Insurance: Protecting What You Have

1. Insurance: Protecting What You Have

2. PESSIMISTIC In your life, What Disasters could happen tomorrow?

3. In this Unit, We will: • Identify ways to manage risk • Describe how insurance is used to protect against potential financial loss • Explain the features and processes related to automobile insurance • Examine how insurance needs vary from person to person because of lifestyle and life situation • Assess how insurance fits into your financial plan

4. Exposure Risk Potential Loss Common Exposures to Loss Loss of income from inability to work; uninsured medical bills; death Accident or Illness UNLIMITED Your property is damaged, destroyed, lost, or stolen Amount needed to replace your property Property Ownership You are found liable for injuries to other people or damages to their property Liability UNLIMITED

5. Risk Management: refers to how you deal with the chance of a potential personal or financial loss.

6. Why is It important to have insurance? Emergency savings - at least six months of expenses set aside to cover costs of unexpected events Risk - chance of loss from an event that cannot be entirely controlled is managed by Insurance - transfers risk from an individual to an insurance organization What are examples of unexpected events that may result in a financial loss?

7. Insurance Policy Insurance: a means of guaranteeing your financial protection against various risks Coverage - The risks covered and amount of money paid for losses under an insurance policy Policyholder - Person who owns the policy Premium - Money paid to purchase the policy Experts say that buying insurance is buying financial security. Do you think this is true? Why or why not?

8. An Illustration of How Insurance Works With a 1% chance that any one of them could get sick and require $10,000 in medical care But, no one knows who will get sick 99 people do not collect anything, but they gain peace of mind and important protection against a large loss If each person pays $100 into a “pool” they will collectively have $10,000 to cover the medical costs of the person who gets sick So, everyone gives up $100, but nobody loses more than $100 Insurance shifts the risk of big loss from the individual to the insurance company

9. The benefits of Insurance Property & Liability • Payments received from an insurance policy can far exceed the premiums paid • Provides financial security and peace of mind Life Health Long-term Care Disability Why is the best outcome to have insurance but never collect on it?

10. The Insurance Process Claim - paperwork submitted to insurance organization describing the accident, illness or injury Event occurs resulting in loss Deductible - amount of money paid out of pocket by policyholder before the insurance coverage begins Remaining amount owed is paid by co-insurance (if applicable) Policyholder makes claim to insurance organization Co-insurance - amount of money, after deductible, that is paid jointly by the insured and the insurance company Insurance organization determines if event is covered by policy If so, policyholder pays a deductible

11. True False True False What Do You Think? • One in 10 Americans visits the emergency room each year. • Nearly 80% of crashes and 65% of near-crashes involve some form of driver inattention in the 3 seconds before the event. • Nearly one in three Americans will become disabled for one year or more before the age of 65. • In the United States, an automobile is stolen every 60 seconds. • Seventy percent of all fatal bicycle crashes involve head injuries. • Using lap and shoulder safety belts reduces the risk of fatal injury to front-seat auto occupants by 45% and the risk of moderate-to-critical injury by 50%. • Sixteen-year-old drivers have crash rates that are three times greater than those of 17-year-old drivers and five times greater than those of 18-year-old drivers. • A disabling injury occurs every minute.

12. Types of Insurance • Automobile • Homeowners • Renters • Health • Life • Disability • Long-Term Care • Identity theft Protection

13. Auto Insurance

14. ? ? ALWAYS WEAR SEATBELTS ? OBEY SPEED LIMITS ? AVOID NIGHT DRIVING ? INJURY IN A CAR ACCIDENT MANAGING LOSS FROM INJURY

15. What’s in Your Wallet! Driver’s License Health Insurance Auto Insurance

16. IT IS AGAINST THE LAW TO DRIVE WITHOUT CAR INSURANCE!!!

17. How much you use the car Factors Affecting Automobile Insurance Costs If you’re a good student Make of car Driver’s education Credit rating Gender Type of car Where you live Marital status Driving record Your age Do you take the car to work?

