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© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona G1 Risk Risk is the uncertainty about a situation’s outcome This can be unpredictable events which lead to loss or damage
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© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.G1
Types of Insurance Auto Health Life Disability
• Homeowner’s/Renters
http://www.lifehappens.org/insurance-101-in-a-flash/
© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.G1
Risk, Responsibility, Reality This video clip gives an overview of
insurance policies Risk, Responsibility, Reality Video
Clip http://www.theiei.org/edu/materials/rr
r/classroom.wmv
© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.G1
Risk
Risk is the uncertainty about a situation’s outcome This can be unpredictable events
which lead to loss or damage
Exposure Risk Potential Loss
Accident or Illness
PropertyOwnership
Liability
Loss of income from inability to work; uninsured medical bills; death
Your property is damaged, destroyed, lost, or stolen
You are found liable for injuries to other people or damages to their property
UNLIMITED
UNLIMITED
Amount needed to replace your property
Common Exposures to Loss
6-A
© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.G1
Avoid it
Share it
Alternatives for Managing the Possibility of Loss
Accept it6-B
Reduce it
Share it
© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.G1
Insurance Terminology
Insurance is an arrangement between an individual (consumer) and an insurer (insurance company) to protect the individual against risk
A policy is a contract between the individual and the insurer specifying the terms of the insurance arrangements
© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.G1
Insurance Terminology
A policyholder is a consumer who purchases the policy
A premium is a fee paid to the insurer to be covered under specified terms
A deductible is the amount paid out of pocket by the policy holder for the initial portion of a loss before the insurance coverage begins
© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.G1
Types of Insurance
Types of insurance can include: Automobile Health Life Disability Homeowners/Renters
© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.G1
Automobile Insurance
Automobile Insurance is an arrangement between an individual (consumer) and insurer (insurance company) to protect the individual against risk from automobile accidents
? AVOIDNIGHT
DRIVING
ALWAYSWEAR
SEATBELTS??
?
? OBEYSPEEDLIMITS
MA
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GIN
G L
OS
S FRO
M IN
JUR
Y
INJURYIN ACAR
ACCIDENT
6-C
© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.G1
Automobile Insurance Types There are four types of coverage
for Automobile Insurance: Liability insurance Medical payment insurance Uninsured or underinsured motorists
insurance Physical damage insurance
Collision Comprehensive
© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.G1
Liability Insurance
Liability Insurance covers the insured if injuries or damages are caused to other people or their property. It is the minimum amount of
insurance required by law for automobiles
© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.G1
Medical Payment insurance 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 or if injured as a pedestrian
© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.G1
Uninsured motorists insurance Uninsured or Underinsured
Motorists Insurance covers injury or damage to the driver, passengers, or the vehicle caused by a driver with insufficient insurance
© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.G1
Physical damage 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
© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.G1
Auto Insurance Coverage Suggested Minimums
Coverage Type Suggested Minimum Coverage
Liability
Medical Payments
Uninsured / Underinsured
Motorist
$100,000 per person $300,000 per accident
$100,000 per person $300,000 per accident
$10,000 per person
6-G
© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.G1
Factors Affecting Automobile Insurance Costs
Your age
Make of car
Marital status
Do you take the car to work?
If you’re a good student
GenderWhere you live
How much you use the
car
Credit ratingDriver’s education
Driving recordType of car
6-F
© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.G1 How to Save Money on Insurance Shop at least three places; compare
rates and policies; ask about discounts and special rates.
Read sources of information such as Consumer Reports®.
Purchase more than one type of insurance from the same company; insure all cars with the same company.
6-J-1
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© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.G1 How to Save Money on Insurance Choose the right car. Don’t smoke. Select a higher deductible. Carefully consider before adding
riders or floaters. Have a good driving record & good
grades (“B” or better).
6-J-2
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© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.G1 How to Save Money on Insurance Ask about discounts. Eliminate collision and
comprehensive coverage if car is older.
Reduce your daily driving. Drive defensively. Avoid theft and vandalism. Avoid filing excessive claims. Keep tabs on credit.6-J-3
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© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.G1
Health Insurance In 2005 there were nearly 47 million
Americans or 16 percent of the population without health insurance (http://www.nchc.org/facts/coverage.shtml )
Health insurance provides protection against financial losses resulting from injury, illness, and disability Health insurance may cover hospital,
surgical, dental, vision, long-term care, prescription, or other major expenditures
Health insurance may be purchased by the individual or through their employer
© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.G1
Life Insurance Life insurance is a contract
between an insurer and policyholder specifying a sum to be paid to a beneficiary upon the insured’s death
The contract is a policy which states the amount to be paid to the beneficiary upon the insured person’s death
© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.G1
Life Insurance A beneficiary is the recipient of
any policy proceeds if the insured person dies
A dependent is a person who relies on someone else financially
© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.G1
Disability Insurance Disability Insurance replaces a
portion of one’s income if they become unable to work due to illness or injury
© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.G1
Homeowner’s/Renter’s Insurance Homeowner’s Insurance
combines property and liability insurance into one policy to protect a home from damage costs due to perils.
A peril is an event which can cause a financial loss like fire, falling trees, lightning and others
© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.G1
Property Insurance 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
Homeowner’s insurance should cover the replacement cost which will pay to rebuild the home if it is completely destroyed
© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.G1
Renter’s Insurance Renter’s Insurance protects the
insured from loss of the contents of the dwelling rather than the dwelling itself
Renter’s insurance may be provided by a parent or guardian while an individual is still a full time student or under the age of 18 However, each policy is different and
should be inspected by the policy holder
© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.G1
What Covers This Risk? You apartment is broken into and
your computer is stolen
Renters!
© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.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 – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.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 – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.G1
What Covers This Risk? You hit and injure a pedestrian in a
crosswalk
Automobile!
© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.G1
What Covers This Risk? After losing her husband to a heart
attack, the wife is left alone to care for 2 children
Life!
© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.G1
What Covers This Risk? You need a cast after breaking an
ankle while roller-blading
Health!
© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.G1
What Covers This Risk? Sick at home from food
poisoning after eating a carnival corndog
Nothing!
© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.G1
What Covers This Risk? You have brake failure. You hit a
telephone pole and cause damage to the front of the car
AUTOMOBILE
© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.G1
What Covers This Risk? You get pulled over and receive a
speeding ticket on your way to the mall
Nothing!
© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.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 – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.G1
What Covers This Risk? A doctor diagnoses a child with
tonsillitis during a visit to a clinic
Health!
© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the
University of Arizona
1.10.1.G1
Conclusion Review the following terms and
concepts: Risk Insurance Policy Policyholder Premium Deductible Types of Insurance