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Chapters 22-24Chapters 22-24
Insurance, Retirement, and Insurance, Retirement, and
Estate PlanningEstate Planning
Insurance Terms:Insurance Terms:
Insurance-protection against possible loss.Insurance-protection against possible loss. Policy-the contract for insurance.Policy-the contract for insurance. Premium-the amount or fee paid for Premium-the amount or fee paid for
coverage.coverage. Deductible-amount paid by you before Deductible-amount paid by you before
insurance will pay.insurance will pay. Risk-chance of loss or injury. Risk-chance of loss or injury. PerilPeril HazardHazard Negligence-carelessnessNegligence-carelessness
Risk-Management MethodsRisk-Management Methods
Risk AvoidanceRisk Avoidance Risk ReductionRisk Reduction Risk AssumptionRisk Assumption Risk ShiftingRisk Shifting
Planning an Insurance Planning an Insurance ProgramProgram
1.1. Set Insurance GoalsSet Insurance Goals
2.2. Develop a planDevelop a plan
3.3. Put plan into actionPut plan into action
4.4. Review ResultsReview Results
Types of Insurance Types of Insurance
AutoAuto HealthHealth HomeHome LifeLife
Homeowner’s InsuranceHomeowner’s InsuranceProperty and Liability Property and Liability
InsuranceInsurance
Property protects your own personal Property protects your own personal loss.loss.
Liability protects you from being Liability protects you from being sued and other people to be sued and other people to be compensated or fixed.compensated or fixed.– Legal responsibilityLegal responsibility
Home and Property Home and Property InsuranceInsurance
Personal PropertyPersonal Property– Take InventoryTake Inventory– FloaterFloater
LiabilityLiability– Medical payments coverageMedical payments coverage
Specialized coverageSpecialized coverage– FloodsFloods– EarthquakesEarthquakes
Renters InsuranceRenters Insurance
Covers only the contents of a home.Covers only the contents of a home.
How much do you need?How much do you need?
Actual cash valueActual cash value Replacement valueReplacement value
What is not covered?What is not covered?– Table pg. 747Table pg. 747
What factors determine What factors determine cost?cost?
Pg. 748-749Pg. 748-749– LocationLocation– StructureStructure– AmountAmount– DiscountsDiscounts– CompanyCompany
Auto InsuranceAuto Insurance
LiabilityLiability– Bodily Injury LiabilityBodily Injury Liability– Property Damage LiabilityProperty Damage Liability
Medical Payments CoverageMedical Payments Coverage Uninsured MotoristUninsured Motorist Underinsured MotoristUnderinsured Motorist CollisionCollision ComprehensiveComprehensive
Coverage Expressed in Coverage Expressed in ShorthandShorthand
Bodily injury per person/bodily injury Bodily injury per person/bodily injury per accident/property damage per accident/property damage liabilityliability
50/100/1050/100/10 100/300/50100/300/50 Expressed in thousandsExpressed in thousands
Motor Vehicle Bodily Motor Vehicle Bodily Injury CoverageInjury Coverage
Chapter
22
Home and Motor Vehicle Insurance
Section 3
Motor Vehicle Insurance
Auto Insurance Cont…Auto Insurance Cont…
What factors do insurance companies What factors do insurance companies look at to figure your premiums? Pg. look at to figure your premiums? Pg. 757757
Assigned Risk PlanAssigned Risk Plan No-fault insuranceNo-fault insurance
CoverageCoverage
How much coverage do you need?How much coverage do you need?– Pg. 756 & 758Pg. 756 & 758
Health InsuranceHealth Insurance To provide coverage for medical To provide coverage for medical
payments. payments. Group coverageGroup coverage
– HMOHMO Primary care physicianPrimary care physician
– PPOPPO DeductibleDeductible
– POSPOS Co-payCo-pay
Individual Plans (expensive)Individual Plans (expensive)
Health Insurance Cont…Health Insurance Cont…
Government Health CareGovernment Health Care– Medicare (over 65)Medicare (over 65)– Medicaid (low income)Medicaid (low income)
Life InsuranceLife Insurance
To provide income for anyone who To provide income for anyone who depends on it.depends on it.
BeneficiaryBeneficiary
Term Life-provides protection agiant Term Life-provides protection agiant loss for a specified term.loss for a specified term.
Whole Life-permanent policy, pay Whole Life-permanent policy, pay specified premium for the rest of your specified premium for the rest of your life.life.
Choosing an AgentChoosing an Agent
Employer-Sponsored Insurance Employer-Sponsored Insurance ProgramsPrograms
How do you chose an agent?How do you chose an agent? How do you file a claim? How do you file a claim?
Planning for RetirementPlanning for Retirement
Setting Long-Range GoalsSetting Long-Range Goals Conducting a Financial AnalysisConducting a Financial Analysis Reviewing AssetsReviewing Assets
Think About:Think About:
Living ExpensesLiving Expenses Standard of LivingsStandard of Livings HousingHousing
– Assisted LivingAssisted Living
PlansPlans
Public PensionPublic Pension– Social Security (disability, survivor, & Social Security (disability, survivor, &
retirement) retirement) Employer Retirement PlanEmployer Retirement Plan
– Pension (401K)Pension (401K)– Most employers match contributionMost employers match contribution
ERISA-states your own contributions ERISA-states your own contributions are vested immediatelyare vested immediately– Your employers portions takes a certain Your employers portions takes a certain
number of years to be vested between 3 number of years to be vested between 3 to 10 to 10
Personal Retirement PlansPersonal Retirement Plans
Individual Retirement Accounts (IRA)Individual Retirement Accounts (IRA)– Traditional-taken out Traditional-taken out beforebefore taxes; taxes;
therefore taxed when taken outtherefore taxed when taken out– Roth-taken out Roth-taken out afterafter taxes; therefore taxes; therefore
NOT taxed when withdrawnNOT taxed when withdrawn Keogh plan-for self-employed Keogh plan-for self-employed
individualsindividuals AnnuityAnnuity
Estate Planning Terms:Estate Planning Terms:
WillWill TestateTestate HeirHeir
Changes to a Will:Changes to a Will:
CodicilCodicil– Must be signed and witnesses alsoMust be signed and witnesses also
Automatic ChangesAutomatic Changes– DivorceDivorce– MarriageMarriage– Birth or adoption of a childBirth or adoption of a child
State StatuesState Statues
Spouse is entitled to 1/3 to 1/2 of the Spouse is entitled to 1/3 to 1/2 of the estateestate
The will must state if a child is The will must state if a child is intentionally left out.intentionally left out.
Dying without a willDying without a will
IntestateIntestate StatutesStatutes
More expensive because court has to More expensive because court has to appoint someone to execute your appoint someone to execute your wishes. wishes. – AdministratorAdministrator– AdministratrixAdministratrix
Settling an EstateSettling an Estate
You appoint a/an:You appoint a/an:– Executor (male)Executor (male)– Executrix (female)Executrix (female)
It is cheaper to die with a will.It is cheaper to die with a will.
Estate PlanningEstate Planning
EstateEstate Probate CourtProbate Court Living WillLiving Will Power of AttorneyPower of Attorney