INSURANCE

How it works…Why YOU need it…

ALL ABOUT RISK

The chance of financial loss from some type of danger

RISK MANAGEMENTAVOID THE RISK

– Don’t do risky things

REDUCE THE RISK– Take steps to protect yourself

ACCEPT THE RISK– If the potential for future financial loss is small, don’t worry about it

SHARE THE RISK– Buy insurance

HOW DOES INSURANCE WORK?

SHARING THE RISKINSURANCE• A means of guaranteeing your financial protection against various risks. In exchange for a relatively a small monthly payment, you gain protection against a potentially large loss

INSURANCE POLICY• A written contract detailing what an insurance company will cover, how much it will pay, and how much you will pay

SHARING THE RISKPREMIUMThe amount you pay for an insurance policy

• Paid monthly, quarterly, semi-annually, or annually

• Based on the type and amount of coverage you choose

• Varies from one insurance company to another – shop around!

• Credit score can play a part in how much you pay (higher score = lower premium)

YOUR TASK:• Find out what the average American pays for:–Health Insurance Premiums–Automobile Insurance Premiums–Homeowner’s Insurance Premiums–Life Insurance Premiums

SHARING THE RISKCOVERAGE LIMITThe maximum amount the insurance company will pay if you file a claim

DEDUCTIBLE• The amount of a loss YOU must pay out of your own pocket before the insurance company will step in and pay the rest

AUTOMOBILE INSURANCEVIDEO 101 – WHAT ARE THE 6 FORMS OF COVERAGE?

What Affects the Price?•AGE•GENDER•MARITAL STATUS•TYPE OF CAR•HOW OFTEN YOU USE THE CAR•LOCATION•DRIVING RECORD•CLAIM RECORD•CREDIT HISTORY

Main Types of Auto INS:GENERAL LIABILITY• Covers damage YOU cause to other people’s property

and bodily injuries you cause to people outside your car• If you damage someone else car, your liability coverage

pays to cost to have it repaired• If you hurt someone outside your car, and he/she sues

you, general liability covers your legal billsMEDICAL PAYMENTS (Personal Injury Protection)

Covers immediate compensation for bodily injury expenses to you and your passengers regardless of who is at fault

COLLISIONCovers repairs for damage you cause to your car.

Main Types of Auto INS:COMPREHENSIVE (NON-COLLISION)

Covers damage to your vehicle, break-ins, vandalism, theft, natural disasters, etc…

UNINSURED MOTORIST (video)Covers your lost wages and medical expenses if you are in an accident with someone who doesn’t have auto insurance

UNDERINSURED MOTORISTCovers you when cost to repair damages exceeds other persons coverage limit

HOME OWNER’S INSURANCE (NOT IN NOTES!!)

investopedia video = WATCH NOW!

HEALTH INSURANCE

HEALTH INSURANCE

• Your, and/or your employer pay a premium and the insurance company pays part of your medical bills

HEALTH INSURANCEWHAT YOU NEED:• Hospital/surgical/physician expenses• Dental/Vision/Long-term care

WHERE TO GET IT:• Private Health Care Plans (Insurance co, Health

Maintenance Organizations)• Government Health Care Programs (Medicare,

Medicaid)

HEALTH INSURANCEChoosing Wisely

If you have a choice from more than one plan, compare how each plan handles the following:

• Coverages - what they cover

• Co-payments – what you have to pay to see Dr.

• Coinsurance - % you have to pay after deductible is met

• Deductibles - amt you pay before insurance kicks in

• Pre-existing conditions • Limitations on devices, drugs, and access to

specialists.

DISABILITY INSURANCE

Provides regular cash income when an employee is unable to work due to pregnancy, a non-work-related accident, or an illness

DISABILITY INSURANCEWHAT YOU NEED:• Day-to-day living expenses for your and your

family

WHERE TO GET IT:• Worker’s compensation• Employer group insurance plans• Social Security (only for over 12 months)• Private income insurance programs

DISABILITY INSURANCEShort-Term Disability• Six months or less of work.• Replaces close to 100% of wages for the first payouts. • Payments will eventually drop, often to 60% of wages.

Long-Term Disability• More than 6 months out of work• Can be purchased to replace 50-70% of salary. • Some policies have monthly maximum payouts• Some policies will only pay out for 5 or 10 years, some will

pay out until age 65.

DISABILITY INSURANCE

Meredith Moore’s Story

LIFEINSURANCE

LIFE INSURANCE

You pay a premium and the insurance company pays a death benefit when you die

You really need it if… Other people depend on you (married, children)

LIFE INSURANCEWHAT YOU NEED:• Burial costs 2011 (average = $7,000-$10,000)• Money to pay off debt (medical expenses, mortgage,

car loans, credit cards, taxes)• And provide income for survivors (food, housing,

utilities, transportation, health care, clothing, insurance, college, retirement)

The bigger your lifestyle, the more you need.Some experts recommend 10-15 times your gross annual

income. $45,000= $450,000-675,000

LIFE INSURANCE

WHERE TO GET IT:• Insurance Professionals • At Work• Direct Purchasing

over the Internet

LIFE INSURANCE

TERM:• A specified term (10,20,30 years)• Lower Cost• No cash value

PERMANENT:• Until age 100 or later, as long as premiums are paid• Higher initial cost• Can accumulate cash value – and then access it• Whole Life, Variable Life, Universal Life, Variable

Universal Life

LIFE INSURANCE

Melissa Knoll’s Story