7.10.1.g1 types of insurance essentials the essentials to take charge of your finances

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7.10.1. G1 Types of Insurance Essentials The Essentials to Take Charge of Your Finances

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Page 1: 7.10.1.G1 Types of Insurance Essentials The Essentials to Take Charge of Your Finances

7.10.1.G1

Types of Insurance Essentials

The Essentials to Take Charge of Your Finances

Page 2: 7.10.1.G1 Types of Insurance Essentials The Essentials to Take Charge of Your Finances

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 2

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

What is Insurance?

Insurance is an arrangement

between a personperson(consumer)

and an insurer (insurance company)

to protect the individual against

riskrisk

Page 3: 7.10.1.G1 Types of Insurance Essentials The Essentials to Take Charge of Your Finances

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 3

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

Why is it important to have insurance?

Page 4: 7.10.1.G1 Types of Insurance Essentials The Essentials to Take Charge of Your Finances

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 4

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1What is an Insurance

Policy?A policy is a

contractcontract between the

individual and the insurer

specifying the termsterms of the

insurance arrangements A premium is a fee paid

to the insurerinsurer to be

covered under

specified terms

outlined in the policy

A deductible is the amount paid out of

pocketpocket by the policyholder for the initial portion of a

loss before the insurance coverage

begins- the deductible is stated

in the policy

A policyholder is a

consumer who

purchasepurchasess the

policy

Page 5: 7.10.1.G1 Types of Insurance Essentials The Essentials to Take Charge of Your Finances

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 5

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

Types of Insurance Automobil

e

Health

LifeDisability

Homeowners/

Renters

Page 6: 7.10.1.G1 Types of Insurance Essentials The Essentials to Take Charge of Your Finances

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 6

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

Automobile Insurance

Liability insurance

Medical payment

insurance

Uninsured or

underinsured motorists insurance

Physical damage insuranc

e

Collision

Comprehensive

Page 7: 7.10.1.G1 Types of Insurance Essentials The Essentials to Take Charge of Your Finances

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 7

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

Types of Auto Insurance

It is the minimum amount of

insurance required by law for

automobiles

Medical Payment Insurance covers injuries sustained

by the driverdriver of the insured vehicle or any passengerpassenger

regardless of fault

It also covers family members injured as passengers in any car, pedestrians, or

bicyclists

Page 8: 7.10.1.G1 Types of Insurance Essentials The Essentials to Take Charge of Your Finances

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 8

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

Types of Auto Insurance Uninsured or Underinsured

Motorists Insurance covers injury or damage to the driver, passengers, or the vehicle caused by a driver with insufficientinsufficient insurance

Physical Damage Insurance covers damages caused toto the vehicle Collision – covers a collision with another

object, carcar, or from a rollover Comprehensive – covers all physical

damage losses except collisioncollision and other specified losses

Why would an individual want automobile insurance coverage beyond liability (the

minimum required by law)?

Page 9: 7.10.1.G1 Types of Insurance Essentials The Essentials to Take Charge of Your Finances

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 9

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

Health Insurance Health insurance provides protection

against financial losses resulting from injuryinjury, illness, and disabilitydisability May cover hospital, surgical, dentaldental, vision,

long-term care, prescription, or other major expenditures

Specific coverage depends upon the individual policy

Health care costs are extremely high Large medical expenses could deplete an

individual’s savings

Why would it be important to have health insurance?

Page 10: 7.10.1.G1 Types of Insurance Essentials The Essentials to Take Charge of Your Finances

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 10

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

May be purchased by the individual’s employeremployer or privately by the individualindividual

Individual’s often seek coverage for dependents (spouses and children)

Many health insurance policies offer dependent coverage but there is no requirement to do so

If dependent coverage is offered, children may stay on their parent’s health care plan until age 2626 with no stipulations

Federal government website to learn about health insurance and compare policies: http://www.healthcare.gov/index.html

Health Insurance

Page 11: 7.10.1.G1 Types of Insurance Essentials The Essentials to Take Charge of Your Finances

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 11

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1Life Insurance

Provides money for family members or dependents when a wage earner dies • A dependent is a person who reliesrelies on someone else financially • So who should purchase life insurance? An individual that has dependents

Page 12: 7.10.1.G1 Types of Insurance Essentials The Essentials to Take Charge of Your Finances

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 12

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

What Covers This Risk?

