Why is insurance important to Have?

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Insurance

• Why is insurance important to Have?
• What factors Impact the cost of insurance?
• (Risk, peril, Risk management, insurance,
  premium, deductible, policy , claim, loss,
  beneficiary, coverage, Types of insurance (auto,
• Home, life, health, renters) liability,
  comprehensive, collision, uninsured, law of large
  numbers)

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Overview of Insurance
Risk The probability that injury, damage, or
loss will occur. Peril Event which can cause
financial loss (fire, falling trees, lightning
and others)
Risk Management 1. Avoid Risk Avoid situations
that involve risk 2. Reduce Risk Lessen
frequency or severity of losses Wear seat belts,
dont drive fast 3. Assume/Accept Risk Pay for
losses personally requires large savings 4.
Transfer/Share Risk Purchase insurance for
possible losses
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Insurance Basics

• Insurance A way to guarantee your financial
  protection against various risks
• Insurance Policy Contract detailing premium,
  deductible, and coverage limits in the event of a
  loss.
• Policy Holder A consumer who purchases the
  policy
• Beneficiary A person eligible to receive
  benefits under an insurance policy

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Key Terms

• Loss an accident or illness which causes a
  financial setback.
• - Must provide proof of loss
• Proof of Loss When making a claim you must prove
  loss.
• - Photograph or videotape each room
• - Keep documentation in a place other than
  your home
• Claim A notice of a loss to the insurance
  company
• - When you have a car accident, you file a claim
  to collect
• Coverage Limit The max. amt an insurance company
  will cover

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Cost of Insurance
Premium Fee paid to be covered under specified
terms Deductible The portion of the loss you
pay before insurance company pays remaining
cost Law of Large Numbers Insurance companies
protect themselves against financial loss by
spreading the risk of costly claims among many
customers over many years
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Types of Insurance

• Property Provides protection against most risks
  to property, such as fire, theft and some
  weather damage
• Liability Provides protection from claims
  arising from injuries or damage to other people
  or property.
• Auto protects against loss in event of an
  incident involving a vehicle they own. Covering
  property, liability, and medical.
• Health Form of protection that eases the
  financial burden people
• may experience as a result of
  illness or injury.

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Types of Insurance

• Life provides a monetary benefit to a decedent's
  family or other designated beneficiary in lump
  sum or annuity (regular payments)
• Disability Provides regular income when an
  employee is unable to work due to pregnancy, a
  non-work-related accident or an illness.
• Homeowners combines property and liability
  insurance to protect home. (Typically covers
  Burglary, fire, wind, smoke, water, vandalism)
• Renters protects insured from loss of the
  contents of the dwelling rather than the dwelling
  itself

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Automobile Insurance

• Teen crash rates drop 40 6 months after getting
  license
• 70 chance of an individual getting in an
  accident in first 3 years of driving-
  (Insurance Education Foundation)

Automobile Insurance Arrangement between
individual and insurer to protect against risk
from auto accidents
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Factors of Insurance Rates

• Age (Younger expensive)
• Gender Males under 25
• Good student discount
• Multiple car/drivers policies
• Cost of repairs

• Vehicle Use/mileage
• Place of Residence/cities
• Marital status
• Type/Age of car (theft)
• Driving Record
• Long-time customers
• Credit Score

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Types of Auto Insurance(ALL MO DRIVERS MUST HAVE)

• Liability Coverage Pays for bodily injury to
  other people damage to property when you are
  responsible (legal min.)
• Bodily injury driver is held legally responsible
  for injuries suffered by another
• Property damage driver is held responsible for
  damage done to others property
• Policy limits for liability are usually quoted
  with three figures such as 25/50/10 (thousands)
• 25 25,000--Per-person bodily injury limit
• 50 50,000--Per-accident bodily injury limit
• 10 10,000--Per-accident property damage
  liability limit

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2. Medical Payment insurance

• Medical Payment Insurance covers injuries to the
  driver of the insured vehicle or any passenger
  regardless of fault

3. Uninsured/Underinsured motorist
Uninsured or Underinsured Motorists Insurance
covers injury or damage to the driver,
passengers, (or the vehicle) caused by a driver
with insufficient insurance or hit-and-run
In many states including MO uninsured only cover
medical related injuries, not property damage
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4. Physical damage insurance (damages to vehicle)

• A. Collision covers collision w/ object, car,
  or rollover
• (Drop Collision? Is deductible higher than car
  value?)
• B. Comprehensive physical damage losses except
  collision
• Theft, vandalism, fire, ice, windstorm, or hail
• Glass breakage, contact with animal

Optional Protection

• Towing Coverage
• Rental Reimbursement

There is NO grace period. If you do not pay your
premium before the due date you have no insurance.
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What do I do if I get into an accident?

1. Make sure that everyone in your car is not hurt
2. Check the other car to see if they are OK
3. Call the police
4. Get the following information from the other
   driver name, address, telephone number, license
   plate number, drivers license number, insurance
   information.
5. Give the same information to the other driver.
6. Get the name and phone number of any witnesses
7. Keep a disposable camera in your car and take
   accident pictures
8. Call your insurance agent as soon as possible

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What is Health Insurance?
Health Insurance The Basics
(Form of protection that eases the financial
burden people may experience as a result of
illness or injury.)

