7.10.1.G1

Types of Insurance Essentials

The Essentials to Take Charge of Your Finances

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 2

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

What is Insurance?

Insurance is an arrangement between

an individual (consumer) and an insurer (insurance

company) to protect the individual against

risk

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 3

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1Why is it important to

have insurance?

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 4

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1What is an Insurance

Policy?A policy is a

contract between the individual and

the insurer specifying the terms of the

insurance arrangements

A premium is a fee paid to the insurer to be

covered under specified terms outlined in the

policy

A deductible is the amount paid out of

pocket by the policyholder for the

initial portion of a loss before the insurance coverage begins- the deductible is stated in

the policy

A policyholder is a consumer

who purchases the policy

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 5

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

Types of Insurance Automobil

e

Health

LifeDisability

Homeowners/Renters

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 6

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

Automobile Insurance

Liability insurance

Medical payment

insurance

Uninsured or

underinsured motorists insurance

Physical damage insuranc

e

Collision

Comprehensive

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 7

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

Types of Auto Insurance

It is the minimum amount of

insurance required by law for

automobiles

Medical Payment Insurance covers

injuries sustained by the driver of the

insured vehicle or any passenger regardless of

fault

It also covers family members injured as

passengers in any car, pedestrians, or

bicyclists

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 8

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

Types of Auto Insurance Uninsured or Underinsured

Motorists Insurance covers injury or damage to the driver, passengers, or the vehicle caused by a driver with insufficient insurance

Physical Damage Insurance covers damages caused to the vehicle Collision – covers a collision with another

object, car, or from a rollover Comprehensive – covers all physical

damage losses except collision and other specified losses

Why would an individual want automobile insurance coverage beyond liability (the minimum required by

law)?

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 9

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

Health Insurance Health insurance provides protection

against financial losses resulting from injury, illness, and disability

May cover hospital, surgical, dental, vision, long-term care, prescription, or other major expenditures

Specific coverage depends upon the individual policy

Health care costs are extremely high Large medical expenses could deplete an

individual’s savings

Why would it be important to have health insurance?

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 10

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

May be purchased by the individual or through their employer

Individual’s often seek coverage for dependents (spouses and children)

Many health insurance policies offer dependent coverage but there is no requirement to do so

If dependent coverage is offered, children may stay on their parent’s health care plan until age 26 with no stipulations

Federal government website to learn about health insurance and compare policies: http://www.healthcare.gov/index.html

Health Insurance

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 11

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

Life Insurance

Provides money for family members or dependents when a wage earner dies • A dependent is a person who relies on someone else financially

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 12

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

What Covers This Risk? While driving, you hit and injure a

pedestrian in a crosswalk

Automobile!

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 13

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

What Covers This Risk? After losing her husband to a heart

attack, a wife is left alone to care for 2 children

Life!

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 14

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

What Covers This Risk? You need a cast after breaking an

ankle while roller-blading

Health!

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 15

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

Disability Insurance Disability Insurance replaces a

portion of one’s income if they become unable to work due to illness or injury

Insurance typically pays between 60-70% of one’s full-time wage Factors such as the length or severity of

a disability influence the percentage of income a person will receive

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 16

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

Homeowner’s InsurancePeril -an event

which may cause a financial loss like fire, falling trees,

lightning and others

Property Insurance -protects the insured from

financial losses due to destruction or damage to property or possessions

Liability Insurance- protects the insured

party from being held liable for other’s financial losses

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 17

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

Renter’s Insurance

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 18

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

What Covers This Risk? Your rented apartment is broken

into and your computer is stolen

Renters!

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 19

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

What Covers This Risk? You are injured in an automobile

accident and are unable to work for 2 months

Disability!

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 20

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

What Covers This Risk? Your garage was destroyed by a

fire which started by a lightning bolt hitting your home

Homeowners!

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 21

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

What Covers This Risk? Sick at home from food

poisoning after eating a carnival corndog

Nothing!

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 22

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

What Covers This Risk? While driving, you have brake

failure. You hit a telephone pole and cause damage to the front of the car

Automobile!

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 23

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

What Covers This Risk? While driving to the mall, you are

pulled over and receive a speeding ticket

Nothing!

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 24

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

What Covers This Risk? A daughter, who is financially

responsible for her mother’s nursing home bills, dies from an undetected heart defect

Life!

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 25

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

What Covers This Risk? A doctor diagnoses a child with

tonsillitis during a visit to a clinic

Health!