While driving, you hit and injure a pedestrian in a crosswalk

Automobile!

Page 13: 7.10.1.G1 Types of Insurance Essentials The Essentials to Take Charge of Your Finances

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 13

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

What Covers This Risk?

After losing her husband to a heart attack, a wife is left alone to care for 2 children

Life!

Page 14: 7.10.1.G1 Types of Insurance Essentials The Essentials to Take Charge of Your Finances

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 14

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

What Covers This Risk?

You need a cast after breaking an ankle while roller-blading

Health!

Page 15: 7.10.1.G1 Types of Insurance Essentials The Essentials to Take Charge of Your Finances

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 15

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

Disability Insurance Disability Insurance replaces a

portion of one’s incomeincome if they become unable to work due to illness or injuryinjury

Insurance typically pays between 6060-7070% of one’s full-time wage Factors such as the length or severity of

a disability influence the percentage of income a person will receive

Page 16: 7.10.1.G1 Types of Insurance Essentials The Essentials to Take Charge of Your Finances

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 16

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

Homeowner’s InsurancePeril -an event

which may cause a financial loss like firefire, falling trees,

lightning and others

Property Insurance -protects the insured from financial losses due to destruction or

damage to property or possessionsLiability

Insurance- protects the insured

party from being held liableliable for

other’s financial losses

Page 17: 7.10.1.G1 Types of Insurance Essentials The Essentials to Take Charge of Your Finances

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 17

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

Renter’s Insurance

Page 18: 7.10.1.G1 Types of Insurance Essentials The Essentials to Take Charge of Your Finances

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 18

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

What Covers This Risk?

Your rented apartment is broken into and your computer is stolen

Renters!

Page 19: 7.10.1.G1 Types of Insurance Essentials The Essentials to Take Charge of Your Finances

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 19

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

What Covers This Risk?

You are injured in an automobile accident and are unable to work for 2 months

Disability!

Page 20: 7.10.1.G1 Types of Insurance Essentials The Essentials to Take Charge of Your Finances

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 20

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

What Covers This Risk?

Your garage was destroyed by a fire which started by a lightning bolt hitting your home

Homeowners!

Page 21: 7.10.1.G1 Types of Insurance Essentials The Essentials to Take Charge of Your Finances

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 21

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

Summary

An arrangement between an individual (consumer) and an insurer (insurance company) to protect the individual against risk

The purpose of insurance is to help individuals limit their financial losses when an accident occurs

Page 22: 7.10.1.G1 Types of Insurance Essentials The Essentials to Take Charge of Your Finances

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 22

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

Summary

• A premium is the fee paid to the insurer to be covered under the specified terms

• A deductible is the amount paid out of pocket by the policy holder for the initial portion of a loss before the insurance coverage begins

Automobile Health

Life

Disability

Homeowner’s/Renter’s

Page 23: 7.10.1.G1 Types of Insurance Essentials The Essentials to Take Charge of Your Finances

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 23

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

What Covers This Risk? Sick at home from food

poisoning after eating a carnival corndog

Nothing!

Page 24: 7.10.1.G1 Types of Insurance Essentials The Essentials to Take Charge of Your Finances

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 24

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

What Covers This Risk? While driving, you have brake

failure. You hit a telephone pole and cause damage to the front of the car

Automobile!

Page 25: 7.10.1.G1 Types of Insurance Essentials The Essentials to Take Charge of Your Finances

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 25

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

What Covers This Risk? While driving to the mall, you are

pulled over and receive a speeding ticket

Nothing!

Page 26: 7.10.1.G1 Types of Insurance Essentials The Essentials to Take Charge of Your Finances

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 26

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

What Covers This Risk?

A daughter, who is financially responsible for her mother’s nursing home bills, dies from an undetected heart defect

Life!

Page 27: 7.10.1.G1 Types of Insurance Essentials The Essentials to Take Charge of Your Finances

© Family Economics & Financial Education – October 2010 – The Essentials to Take Charge of Your Finances – Types of Insurance Essentials – Slide 27

Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

7.10.1.G1

What Covers This Risk? A doctor diagnoses a child with

tonsillitis during a visit to a clinic

Health!