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Insurance

Insurance. It’s all about RISK!. http://www.youtube.com/watch?v=aw9hQNdXYbI. Spreading the Risk. Risk Chance of loss Insurance Spreading individual risk amongst a large group of people to make losses more affordable for all Types Life Health Home Owners Renters Car Disability

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Insurance

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  1. Insurance It’s all about RISK!

  2. http://www.youtube.com/watch?v=aw9hQNdXYbI

  3. Spreading the Risk • Risk • Chance of loss • Insurance • Spreading individual risk amongst a large group of people to make losses more affordable for all • Types • Life • Health • Home Owners • Renters • Car • Disability • And many more…

  4. Insurable risks • Property Risks • Loss or harm to property • Examples: home owners, renters, car • Liability Risks • Loss or harm to other people and their property • Examples: car, malpractice • Personal Risks • Loss involving income and standard of living • Examples: life, health, disability

  5. Vocabulary • Insurer • Collects regular payments in exchange for paying for the cost of potential future losses • Policy • Written insurance contract • Premium • Fee the policyholder pays • Claims Adjustor/Insurance Adjustor • Employee of the insurance company that determines value of property destroyed • Deductible • Amount of money you have to pay before the insurance company will pay remaining costs

  6. Example • Without “Textbook Insurance” • 1 textbook=$40 • You lose it or damage it=You pay $40 • With “Textbook Insurance” • 1 textbook=$40 • On average 1 out of 10 books are lost or damaged • All students pay $5 for “Textbook Insurance” • You lose it or damage it=You don’t have to pay • What would happen to your rate in the future if you lost or damaged your textbook this term? • What would happen to your rate in the future if students became more careless and 3 out of 10 books were lost or damaged in a term?

  7. Property Insurance • Renters Insurance • Protects your property in the rental unit • Homeowner’s Insurance • Protects the home structure, property within the home, and the surrounding land

  8. Property Insurance • Car Insurance • Covers damage to vehicles and passengers • States require minimum car insurance • Premiums are based on the following… • Model, style, age of car • The driver (age, gender, marital status, record) • Location • Distances driven • Purpose of driving

  9. Property Insurance • Car Insurance • Liability: injury to other person (bodily or property) ***your fault*** • Expressed as a series of numbers • Example: 25/50/10 (They’ll pay $25,000 for injury to one person, $50,000 for all total people, and $10,000 for property damage.) • Collision: injury to your car ***your fault*** • Deductible • Comprehensive: damage to your car other than collision • Example: fire, theft, tornado, hail, water, vandalism • Personal Injury Protection (PIP): bodily injury to anyone involved ***regardless of fault*** • Medical, funeral costs • Underinsured & Uninsured Motorist Coverage: injuries when other driver is at fault but unable to pay

  10. Rates for 2009 Mustang

  11. Rates for 1999 Honda Accord

  12. Personal Risks • Health Insurance • Protects against loss due to ill health • Some may cover dental and vision • Basic Health: covers office visits, routine services, generic prescriptions • Major/Medical: covers serious injury/illness • Usually has “co-insurance” (injured must pay a % of bill) • Group health insurance: issued to a group of people, typically through employment • All have same coverage and pay set premium • Individual health insurance: issued to an individual • May require a physical exam • Much more expensive

  13. Personal Risks • Life Insurance • Provides funds to beneficiaries when insured dies • Pays for… • Final expenses • Debts • Money for children (education) • How much you pay is based on RISK! • Term Life Policy: • Remains in effect for a specified period of time • Only has value if insured dies during that time • Much less expensive • Whole Life Policy: • Covered through entire life • Has cash value (you could potentially borrow this money)

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