Chapters 22-24Chapters 22-24

Insurance, Retirement, and Insurance, Retirement, and

Estate PlanningEstate Planning

Insurance Terms:Insurance Terms:

Insurance-protection against possible loss.Insurance-protection against possible loss. Policy-the contract for insurance.Policy-the contract for insurance. Premium-the amount or fee paid for Premium-the amount or fee paid for

coverage.coverage. Deductible-amount paid by you before Deductible-amount paid by you before

insurance will pay.insurance will pay. Risk-chance of loss or injury. Risk-chance of loss or injury. PerilPeril HazardHazard Negligence-carelessnessNegligence-carelessness

Risk-Management MethodsRisk-Management Methods

Risk AvoidanceRisk Avoidance Risk ReductionRisk Reduction Risk AssumptionRisk Assumption Risk ShiftingRisk Shifting

Planning an Insurance Planning an Insurance ProgramProgram

1.1. Set Insurance GoalsSet Insurance Goals

2.2. Develop a planDevelop a plan

3.3. Put plan into actionPut plan into action

4.4. Review ResultsReview Results

Types of Insurance Types of Insurance

AutoAuto HealthHealth HomeHome LifeLife

Homeowner’s InsuranceHomeowner’s InsuranceProperty and Liability Property and Liability

InsuranceInsurance

Property protects your own personal Property protects your own personal loss.loss.

Liability protects you from being Liability protects you from being sued and other people to be sued and other people to be compensated or fixed.compensated or fixed.– Legal responsibilityLegal responsibility

Home and Property Home and Property InsuranceInsurance

Personal PropertyPersonal Property– Take InventoryTake Inventory– FloaterFloater

LiabilityLiability– Medical payments coverageMedical payments coverage

Specialized coverageSpecialized coverage– FloodsFloods– EarthquakesEarthquakes

Renters InsuranceRenters Insurance

Covers only the contents of a home.Covers only the contents of a home.

How much do you need?How much do you need?

Actual cash valueActual cash value Replacement valueReplacement value

What is not covered?What is not covered?– Table pg. 747Table pg. 747

What factors determine What factors determine cost?cost?

Pg. 748-749Pg. 748-749– LocationLocation– StructureStructure– AmountAmount– DiscountsDiscounts– CompanyCompany

Auto InsuranceAuto Insurance

LiabilityLiability– Bodily Injury LiabilityBodily Injury Liability– Property Damage LiabilityProperty Damage Liability

Medical Payments CoverageMedical Payments Coverage Uninsured MotoristUninsured Motorist Underinsured MotoristUnderinsured Motorist CollisionCollision ComprehensiveComprehensive

Coverage Expressed in Coverage Expressed in ShorthandShorthand

Bodily injury per person/bodily injury Bodily injury per person/bodily injury per accident/property damage per accident/property damage liabilityliability

50/100/1050/100/10 100/300/50100/300/50 Expressed in thousandsExpressed in thousands

Motor Vehicle Bodily Motor Vehicle Bodily Injury CoverageInjury Coverage

Chapter

22

Home and Motor Vehicle Insurance

Section 3

Motor Vehicle Insurance

Auto Insurance Cont…Auto Insurance Cont…

What factors do insurance companies What factors do insurance companies look at to figure your premiums? Pg. look at to figure your premiums? Pg. 757757

Assigned Risk PlanAssigned Risk Plan No-fault insuranceNo-fault insurance

CoverageCoverage

How much coverage do you need?How much coverage do you need?– Pg. 756 & 758Pg. 756 & 758

Health InsuranceHealth Insurance To provide coverage for medical To provide coverage for medical

payments. payments. Group coverageGroup coverage

– HMOHMO Primary care physicianPrimary care physician

– PPOPPO DeductibleDeductible

– POSPOS Co-payCo-pay

Individual Plans (expensive)Individual Plans (expensive)

Health Insurance Cont…Health Insurance Cont…

Government Health CareGovernment Health Care– Medicare (over 65)Medicare (over 65)– Medicaid (low income)Medicaid (low income)

Life InsuranceLife Insurance

To provide income for anyone who To provide income for anyone who depends on it.depends on it.

BeneficiaryBeneficiary

Term Life-provides protection agiant Term Life-provides protection agiant loss for a specified term.loss for a specified term.

Whole Life-permanent policy, pay Whole Life-permanent policy, pay specified premium for the rest of your specified premium for the rest of your life.life.

Choosing an AgentChoosing an Agent

Employer-Sponsored Insurance Employer-Sponsored Insurance ProgramsPrograms

How do you chose an agent?How do you chose an agent? How do you file a claim? How do you file a claim?

Planning for RetirementPlanning for Retirement

Setting Long-Range GoalsSetting Long-Range Goals Conducting a Financial AnalysisConducting a Financial Analysis Reviewing AssetsReviewing Assets

Think About:Think About:

Living ExpensesLiving Expenses Standard of LivingsStandard of Livings HousingHousing

– Assisted LivingAssisted Living

PlansPlans

Public PensionPublic Pension– Social Security (disability, survivor, & Social Security (disability, survivor, &

retirement) retirement) Employer Retirement PlanEmployer Retirement Plan

– Pension (401K)Pension (401K)– Most employers match contributionMost employers match contribution

ERISA-states your own contributions ERISA-states your own contributions are vested immediatelyare vested immediately– Your employers portions takes a certain Your employers portions takes a certain

number of years to be vested between 3 number of years to be vested between 3 to 10 to 10

Personal Retirement PlansPersonal Retirement Plans

Individual Retirement Accounts (IRA)Individual Retirement Accounts (IRA)– Traditional-taken out Traditional-taken out beforebefore taxes; taxes;

therefore taxed when taken outtherefore taxed when taken out– Roth-taken out Roth-taken out afterafter taxes; therefore taxes; therefore

NOT taxed when withdrawnNOT taxed when withdrawn Keogh plan-for self-employed Keogh plan-for self-employed

individualsindividuals AnnuityAnnuity

Estate Planning Terms:Estate Planning Terms:

WillWill TestateTestate HeirHeir

Changes to a Will:Changes to a Will:

CodicilCodicil– Must be signed and witnesses alsoMust be signed and witnesses also

Automatic ChangesAutomatic Changes– DivorceDivorce– MarriageMarriage– Birth or adoption of a childBirth or adoption of a child

State StatuesState Statues

Spouse is entitled to 1/3 to 1/2 of the Spouse is entitled to 1/3 to 1/2 of the estateestate

The will must state if a child is The will must state if a child is intentionally left out.intentionally left out.

Dying without a willDying without a will

IntestateIntestate StatutesStatutes

More expensive because court has to More expensive because court has to appoint someone to execute your appoint someone to execute your wishes. wishes. – AdministratorAdministrator– AdministratrixAdministratrix

Settling an EstateSettling an Estate

You appoint a/an:You appoint a/an:– Executor (male)Executor (male)– Executrix (female)Executrix (female)

It is cheaper to die with a will.It is cheaper to die with a will.

Estate PlanningEstate Planning

EstateEstate Probate CourtProbate Court Living WillLiving Will Power of AttorneyPower of Attorney