• Things you should know about Health Insurance
• Insurance costs a lot, not having it costs more
• If your employer offers insurance, get it
• Youll pay more for freedom
• Health insurance plans include premiums,
  deductibles, and co-pays
• Co-payment is the portion of a claim that must
  be paid out-of-pocket. (Usually 5,10, or 15
  for each visit.)
• 46 million Americans do not have health insurance
• Young healthy ppl. often feel they dont need
  health insurance

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Health Insurance The Basics
Health Insurance
Law of Large Numbers Health insurance companies
protect themselves against financial loss by
spreading the risk of costly claims among many
customers over many years Pre-existing
Conditions The more likely that people need
health insurance, the more likely they are to
seek it. An insurer may refuse to cover
treatment if the condition existed prior to
enrolling in a health insurance plan
Fee for service vs. Managed Care Pay
deductible 1st Use Dr.s in network to limit
costs Then pay coinsurance (20) Pay co-pay per
visit Pay for each service May/may not have
deductible Use any Dr. you find Preventative
care included File claims Dont have to file
claims
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Type of Health Insurance (Government Provided)

• Medical assistance for eligible individuals/
  families w/ low incomes disabilities
• Nations largest health insurance program (39
  million Americans)
• Largest group covered by Medicare is people over
  the age 65

Medicare Medicaid
Who is eligible All ppl. 65 older. Younger based on disability Income based, all ages eligible Disabled, orphaned
Premium 50 / month Many have 0, some pay spend down amt.
Paid by Federal Government State Government
Co-payment yes Not usually
MEDICARE TYPES MEDICARE TYPES MEDICARE TYPES
PART A PART B
What it covers Covers of hospital bills Non-hospital expenses
What it costs Free if you have paid into Medicare for 10 years Small premium, deductible, co-pay
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Type of Health Insurance (Managed Care)
Managed Care (HMO PPO) Provide health care
services at a lower cost through network.
Members agree to certain restrictions which help
lower the cost
Health Maintenance Organization (HMO) Healthcare
network of doctors that provide comprehensive
healthcare to a group for a flat monthly rate

• Preferred Provider Organization (PPO) Healthcare
  network of doctors that provide comprehensive
  healthcare to a group
• Combine features of HMOs and fee-for-service plans

COBRA If an employee loses their job they are
covered for a set period of time. (18 months)
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Individual Plans People who are self-employed, or
whose company does not offer health insurance as
a benefit, can buy health insurance directly from
an insurance company
Health Insurance The Basics

• Advantages
• Personalized/customized policy
• Discounts for healthier people

• Disadvantages
• Can be denied coverage
• W/ pre-existing conditions,
• it will be very expensive to cover

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Life Insurance
Provides a monetary benefit to a decedent's
family or other designated beneficiary in lump
sum or annuity (regular payments)

• Pay off mortgage or debts
• Accumulate savings
• Establish a regular income for survivors/children

Term Life or Whole Life?
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Types of Life Insurance

• Term Life insurance
• Provides protection against loss of life for only
  a specified term or period of time.
• Could be for 1,5,10, or 20 years
• If you stop paying your coverage stops.

• Renewable Term insurance
• Coverage ends, renewable w/ higher premiums
• Conversion Term
• Allows you to change from term to permanent
  coverage. w/ higher premiums.

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Whole life insurance

• Is a permanent policy for which you pay a
  specified premium each year for the rest of your
  life. The insurance company pays a set amount
  after you die.
• Limited Policy pay for set number of years, the
  insurance stays until death
• Variable life premiums are placed in stocks and
  are paid an amount depending on how market does.
• Universal life part of premium is put into an
  account and you can borrow against it.

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Disability Insurance
Provides regular income when an employee is
unable to work due to pregnancy, a
non-work-related accident or an illness.

• Single greatest asset is potential earning power
• Pays income if policy holder gets sick and cant
  work
• Limited to 2/3 gross income. Why?

Workers Compensation If your disability is a
result of an accident or illness on the job.
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Homeowners Insurance The Basics

• Legal contract to protect the insured, their
  home, and belongings if
• they are damaged or destroyed (May also cover
  garages, sheds, pools)
• Protection is provided against losses caused by
  fire, water damage, storm,
• theft, and other perils
• Homeowners Insurance is comprised of property
  liability insurance

Apartment
Mobile Home
House
Condominium
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Homeowners Insurance The Basics

• Items that are excluded or limited on a
  Homeowners Policy
• Boats
• ATVs
• Jewelry
• Art
• Insurer can opt to purchase coverage on unique
  items
• Certain natural disasters in areas prone to them
  are also excluded from standard coverage

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Renters Insurance

• Protects individuals who live in a house, mobile
  home, condominium, or apartment that is owned by
  another person
• Protects against
• Theft
• Loss of personal property

If youre headed to college

• If youre living in a dorm, check your parents
  policy. Most homeowners policies will cover
  items away from the home, up to a certain dollar
  amount.

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This is what your policy covers

• Personal Items your stuff at home is covered
  in case of fire or theft. Estimate and itemize
  the dollar value of the things you own, once a
  year. Put that information in a safe place away
  from your home, like at your parents house or in
  a safety deposit box in a bank.
• Unintentional damage Fire from cooking
• Liability Fall on ice
• Additional living expenses (hotel)
• Check the limits on your policy.

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• Small Claims Can Hurt
• The severity of a claim does not matter to some
  insurance companies, simply the number of claims.
  
• Most insurance companies will look at your claims
  record for the previous 5 years.
• Many companies will not insure those who have had
  2-3 claims in 3 years, no matter the amount of
  these claims.

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Ways to Reduce your Premium

• Raise your deductible
• Buying homeowners and automobile insurance from
  the same company
• Fire resistant structures, sprinkler systems, or
  smoke detectors
• 55 years of age, or older and retired
• Original owner
• New home
• Non-smoker
• Security system