Introductory Finance: Insurance (4.03)

Insurance

Draw

How are you feeling today? How was your weekend?

Lesson Objectives

1. Explain why insurance is purchased, who the various policy types protect, and how they reduce risk.

2. Develop an estimated value of the contents of your first apartment, determine how much renters insurance would cost, and explain why you ought to purchase this insurance.

3. Develop long-term costs of various types of life insurance policies, and determine when someone needs life insurance and which type of policy they should purchase.

4. Research articles on the Internet about extended warranties and develop comparison lists of why you should or should not purchase these products.

Word Cloud

Name everything you know about insurance (including types, why to have it, what it covers, etc)

What is insurance?

When you purchase a ticket to a movie, you are entering into a legal contract. For the price of admission, you are given a ticket that allows you to view the movie. Insurance is the same idea.  For the premium paid for the policy, the insurance company agrees to protect you, within stated amounts, from the potential losses listed in the policy. Both the movie ticket and the insurance involve an agreement between two parties.

Just about anything can be insured. Ball players will insure against injuries that could prevent them from playing. Developers purchase insurance to cover losses incurred during construction. Individuals can protect themselves from the losses that result from accidents, fire theft, illness or death. The insurance company, within the limits in the policy, will compensate losses with the understanding that the policy holder may be responsible for deductibles or co-payments.

Auto insurance is a legal contract between you and an insurance company to provide financial protection against damage, loss or theft of your automobile. Auto insurance will also cover medical expenses for those injured in a car accident up to a certain amount.

​

Auto insurance

• Can protect against theft, damage to the car, damage to property

• Helps to pay medical bills

• Not required in all 50 states

• Liability IS required in all 50 states

• The younger you are, the more expensive it costs

auto insurance cont...

Compare rates from various companies.
As a minor, you can possible go on your parents' insurance.
Insurance companies will look at your record, so take time to look at theirs!

​

HOw do i choose auto insurance?

home owners insurance

Your credit rating, your claims history (the fewer claims, the lower your insurance rate), safety features of your home (smoke detectors, fire alarm, sprinkler system), and your location are all key factors in determining your premium.

What factors determine your premium?

Homeowner’s insurance protects your home in case of fire, theft, or if any other type of damage occurs.

​What is it?

Categorize

Options (11)

Theft

Fire

Vandalism

Burglary

Accidental damage

Water damage

Wear and tear

Home neglect

Floods

Earthquakes

Home Businesses3.

Determine whether homeowners insurance would cover the event or not.

Covered

Not covered

Although floods are a natural disaster, they are only covered by your homeowners insurance if you pay an ADDITIONAL premium. This cost goes up significantly if you're in a "flood zone."

Floods

Earthquake insurance is also a separate, EXPENSIVE premium. Unless on a fault, most people don't purchase this insurance. Since WE all live on a fault, I would recommend being insured.

Earthquake

Working full-time? Employer
Student? Parents
Unemployed/Not a student? Medicare/Obamacare
Business owner? Purchase your own

​How do you get it?

• Fee-for-service

• High-deductible

• HMOs

• PPOs

Types

Health Insurance

•  No Referrals

• Pays a percentage of “reasonable and customary charges”

• Out-of-pocket maximum

• Lifetime limit

Fee-for service

• Lower monthly premiums

• Annual deductible must be met before benefits are paid

• Health Savings Account

High-deductible

• Control cost, amount, location, and types of treatment

• Participating Providers

•  Co-Payment

• Primary Care Physician

• Hospital admission must be pre-approved by HMO

• Non-participating provider = no payment from HMO

​​Hmo

• Combines managed care with a fee-for-service arrangement

• Co-Payments

• Use providers not on plan

• Lifetime limit

PPO

Match

Match the following health insurance options

• No referrals, lifetime limit, pays % of charges
• Lower monthly premiums, must meet annual deductible before benefits gets paid

• Control cost, amount, location, type of treatment

• Combines managed care with fee-for-service

Fee for service

High deductible health plan

HMO

PPO

• Fee for service
• High deductible health plan

• HMO

• PPO

Flood damage
Losses beyond what's listed in policy
Jewelry
Losses beyond perils

What's not?

Personal property
Liability
Living expenses (eg. hotel)

What's covered?

Renters insurance

Multiple Select

As a junior or senior in high school, which two insurance programs mostly relate to your needs?

• Renters

• Homeowners

• Health

• Auto

Multiple Choice

True or False: Insurance isn't something I'll need until I'm 18.

• False
• True

Multiple Choice

What is not a factor of determining your auto insurance premium?

• credit rating

• safety features

• location of where you live and work

• none of the above

Multiple Choice

Which type of health insurance policy do you have if your insurance company does not pay anything until you have reached your deductible?

• Fee-for-service

• High-deductible

• HMO

• PPO

Multiple Choice

Your best friend just purchased a new house and is planning to buy a homeowner’s insurance policy. Based on what you learned in this section, which of the following does a typical policy not cover?

• liability

• flood

• personal liability

• dwelling

Multiple Choice

When preparing an estimated value of contents list for your renter’s insurance, which of the following would you include on that list?

• TV

• Computer

• Stereo

• All of the above

Multiple Choice

You are 18 years old single, and still live at home.

What type of life insurance policy should you purchase?

• Term life

• Universal life

• Variable life

• None of the above