Insurance 101

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Insurance 101

• Personal Finance

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Learning Goal

• To be able to define terms relating to insurance.

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What is Insurance?

• Insurance an arrangement between an individual
  and an insurance company to protect the
  individual from risk.
• We buy insurance to help limit the financial
  losses when accidents occur.

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Insurance Policy

• Policy a contract between the individual and
  the insurer specifying the terms of the insurance
  arrangement.
• Premium the fee paid to the insurer to
  guarantee coverage.
• Deductible the amount paid out of pocket by the
  policy holder for the initial portion of a loss
  before the insurance coverage begins.

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Example

• You pay money to have car insurance (Premium)
• When you get into an accident that is your fault,
  you must pay a certain amount before the
  insurance company picks up the rest (Deductible)
• The higher the deductible, the lower the premium

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Automobile Insurance

• Different types
• Liability (Required by law)
• Pays for bodily injury to other people, damage to
  property, court fees
• Medical Payments
• Pays for hospital bills for you and anyone riding
  in your car
• Uninsured Motorist
• Helps pay bills if hit by someone without
  insurance
• Collision / Comprehensive
• Pays to repair your car if it was your fault or
  no other car was involved. Comprehensive is for
  non-driving risks such as hail, theft, flood,
  vandalism, etc.

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Learning Goal

• To be able to define terms relating to insurance.

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Insurance 101

• Personal Finance

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Learning Goal

• To be able to identify and explain the importance
  of the 5 necessary types of insurance.

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Types of Insurance

• Automobile
• Health
• Life
• Disability
• Homeowners / Renters

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Health Insurance

• Covers medical costs if you are injured or become
  ill
• Each policy is different
• Most people receive health insurance from their
  employer
• Children are covered up to the age of 19 unless
  they are attending college full time (23)

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Life Insurance

• Pays people who are dependent on someone else if
  that person dies
• Usually offered from an employer, but can (and
  should) purchase independently.
• Life insurance is usually very low in price
  compared to the coverage you receive

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Life Insurance Types

• Term
• Coverage for a specific period of time
• MUCH cheaper than Cash Value
• Cash Value (Whole, Universal)
• Coverage for life
• Includes a savings plan
• MUCH more expensive than term
• ALWAYS GO FOR TERM LIFE!!!!!!

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Disability Insurance

• Will pay a percentage of your income from a job
  if you are sick or unable to work for long
  periods of time
• Usually will pay between 60 and 70
• Also is a common insurance offered by an employer

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Homeowners / Renters

• Protects your home and possessions within the
  home from damage
• Includes Fire, Storm, etc.
• Natural Disasters require a special insurance
• Also covers liability if someone else is injured
  on your property and they sue

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Learning Goal

• To be able to identify and explain the importance
  of the 5 necessary types of insurance.