. Vehicle insurance is paid protection against losses due to injury or property damage. To get insurance, you have to purchase a contract called a policy from an insurance company. The policy explains how much and what kinds of protection you have. To get insurance, you have to purchase a contract called a policy from an insurance company. The policy explains how much and what kinds of protection you have.

Types of Vehicle Insurance Bodily Injury Liability – covers injuries to someone else. Bodily Injury Liability – covers injuries to someone else. Example: 100/300 bodily injury coverage. Example: 100/300 bodily injury coverage. Stated in thousands Stated in thousands $100,000 for 1 injured person $100,000 for 1 injured person $300,000 for total accident $300,000 for total accident

Types of Vehicle Insurance Property Damage Liability – covers damage to another person’s vehicle or other property. Property Damage Liability – covers damage to another person’s vehicle or other property. Example: 100/300/50 property damage liability Example: 100/300/50 property damage liability $100,000 and $300,000 for bodily injury and $50,000 from property damage $100,000 and $300,000 for bodily injury and $50,000 from property damage

Types of Vehicle Insurance Collision Insurance – covers damages to your own vehicle. The maximum amount covered is based on the actual cash value (ACV) of your vehicle, which is the value of the care when its new minus depreciation. Depreciation is the decline in value of a vehicle because of use. Collision Insurance – covers damages to your own vehicle. The maximum amount covered is based on the actual cash value (ACV) of your vehicle, which is the value of the care when its new minus depreciation. Depreciation is the decline in value of a vehicle because of use.

Types of Vehicle Insurance Collision insurance continued… Collision insurance continued… Example: After an accident, if the repairs to the vehicle are $3,000 but the ACV is only $2,000 – the insurance company will only pay $2,000 Example: After an accident, if the repairs to the vehicle are $3,000 but the ACV is only $2,000 – the insurance company will only pay $2,000 Often, if a vehicle’s ACV is low, people will not carry collision Often, if a vehicle’s ACV is low, people will not carry collision Most financed vehicles must have full coverage Most financed vehicles must have full coverage

Types of Vehicle Insurance Medical Payments Coverage – AKA Personal Injury Protection – covers injuries to you and anyone else in your vehicle. Pays medical bills. Medical Payments Coverage – AKA Personal Injury Protection – covers injuries to you and anyone else in your vehicle. Pays medical bills.

Types of Vehicle Insurance Comprehensive Coverage – covers damage to a policyholder’s vehicle caused by things other than a car accident. Comprehensive Coverage – covers damage to a policyholder’s vehicle caused by things other than a car accident. Example: Falling object, flood, theft, and vandalism. Example: Falling object, flood, theft, and vandalism. Covers only the ACV. Covers only the ACV.

Types of Vehicle Insurance Uninsured Motorist Protection – covers you and your passenger if the other driver is uninsured. Also protects you if you are hit by someone while walking or involved in a hit and run. Uninsured Motorist Protection – covers you and your passenger if the other driver is uninsured. Also protects you if you are hit by someone while walking or involved in a hit and run. Miscellaneous coverage – can include rental cars, towing, etc. Miscellaneous coverage – can include rental cars, towing, etc.

Laws on Vehicle Insurance Financial Responsibility Law – says you must pay for any damage or injury you cause in an accident either with insurance, savings, or by selling property. Financial Responsibility Law – says you must pay for any damage or injury you cause in an accident either with insurance, savings, or by selling property. Compulsory Insurance Law – legally requires drivers to have a minimum amount of car insurance. Compulsory Insurance Law – legally requires drivers to have a minimum amount of car insurance.

Laws of Vehicle Insurance No-fault Insurance – pays damages if the accident is deemed “no-fault.” No-fault Insurance – pays damages if the accident is deemed “no-fault.”

Cost of Insurance Average $1,200 per year Average $1,200 per year Policy amount is directly affected by the number of claims or requests for payment from an insurer for any damages covered by a policy. Policy amount is directly affected by the number of claims or requests for payment from an insurer for any damages covered by a policy. Insurance premiums are the amount an insurance company charges a policyholder for the policy Insurance premiums are the amount an insurance company charges a policyholder for the policy

Factors Affecting the Cost of Insurance Amount of coverage Amount of coverage Amount of deductible Amount of deductible Type of vehicle Type of vehicle Location Location Driver classification – age, gender, marital status, how often you use your car Driver classification – age, gender, marital status, how often you use your car Driving record Driving record Claim record Claim record Credit History Credit History

Georgia Requirements In the state of Georgia, a driver must have continuous mandatory liability insurance coverage to: In the state of Georgia, a driver must have continuous mandatory liability insurance coverage to: Legally drive the vehicle Legally drive the vehicle Register & obtain Georgia plates Register & obtain Georgia plates Renew, replace, or transfer plates Renew, replace, or transfer plates

Georgia Requirements Insurers must be licensed with the Georgia Insurance & Safety Fire Commissioners Office (ICO) to be able to issue motor vehicle liability policies. Insurers must be licensed with the Georgia Insurance & Safety Fire Commissioners Office (ICO) to be able to issue motor vehicle liability policies. Must carry insurance card in the vehicle at all times! Must carry insurance card in the vehicle at all times!

