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Insurance
Basics
Home
Automobile
Medical & Life
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Insurance Basics
Learning the Language of Insurance
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The Insurance Policy
A legal contract between a person buying insurance and an insurance company.
Explains… Who is covered What is covered What the company will pay Cost of the policy Deductibles
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Insurance Coverage
Refers to losses that an insurance company will cover.
Translates into an actual dollar amount. Exclusions
Losses that are not covered under the policy
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Premiums
The amount a policyholder pays an insurance company for coverage.
Can be paid in installments. Usually paid once a month on a six-month or
yearly policy. If paying on installments, the company may
charge an additional handling fee
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Deductibles
The portion of a loss that you pay. The insurance company then pays the
remaining costs. The higher your deductible, the lower the
premium (usually).
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Claims
An oral or written notification of a loss filed with the insurance company.
Report a claim as soon as possible. If your losses are less than your deductible, it
is not necessary to report a claim.
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Kinds of Insurance
You can purchase insurance for almost anything including… Marine insurance Space Flight insurance Disease insurance Dancers can insure their legs Pianists can insure their hands And so on…
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Government Insurance Programs
Unemployment Insurance Provides coverage if you lose your job
Workers’ Compensation Provides coverage if you are injured on the job
Medicare/Medicaid Provides health coverage for those who qualify
due to low income.
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Homeowner’s and Renter’s Insurance
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Renter’s Insurance
Necessary for persons who rent a home or apartment
Covers personal belongings up to a given amount (minus deductible)
Does not cover the cost of repairs to the home or apartment
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Homeowner’s Insurance
Protects your house and its contents against losses due to fire, theft, and accidents.
Generally does not cover floods or earthquakes.
Supplemental insurance policies are available for these and additional risks.
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Types of Automobile Insurance
Liability
Collision
Comprehensive
Uninsured Motorists
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Liability Insurance
Required in the state of Louisiana Covers damage or injuries for which you are
responsible. Includes injuries to any passengers in your vehicle. Also includes injuries to driver and/or passengers of
the other vehicles involved. Also covers property damage to the other vehicle DOES NOT cover injuries to you or damage to your
car.
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Collision Insurance
Not required if you own your car (no car note) Covers costs to repair your vehicle if
damaged in a collision. Also covers costs of damage to your vehicle
if the accident was caused by a driver without insurance.
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Comprehensive Insurance
Not required if you own your car (no car note) Covers your car for reasons other than a
collision, such as Theft Fire Vandalism Stupidity
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Uninsured Motorist Insurance
Optional Covers you against drivers who do not have
liability insurance.
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In Case of an accident…
1. Stay Calm Move your car to the side of the road if possible.
2. Check for Injuries
3. Call the police Have your driver’s license, registration, and proof of insurance available
when police arrive.
4. Get Information Exchange insurance information with the driver of the other vehicle.
5. Report the Accident Call your insurance company as soon as possible to file a claim.
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Buying Automobile Insurance
Shop Around Try to get prices from at least 3 different companies
Drive Carefully Most companies offer safe-driver discounts
Take Driver’s Education Most companies offer discounts for this too
Buy only what you need Don’t buy collision if you have a $1000 deductible and your car is only
worth $1500.
Consider a higher deductible Look for discounts
There are many additional discounts for which you may qualify.
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Health and Life Insurance
Major Medical
Term Life
Whole Life
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Health Insurance
Major Medical Hospital & Surgical expenses Doctor Visits Prescription Drugs Medical Tests/Diagnosis
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Out of Pocket Expenses
Premium The amount you pay the insurance company for
coverage Copay
The amount you pay for a doctor visit or prescription
Deductible The amount you pay toward your medical
expenses before the insurance company pays
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HMO
Health Maintenance organization Advantages
No deductibles Low out of pocket Many things covered 100%
Disadvantages Limited choice of doctors
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PPO
Preferred Provider Organization Advantages
Wider choice of doctors No deductibles
Disadvantages Higher premiums Higher copayments
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Standard Coverage
Advantages Lower Premiums Your choice of doctors
Disadvantages Higher out-of-pocket expenses
Higher Deductibles Insurance only pays a percentage of medical expenses
Percentages can vary 80/20 70/30 60/40
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Types of Health Plans
Group Offered through employer Lower premiums due to larger participation Employer sometimes pays a portion
Individual Not part of a group Premiums can be expensive Can be more customized Typically students, self-employed, retirees or
employees of very small companies
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Disability Coverage
Pays a percentage of your salary should you become unable to work for an extended period of time. Short-term Disability Insurance
Lower premium Pays for only a few months
Long-term Disability Insurance Higher premium Pays up to a lifetime of missed work
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Life Insurance
Provides money to loved ones in the event of your unfortunate death.
Can assist in the cost of burial arrangements.
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Term Life Insurance
Less costly Protects your dependents if you die No cash value Provides coverage for a set number of years Beneficiary receives an amount of money
known as the face value of the policy.
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Whole Life Insurance
Premiums are based on age, health, and policy type They may increase as you grow older
Generally higher premiums than term life Pays a set amount to beneficiary if you die. Also works as a savings account
You can borrow against the money you have actually invested
You can close the policy and collect any money invested upon retirement.
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Things to Consider
When should you buy life insurance? If you have someone who depends on you. Some companies offer low “lock-in” rates at an earlier age.
How much should you buy? Depends on how many dependents you have, your age
and their age Also depends on how much will be required to pay off your
debts if you die What are some important tips?
Shop around Talk to others who have shopped and purchased Read up!