SSEPF5

SSEPF5 The student will describe how SSEPF5 The student will describe how insurance and other risk-management insurance and other risk-management strategies protect against financial loss.strategies protect against financial loss. a. List various types of insurance such as a. List various types of insurance such as

automobile, health, life, disability, and property.automobile, health, life, disability, and property. b. Explain the costs and benefits associated with b. Explain the costs and benefits associated with

different types of insurance; include deductibles, different types of insurance; include deductibles, premiums, shared liability, and asset protection.premiums, shared liability, and asset protection.

Asset protectionAsset protectionProtects you against financial lossesProtects you against financial lossesMost adults should have 4-5 types of Most adults should have 4-5 types of

insurance.insurance.Your age, family situation, & income are Your age, family situation, & income are

all factors to consider when deciding the all factors to consider when deciding the type and amount of coverage you should type and amount of coverage you should get.get.

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

Protects you in case of illness or injury.Protects you in case of illness or injury. Also covers routine medical care, prescriptions, & Also covers routine medical care, prescriptions, &

sometimes dental.sometimes dental.

protects your home or apartment in case protects your home or apartment in case of damage or loss of your belongings due of damage or loss of your belongings due to water, wind, or fire.to water, wind, or fire. Bka: homeowners or renter’s insuranceBka: homeowners or renter’s insurance Covers your Covers your liabilityliability if someone is hurt in your if someone is hurt in your

home & sues you for damageshome & sues you for damages NOTE: most policies do NOTE: most policies do notnot protect you against flood protect you against flood

damage- this is a separate policy.damage- this is a separate policy.

Pays a set amount to your Pays a set amount to your beneficiary beneficiary in in case of your death.case of your death. Beneficiary= person you name as the recipient of Beneficiary= person you name as the recipient of

the insurance policy pay out.the insurance policy pay out.

2 types of Life insurance:2 types of Life insurance: 1. Term (Temporary)- rates increase over time; must 1. Term (Temporary)- rates increase over time; must

die during the term (specific period of time) for the die during the term (specific period of time) for the policy to pay.policy to pay.

2. Whole- set rates; insurance remains in effect for 2. Whole- set rates; insurance remains in effect for one’s entire life.one’s entire life. Builds cash value you can borrow against (take out a loan Builds cash value you can borrow against (take out a loan

from)from)

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

2 types:2 types: 1. 1. Short term- Short term- begins after begins after

missing 2 weeks of work. missing 2 weeks of work. Coverage lasts anywhere from Coverage lasts anywhere from 3 to 6 months.3 to 6 months.

2. 2. Long term- Long term- picks up after picks up after short term disability expires. short term disability expires. Coverage lasts from 2 to 5 Coverage lasts from 2 to 5 years.years.

– NOTE: these are purchased as separate policies. This is not the same as Social Security pay for disability or workman’s compensation.

Also known as Also known as ratesrates..Defined as the payment you make to the Defined as the payment you make to the

insurance company.insurance company.Insurance companies set rates based on Insurance companies set rates based on

risk factorsrisk factors, hard statistics that predict , hard statistics that predict whether someone is likely to be a bad risk.whether someone is likely to be a bad risk.

An amount you pay before your coverage An amount you pay before your coverage kicks in.kicks in.

Ex. If your car insurance policy has a Ex. If your car insurance policy has a $1,000 deductible, it means that after an $1,000 deductible, it means that after an accident you must pay the first $1,000 of accident you must pay the first $1,000 of the repair bill and then the company pays the repair bill and then the company pays the rest.the rest.

Note: for car ins. the higher the Note: for car ins. the higher the deductible, the lower your premium.deductible, the lower your premium.

Deductibles also exist for health Deductibles also exist for health insurance, usually required for surgery.insurance, usually required for surgery.

You pay a small portion of the total cost of You pay a small portion of the total cost of service, your insurance pays the rest.service, your insurance pays the rest. Ex. You pay $35 to see the doctor, he bills your Ex. You pay $35 to see the doctor, he bills your

insurance co. for $265.insurance co. for $265.

Often listed

on health

ins. card

Asset Protection- Asset Protection- protects your “stuff” protects your “stuff” from damagefrom damage

Shared liability- Shared liability- when two or more when two or more persons are responsible for a debt.persons are responsible for a debt. Ex. Auto repairs & copays, you pay a portion and Ex. Auto repairs & copays, you pay a portion and

the insurance co. pays a portion.the insurance co. pays a portion. ““Healthy people pay for sick people”Healthy people pay for sick people”