18. Auto InsuranceWhat affects your premiums? • Age: Younger you are, the higher the premium • Gender: Males under the age of 25 have significantly higher accident rates than females under the age of 25, therefore higher premiums • Marital Status: Married people are more careful drivers because they tend to have fewer accidents • Type of Car

19. Auto InsuranceWhat affects your premiums? • How Often You Use Your Car • Location: High populated areas = more accidents • Driving Record: Speeding tickets and other traffic violations = higher premiums • Claim Record: No accidents = lower premiums • Credit History: Poor credit history = higher premiums

20. Did You Know? • In the first year of driving, one in five 16-yearold drivers has an accident. • Male teens are much less likely to wear their seat belts than female teens. And 7.7% of guys said they either rarely or never wear their seat belts compared with 2.8% of girls. • Sixty-two percent of high school drivers say they talk on a cell phone while driving. • Two-thirds of high school drivers say they speed. • Injury claim frequencies and overall collision losses for cars driven by insured teenagers are more than double those of cars driven only by insured adults.

21. Main types of Auto Insurance Coverage's: • General Liability: Covers damage you cause to other people’s property and bodily injuries you cause to people outside of your car • Medical Payments: Cover immediate compensation for bodily injury expenses to you and your passengers regardless of who is at fault. • Also covers you and members of your household in any accident involving an automobile, whether you are on foot, on a bicycle, or in a friend’s car

22. Main types of Auto Insurance Coverage's: • Collision: Covers repairs for damage you cause to your car caused by an accident, whether it involves another vehicle or an object, such as a tree. • A deductible applies to collision payments. This means that you pay the deductible amount first; your insurance company pays the amount over your deductible.

23. Main types of Auto Insurance Coverage's: • Comprehensive: (other non-collision damage) This covers fire damage to your vehicle, break-ins, vandalism, or theft, as well as natural disasters such as an earthquake, hail, hurricane, or flood. Covers everything EXCEPT an actual collision.

24. Main types of Auto Insurance Coverage's: • Uninsured Motorist: Covers your lost wages and medical expenses if you are in an accident with someone who doesn’t have auto insurance • Underinsured Motorist: Covers you when the cost of repairs from an accident caused by another driver exceeds his or her coverage limits

25. Can You Lose Your Insurance? • Fail to pay your premium • Lose your driver’s license • Lied on your insurance application • Fail to report a change in your circumstances, such as buying a sports car to replace a family sedan. • Too many claims YES!

26. Homeowner’s Insurance

27. Renter’sInsurance

28. Homeowner’s Insurance • Insurance that protects property owners from property and liability risks • Includes coverage for the building as well as personal possessions inside the building • 3 Types of Risks: • Fire, water, wind, and smoke • Criminal activity • Liability

29. Renter’s Insurance • The landlord is responsible for the building • Personal possessions that you keep in your rented home are YOUR responsibility to protect – not the landlord’s. • Renter’s Policy – insurance that protects renters from property and liability risks. • Protects from loss due to fire, smoke, water, etc • Protects items at work or in your car • Liability

30. HealthInsurance

31. Health Insurance • Provides protection against financial losses resulting from injury, illness, and disability. • Provide coverage for emergency or routine medical expenses. • May cover hospital, surgical, dental, vision, long-term care, prescription, etc. • If your parents have health insurance, it will cover you until you turn 19 years old, or until age 26 if you’re a full-time student • May be purchased by an individual, or through their employer

32. Health Insurance • Co-Payment – amount of coverage that is shared between the insured and the insurer. • Deductible • Covered Expenses – expenses the insurer has agreed to pay in the policy • Claims – requests for payments (doctors, hospitals, etc) • Exclusions – exceptions to coverage agreed to in the policy • Premiums

33. lifeInsurance

34. Life Insurance • A contract between an insurer and policyholder specifying a sum to be paid to a beneficiary upon the insured’s death. • Beneficiary: the recipient of any policy proceeds if the insured person dies. • Purpose is to provide money for family members or dependents when a wage earner dies.

35. DisabilityInsurance

36. Disability Insurance • Replaces a portion of one’s income if they become unable to work due to illness or injury • Typically pays between 60% – 70% of one’s full time wage • Many employers offer disability insurance as part of the benefits package

37. Employee Benefits • Hospitalization, Medical, & Disability Insurance • Dental and Vision Insurance • Accidental Death Insurance • Sick Leave • Paid Vacation Time and Holidays • Parental Leave • Worker’s Compensation Insurance • Life Insurance • Retirement Benefits • Retirement Savings Plans • Employee Assistance Programs