Copyright 2007 Thomson South-Western Chapter 6 Personal Risk Management.
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Transcript of Copyright 2007 Thomson South-Western Chapter 6 Personal Risk Management.
Copyright 2007 Thomson South-Western
Chapter 6
Personal Risk Management
Slide 2
What is risk?
• Risk is the chance of injury, damage, or economic loss– Personal risk
6-1 Risk Assessment and Strategies
Snow skiing involves risk of personal injury.
– Risk of financial loss– Risk of financial
resources
Slide 3
Risk Assessment
• Identify the risks
• Decide how serious they are
6-1 Risk Assessment and Strategies
RISK EXAMPLES
RiskProbability ofOccurrence
SeriousnessRating*
Possible Consequences
Losing my job Medium 10 Payments could be missed.
Credit rating suffers.
Car accident Unknown 10 Personal injuryLawsuit
Physical injury from snowboarding
Medium 3 Missed work timeMedical bills
*1 is a low risk; 5 is a medium risk; 10 is a high risk
Slide 4
Risk Strategies
• Reducing risks
• Avoiding risks
• Transferring risks
• Assuming risks
6-1 Risk Assessment and Strategies
Having a home security alarm system may reduce premiums on homeowner’s insurance.
Slide 5
Building Communications Skills
Reading Speed • Affects how much material you can read in a
given time • Affects how well you remember what you read • Can be improved with practice
– Preview material before reading– Read everything in order– Use a pacer to focus your eyes on the page– Read in a quiet place
6-1 Risk Assessment and Strategies
Slide 6
Health Insurance
• Is a plan for sharing the risk of medical costs from injury or illness
• Three basic types of health insurance plans are available– Fee-for-service plans– Preferred provider organization plans– Health maintenance organization plans
6-2 Income Protection
Slide 7
Focus on...
Being Uninsured in America • Millions of Americans do not have health
insurance • People who are not insured often have problems
paying medical bills • Uninsured patients often pay higher fees than
patients who have insurance• Having health insurance should be an important
goal in your financial plan
6-2 Income Protection
Slide 8
Types of Health Coverage
• Basic health care
• Major medical
• Dental care
• Vision care
• Catastrophic illness
6-2 Income Protection
Health insurance plans often include vision care.
Slide 9
Managing Costs
• Deductibles and co-pays
• Stop-loss provisions
• Health savings accounts
6-2 Income Protection
Medical emergencies can be very expensive.
Slide 10
Disability Insurance
• Provides money to replace a portion of normal earnings
• Pays when the insured is unable to work
• Covers an injury or illness that is not job-related
• May be short-term or long-term
6-2 Income Protection
Slide 11
Life Insurance
• Term insurance– Renewable term insurance– Decreasing term insurance– Level term insurance
• Permanent insurance– Whole life insurance– Limited-pay life insurance – Universal life insurance – Variable life insurance
6-2 Income Protection
Slide 12
Group Life Insurance
• Is purchased through an employer or an organization
• Has much lower premiums than individual policies
6-2 Income Protection
Life insurance can provide benefits for children when a parent dies.
Slide 13
Success Skills
Dealing With People in Difficult Situations • Focus on the person causing the problem
• Listen to what the person is saying
• Talk to others affected by the behavior
• Try to resolve the situation and keep the goodwill of others
6-2 Income Protection
Slide 14
Homeowner’s Insurance
• Protects from risk of loss in the home
• Covers the building and its contents
• Types of coverage– Fire and other hazards– Criminal activity– Personal liability– Acts of nature
6-3 Property Protection
Slide 15
Home Inventory
• Lists all the items of value in your home
• Should include receipts for expensive items when possible
• Is useful when filing an insurance claim
6-3 Property Protection
Slide 16
Sample Home Inventory
6-3 Property Protection
Slide 17
Renter’s Insurance
• Protects renters from the risk of losing personal property in their homes or cars
• Covers the cost of repairing or replacing personal property
• Is a low-cost wayto manage risk
6-3 Property Protection
Renter’s insurance protects you from losses as a result of fire.
Slide 18
Automobile Insurance
• Protects the owner of a car from losses as a result of accidents
• Types of coverage– Liability– Collision– Comprehensive– Personal injury– Uninsured/underinsured motorist– Towing/rental car
6-3 Property Protection
Slide 19
Reducing Costs
• Choosing higher deductibles can save you money on insurance
• To lower costs for car insurance– Take driver training classes– Maintain a good driving record– Buy more than one insurance policy from
the same company– Own a car with a high safety rating
6-3 Property Protection
Slide 20
Umbrella Insurance
• Provides coverage in addition to car and home insurance
• Protects you from catastrophic losses
• Requires that you have liability coverage on your home and car
6-3 Property Protection
Slide 21
Technology Corner
Buying Insurance Online • Many insurance companies have Web sites • Consumers can apply for insurance online• With some companies, claims can be filed
online• Premiums may be lower with online companies• Be sure that the company is reputable before
buying online
6-3 Property Protection
Slide 22
Ethics
Driving Accidents • Most states have financial responsibility
laws that require drivers to be insured
• Many people drive without insurance in violation of laws
• Driving without being able to pay for damages you cause to others is unethical
6-3 Property Protection