SSEPF5

Standard SSEPF5 The student will describe how insurance and other risk-management strategies protect against financial loss. SSEPF5 The student will describe how insurance and other risk-management strategies protect against financial loss.  a. List various types of insurance such as automobile, health, life, disability, and property.  b. Explain the costs and benefits associated with different types of insurance; include deductibles, premiums, shared liability, and asset protection.

What is Insurance? Asset protection Asset protection Protects you against financial losses Protects you against financial losses Most adults should have 4-5 types of insurance. Most adults should have 4-5 types of insurance. Your age, family situation, & income are all factors to consider when deciding the type and amount of coverage you should get. Your age, family situation, & income are all factors to consider when deciding the type and amount of coverage you should get.

1. Auto Protects you & other drivers in case of an accident that results in damage or injury. Protects you & other drivers in case of an accident that results in damage or injury.  Also protects you in case of theft & vandalism

2. Health Protects you in case of illness or injury. Protects you in case of illness or injury.  Also covers routine medical care, prescriptions, & sometimes dental.

3. Property protects your home or apartment in case of damage or loss of your belongings due to water, wind, or fire. protects your home or apartment in case of damage or loss of your belongings due to water, wind, or fire.  Bka: homeowners or renter’s insurance  Covers your liability if someone is hurt in your home & sues you for damages  NOTE: most policies do not protect you against flood damage- this is a separate policy.

4. Life Pays a set amount to your beneficiary in case of your death. Pays a set amount to your beneficiary in case of your death.  Beneficiary= person you name as the recipient of the insurance policy pay out.

 2 types of Life insurance:  1. Term (Temporary)- rates increase over time; must die during the term (specific period of time) for the policy to pay.  2. Whole- set rates; insurance remains in effect for one’s entire life.  Builds cash value you can borrow against (take out a loan from)

5. Disability- Pays you a portion (50-60%) of your regular salary if you are injured or unable to work. Pays you a portion (50-60%) of your regular salary if you are injured or unable to work.

2 types:  1. Short term- begins after missing 2 weeks of work. Coverage lasts anywhere from 3 to 6 months.  2. Long term- picks up after short term disability expires. Coverage lasts from 2 to 5 years. – NOTE: these are purchased as separate policies. This is not the same as Social Security pay for disability or workman’s compensation.

Premium Also known as rates. Also known as rates. Defined as the payment you make to the insurance company. Defined as the payment you make to the insurance company. Insurance companies set rates based on risk factors, hard statistics that predict whether someone is likely to be a bad risk. Insurance companies set rates based on risk factors, hard statistics that predict whether someone is likely to be a bad risk.

Deductibles An amount you pay before your coverage kicks in. An amount you pay before your coverage kicks in. Ex. If your car insurance policy has a $1,000 deductible, it means that after an accident you must pay the first $1,000 of the repair bill and then the company pays the rest. Ex. If your car insurance policy has a $1,000 deductible, it means that after an accident you must pay the first $1,000 of the repair bill and then the company pays the rest. Note: for car ins. the higher the deductible, the lower your premium. Note: for car ins. the higher the deductible, the lower your premium. Deductibles also exist for health insurance, usually required for surgery. Deductibles also exist for health insurance, usually required for surgery.

Copays You pay a small portion of the total cost of service, your insurance pays the rest. You pay a small portion of the total cost of service, your insurance pays the rest.  Ex. You pay $35 to see the doctor, he bills your insurance co. for $265. Often listed on health ins. card

Asset Protection- protects your “stuff” from damage Asset Protection- protects your “stuff” from damage Shared liability- when two or more persons are responsible for a debt. Shared liability- when two or more persons are responsible for a debt.  Ex. Auto repairs & copays, you pay a portion and the insurance co. pays a portion.  “Healthy people pay for sick people”