Georgia Requirements Insurance coverage requirements: Insurance coverage requirements: Bodily Injury Liability of $25,000 per injured person, $50,000 per accident Bodily Injury Liability of $25,000 per injured person, $50,000 per accident AND AND Property Damage Liability of $25,000 Property Damage Liability of $25,000 AKA 25/50/25 coverage AKA 25/50/25 coverage

Life and Health Insurance

Life Insurance Life insurance protects the standard of living of the survivors. At the policyholder’s death, the insurance company pays survivors the face value of the life insurance policy. Life insurance protects the standard of living of the survivors. At the policyholder’s death, the insurance company pays survivors the face value of the life insurance policy. The money paid to survivors is called the proceeds. The money paid to survivors is called the proceeds. Each person who receives part of the proceeds is called a beneficiary. Each person who receives part of the proceeds is called a beneficiary.

Life Insurance Cash value insurance provides both savings and death benefits. Cash value insurance provides both savings and death benefits. Part of the premium pays for death benefits and the rest builds up cash value like a savings account. Part of the premium pays for death benefits and the rest builds up cash value like a savings account. If you cancel the policy, you collect the cash value. If you cancel the policy, you collect the cash value. You can borrow against it. You can borrow against it.

Types of Cash Value Insurance Whole life insurance – the policyholder pays a premium that stays the same throughout his or her entire lifetime. Provides savings during life and pays benefits after death. Whole life insurance – the policyholder pays a premium that stays the same throughout his or her entire lifetime. Provides savings during life and pays benefits after death. Example: Gerber life insurance Example: Gerber life insurance

Types of Cash Value Insurance Limited-payment life insurance – policyholder only pays for so many years – like up to age 65. Limited-payment life insurance – policyholder only pays for so many years – like up to age 65. Variable life insurance – cash value part of insurance invested in stocks, bonds, and mutual funds rather than in savings. Also guaranteed death benefits. Variable life insurance – cash value part of insurance invested in stocks, bonds, and mutual funds rather than in savings. Also guaranteed death benefits.

Term Life Insurance Term insurance covers a person for a specific period of time. Term insurance covers a person for a specific period of time. Pays benefits only if the insured dies during the term of the policy. Pays benefits only if the insured dies during the term of the policy. If insured lives beyond the policy – no cash value but policy can be renewed. If insured lives beyond the policy – no cash value but policy can be renewed.

Term Life Insurance Advantage: LOW COST! Advantage: LOW COST! Disadvantage: Premiums increase as insured gets older. Disadvantage: Premiums increase as insured gets older. Employers usually provide term life insurance. Employers usually provide term life insurance.

Cost of Life Insurance The cost of life insurance depends on the type of coverage and the amount of the coverage and: The cost of life insurance depends on the type of coverage and the amount of the coverage and: Age Age Health Health Occupation Occupation Physicals are sometimes required! Physicals are sometimes required!

Health Insurance Average cost of a stay in the hospital is $5,000 per day. Average cost of a stay in the hospital is $5,000 per day. Major medical insurance pays for most kinds of care in and out of the hospital. It covers hospital care, doctor’s bills, tests and x-rays, and nursing care. Major medical insurance pays for most kinds of care in and out of the hospital. It covers hospital care, doctor’s bills, tests and x-rays, and nursing care. Most policies have a deductible. Most policies have a deductible.

Health Insurance Most also require you to pay coinsurance (sometimes called “copay”) or a percentage of medical expenses in addition to the deductible. Most also require you to pay coinsurance (sometimes called “copay”) or a percentage of medical expenses in addition to the deductible. Insurance companies usually pay percent and the insured pays the rest. Insurance companies usually pay percent and the insured pays the rest.

Health Insurance Hospital Expense Insurance pays for hospital care for a given period of time. It covers room and board, tests and x-rays, operating room costs, nursing care, and fees for drugs and treatments. Hospital Expense Insurance pays for hospital care for a given period of time. It covers room and board, tests and x-rays, operating room costs, nursing care, and fees for drugs and treatments. Most popular type of health insurance. Most popular type of health insurance.

Health Insurance Surgical Expense Insurance pays part of a surgeon’s entire fee for an operation. Surgical Expense Insurance pays part of a surgeon’s entire fee for an operation. Medical Expense Insurance covers the cost of a doctor’s care not involving surgery. Medical Expense Insurance covers the cost of a doctor’s care not involving surgery.

Health Insurance Group Health Insurance is the least expensive form of health insurance for most people. Group Health Insurance is the least expensive form of health insurance for most people. Usually provided by an employer for employees. Usually provided by an employer for employees.