Lesson 18 Insurance

Today’s Learning Objective What are the main types of insurance? Insurance Basics Auto Insurance Renter’s Insurance Homeowner’s Insurance Health Insurance Disability Insurance Life Insurance

Key Terms Automobile Insurance Beneficiary Coverage Deductible Dependents Disability Insurance Health Insurance Homeowner’s Insurance Insurance Life Insurance Policy Premium Renter’s Insurance Term Life Insurance Whole Life Insurance

Insurance You pay a company to protect you against a particular loss or cover a legal responsibility Common kinds of insurance: – Automobile – Life – Disability – Home – Health – Property

How Do I Purchase Insurance? Decide what you need to protect – Property that could get damaged or stolen – Car or other vehicle – House – Protection from massive medical bills – Protect family from loss of income if you die unexpectedly Contact an insurance agent – In person – On phone – Over Internet

Cost of Insurance Factors that contribute to cost – Age – Behavior – Financial stability – Geography – Deductible – Other factors

What is a Deductible? The amount you pay when you file a claim – Fixed dollar amount Deductibles are how you retain some risk for whatever the risk you are transferring The larger the deductible, the lower your premium Deductibles may be different for different parts of your policy

Auto Insurance Pays for damages & liability if in a car accident when you are driving your car Will cover: – Liability for damage to do to other people (medical, lost wages, etc.) and their property May cover (not always required ): – Damage to your own car due to accidents – Injuries to you from the accident Insurance policies normally for 6 months or a year at a time

Renter’s Insurance Protects your stuff in your apartment (or other property you are renting) from – Damage (fire, smoke, water) – Theft May include covering living expenses while you are displaced (if from fire) Need extra coverage for certain disasters – Earthquake – Flood – Hurricane

Homeowner’s Insurance Covers damage to the structure and contents due to – Fire – Theft Can get additional coverage for – Wind – Flood – Hurricane – Earthquake

Health Insurance Pays for medical costs Two basic kinds: – Fee-for-Service You see doctor of your choice Doctor is paid by you (co-pay, co-insurance) and your insurance company – Managed Care You see doctor that is has an agreement with your insurance company to see you for a set fee Doctor may be independent or work for the managed care provider

Disability Insurance Pays to replace lost wages when you can’t work due to an injury or illness Types: – Employer-paid Short-term sick leave – Individual policy You get insurance policy to cover your income – Other benefits Workers’ Compensation Insurance Social Security

Forms of disability insurance – Short-term Designed to cover relatively short periods of time Usually no longer than 2 years – Long-term Designed to cover long time periods Can last several years or entire life

Life Insurance Provides money to your designated beneficiary Normal uses for life insurance – Replace income for your family – Pay your final expenses (funeral, burial, etc.) – Create an inheritance (money for kids, like college funds) – Pay final taxes

Main types of life insurance – Term Covers you for specified period of time If you die after that coverage period, your beneficiary gets nothing – Whole Life Covers you for entire life Premiums paid for entire life or until specified age Policy will pay out when you die