Insurance
Ways to deal with personal and
financial risk…
But first…
A quick quiz to see how much
you already know!
True or False?
Automobile accidents are the most common
cause of death among teenagers
TRUE!
Because they are more likely than other groups to
be in automobile accidents, teenagers pay a
higher rate for automobile insurance.
True or False?
Smokers pay the same amount for life
insurance as non-smokers
FALSE!
Smokers typically pay more over the course of
their lifetimes for life insurance because their
chance of dying before nonsmokers is
statistically greater.
True or False?
On average, women live longer than
men
TRUE!
Women live about seven years longer than men.
That’s why life insurance rates for women are
often lower than for men.
True or False?
Students who have health care coverage
through their parents risk losing it when
they leave high school or college
FALSE!
As part of the new Healthcare Reform bill, you can
remain on your parents’ health insurance until
age 26 (whether or not you are still attending
school).
True or False?
On average each American family
spends $5000 a year on health care
FALSE!
In 2009, the average yearly cost of health
care for a family was $15,000 (including
insurance premiums, co-pays, etc.)
True or False?
Only people born with disabilities need
disability insurance
FALSE!
The main purpose of disability insurance is to
replace lost income. It can help any person who
is unexpectedly injured or sick and unable to go
to work.
Did You Know?



The average renter has more than
$20,000 worth of stuff. (State Farm)
The average cost per emergency room
visit is $560. (National Safety Council)
The average cost of a disabling auto
injury is $49,700. (Agency for Healthcare Research and Quality)
So….
How can you deal with all this
potential personal and financial loss?
The answer is… RISK MANAGEMENT!
RISK MANAGEMENT
You have FOUR options when dealing with potential
personal or financial loss…
#1. Avoid the Risk

If you’re worried about being injured in a plane crash, you could
take the train instead.
#2. Reduce the Risk

To reduce the risk of being hurt in a car accident, you could
wear a seatbelt, avoid doing distracting things while driving,
choose a car with airbags, etc.
#3. Accept the Risk

Instead of buying an extended warranty for your cell phone, you
could take the chance of having to replace it yourself if
something happens..
#4 - RISK POOLING!

Your chance of risk is “pooled” (grouped together) with
other people with the same type of risk.
This is what insurance is all about!

In exchange for monthly payments, an insurance
company promises to “cover” (pay for) a large portion of
the expense should a personal or financial disaster
occur.
TEACHERS…show that video clip now! 
Common Insurance Terms
Liability: Bodily injury or property damage
you have caused another
Claim: Demand by an individual to recover
losses covered by insurance
Premium: Payment to the insurance
company for coverage
Deductible: Amount the insured must pay
before the insurance company pays
Higher Deductible = Lower Premium
Example: You have a $1000 car insurance DEDUCTIBLE
and unfortunately just got into a car accident…(oops!)
You will have to pay $1000 BEFORE the insurance
company covers the rest. If the damage is less than
$1000, the insurance company will not cover any of the
damage.
The benefit of this is that your MONTHLY PREMUIM will
be LOWER (since the insurance company will ultimately
spend less money on your claims)
Lower Deductible = Higher Premium
Example: You have a LOWER DEDUCTIBLE ($100) and
get into that same car accident…
You will only have to pay $100 before the insurance
company covers the rest of the damage. This also
means that they will cover much smaller amounts of
damage (scratches, small dents) assuming the damage
costs over $100 to repair.
However, if you have a lower deductible, then the
insurance company will increase your MONTHLY
PREMIUM to compensate for the increased
cost/frequency of your claims.
Life Insurance
“It is not for the person who dies, it is for the ones who are left”

Life Insurance protects a family’s way of life
-

Spouses
Dependents
Cost of the funeral
How much should you get?
-
Enough to replace income
Pay for time off of work for loved ones
Other
-
College for the kids?
Pay off the house?
Medical/Health Insurance

Helps cover the costs associated with medical
care (doctor visits, prescriptions, etc)
-
May be partially covered by employer
-
Individual policies are available (but are more expensive)
-
Students can be covered by parents’ policy up to age 26.
-
Amounts and types of coverage vary by plan, read the fine
print before choosing!
Disability Insurance

Insures your earning power (loss of income
because of illness or accident)
-
Usually ½ to 2/3 of your salary
-
Often covered by employer
-
-
if accident happens at work site
Can be purchased individually
-
for accidents that happen on personal time
Homeowners/Renters Insurance
Homeowners:
- Covers the buildings, garage, property, contents
- May require additional “riders” for damages
caused by floods, earthquakes, etc. or for “one
of a kind” items like jewelry or art collections.
How to reduce risks:
- Develop good security habits (ex: lock doors)
- Reduce water damage (ex: check pipes)
- Reduce Fire Risks (ex: maintain fire alarms)
Renter’s Insurance
- Renters do not own the building, so insurance covers
your belongings and liability
-
-
Take inventory of your belongings! (photograph or videotape)
Keep receipts for major items
Keep documentation in a place other than your home
Does not cover
-
Structural damage caused by carelessness (such as damage by
animal)
Usually less than $15/month!!!
Auto Insurance
Why do I need it?

It’s the law!

What happens if…





You’re involved in a crash that causes property
damage?
You hurt yourself or someone else?
Your car is damaged when you’re not driving it? (by
weather, vandalism or a hit & run)
Your car is stolen?
Your car breaks down and needs to be towed?
Types of Auto Insurance Coverage
-
-
-
-
-
Collision:
- Covers damage to car resulting from collision to another car,
object or rollover
Comprehensive:
- This covers loss or damage that doesn't involve a collision.
(including theft, vandalism, natural disasters))
Property Damage Liability:
- Damage to another person’s property caused when you’re
driving
Bodily Injury Liability:
- This will cover the injuries that you cause in an accident
Uninsured Motorist Coverage:
- Just like it sounds. Covers you (and your car) if the person who
hit you doesn't have insurance.
Personal Injury Protection:
- This will pay to treat the injuries and provide for the lost wages
of you and your passengers if in an accident.
What affects the cost of car
insurance premiums?
# of Accidents/Tickets
Kinds of Accidents/Tickets
Type of Car
Color of Car
Age of Driver
Sex of Driver
Credit History
Anti-Theft Systems
Safety Features (airbags)
Grades (Good Student Discount)
Married vs. Single
Drivers Ed
-
-
Now…
-
-
Turn to the student next to you
Tell them 3 facts about insurance that you
didn’t know before today!
How can you use this information in the
future?