Objectives:

Students will be able to understand the importance of insurance

Students will be familiar with the various factors that determine the cost of insurance.

Students will have a basic understanding of the main types of insurance and what they are used to protect.

InsuranceDo Now: Why is it important to have Insurance?

Insurance Insurance is one important way that you can protect yourself from being

financially harmed by an unexpected situation.

Insurance is what you get when you pay a company to protect you against a particular loss or cover a legal responsibility. Loss could be theft Legal responsibility could be paying someone else’s medical bills if you caused an

automobile accident.

Kinds of InsuranceAutomobile

Life

Disability

Home

Health

Property

How Do I Purchase Insurance? What property do you want to protect from theft or damage?

Do you have a vehicle?

What major property do you own that needs to be covered? A house?

What financial or legal responsibilities do you have? What kinds of insurance does you state require?

What geographic location do you live in, and what special problems does it pose? Are their floods? Earthquakes?

The Cost of Insurance Factors:

Age: auto insurance: the younger you are the more expensive your insurance will be. Life Insurance: it is the opposite

Behavior: insurance companies view your past behavior as an indication of how you will act in the future.

Financial Stability: look at large credit card debts or other financial issues as a way to predict future insurance losses.

Geography: If you live in a city you will often pay more for insurance because crime is a bigger problem than in rural areas. Same with auto insurance

Deductible: the amount of the deductible that you choose with your policy will also affect how much you pay for insurance. The larger the deductible you decide to have, the lower premium you will pay on your policy.

Other FactorsRule of thumb: The more expensive the item is, the

more expensive the insurance.

What is a deductible? Is the amount of money you pay when you file a claim.

Can be a specified dollar amount or a percentage of the claim. EXAMPLE: if you have an auto accident that costs $2500 in damage amount and

your deductible is $500. Then you will have to pay $500 before the company will pay the rest of the amount.

The larger the deductible: the lower the premium

Auto Insurance To protect you against the financial loss that you can suffer if you are in an

accident. Auto Insurance Provides you with:

Property coverage that pays for damage to or the theft of your car. Liability coverage that pays for the cost of treating your own or others’ injuries,

and sometimes lost wages and funeral expenses.

Renters Insurance If your apartment building was on fire, or if you find your apartment was

broken into and your laptop was stolen.

By purchasing renter insurance, you will be able to replace or repair what has been damaged or stolen.

Covers possessions if they are lost or damaged through theft, fire, and smoke, vandalism, lightning, or water damage caused by plumbing problems.

Your renters insurance will cover some living expenses if you are displaced such as hotel bills, temporary rentals, and meals.

Renters insurance Renters insurance also covers your legal responsibilities to other people

injured in your residence by you, your relatives, or your pets.

However, certain disasters such as earthquakes and floods are not covered by renters insurance.

Can be purchased as separate policies.

Homeowners Insurance Your house will be one of the biggest investments you will make.

This type of insurance provides you with financial protection against disasters such as fire, storms, or thefts. Policies covers the home itself and the possessions inside. Similar to renters insurance, homeowners insurance covers both the damage to

your property and your legal responsibilities to people injured or property damaged in your residence by you, your relatives, or your pets. WILL NOT COVER MAINTENANCE-RELATED PROBLEMS IT WILL NOT COVER THAT CAUSED BY FLOODS, EARTHQUAKES, OR HURRICANES.

HEALTH INSURANCE Purchase a policy on your own or take advantage of a plan offered by your

employer.

Health insurance is important to have because medical costs can quickly add up. (emergency room visit, doctors fees, ambulance fees, x-ray costs, medication) can cost you thousands of dollars.

Types: FEE- FOR-SERVICE:

This kind of health insurance is based on health professionals receiving a fee for the services provided to the patient.

You can see the doctor of your choice and a claim is submitted to the insurance company by either the health-care provider or the patient.

Health Insurance Managed Care:

Type of health insurance provides a comprehensive health services and offers financial incentives, such as low co-pays, to patients who use providers that are part of the plan. HMO: Health maintenance organizations PPOs: Preferred Provider Organizations POS: Point-of-service

Some plans offer prescription medicine and some offer dental and vision coverage.

Disability Insurance Imagine you had an auto accident or had a work-related injury and cannot

go to work, you can’t earn the money you need to pay your rent and utilities or to buy food and medicine.

Disability insurance can protect you and replaces the income you lose if you are unable to work because of an injury or illness.

The money you receive from disability insurance pays for your living expenses.

Disability Insurance Continued… 3 ways to replace your income:

1. Employer-paid disability insurance: short-term sick leave

2. Individual disability insurance policies: purchase additional insurance

3. Other benefits: you might qualify for benefits from workers compensation if your injury or illness is job related, or benefits through U.S. Department of Veterans Affairs.

Disability Insurance Short-term disability: starts sometime in the first 14 days of disability and

lasts no longer than two years.

Long-term disability: Benefits usually start several weeks or months after the disability, and can last a few years or for the rest of your life.

Usually covers 60 percent of your total income.

Life Insurance If you die, your family is responsible for your debts such as car loans,

medical bills, and credit cards.

Life Insurance pays a sum of money to a person or group of people when you die to take care of things such as your bills, funeral, and family’s income. Replace income for your family: Pay your final expenses: provide for funeral and burial costs, your will, debts, and

medical costs Create an inheritance: Pay final taxes: federal and state governments tax your estate, which are the assets

you are left with after death.

Life Insurance Types Term: term life insurance pays a benefit if you die during the term of the

policy, usually between 1 and 30 years.

Whole life: permanent life insurance, pays a benefit whenever you die, not matter your age.

Video https://www.youtube.com/watch?v=gZ6Ly2lsJMw

Renters Insurance Video https://www.youtube.com/watch?v=6m00xOp2tr4

Health insurance https://www.youtube.com/watch?v=kT3H9pBP8fg

Questions: