introduction to insurance
DESCRIPTION
A general overview of insurance given to college students.TRANSCRIPT
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Introduction to Insurance
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Outline
• Fundamentals of Insurance• Auto Insurance• Homeowner’s/Renter’s Insurance• Umbrella Insurance
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Life and Health
• Health Insurance Could be Discussed at Workplace
• Life Insurance often not Really Necessary for Recent Graduates
• If Specific Questions, Please Ask After Session
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“Insurance is the One Thing that You Buy, that You Hope
Never to Use”~ anonymous
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What is Insurance?
• Risk Sharing• Everyone Pays a Little so that an
Individual Doesn’t Have to Pay a Lot• Based on Statistics• Only Risk What You Can Afford To Lose• The More You Have to Lose, The More
You Have To Protect
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Definitions
• Policy – Insurance Contract• Premium – Cost of Having an Insurance Policy• Deductible – Cost of Using an Insurance Policy• Claim – Act of Using an Insurance Policy• Lapsed – A Policy Terminated by Non-payment
of Premium• Dropped – Disallowed to Renew a Policy• Declaration Page – Summary of Policy Terms
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Risk: An Inverse Relationship
As Deductible Increases Premium Decreases
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Auto Insurance
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Auto Insurance - Coverage
• Liability Insurance – Legal Requirement• Collision Insurance• Comprehensive Insurance• Medical Payments• Uninsured Motorist Coverage• Rental Reimbursement
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Liability Insurance
• Protects Others• Two Types
o Bodily Injuryo Property Damage
• Limits – Each Person/Aggregate Limit• Legal Requirement in Illinois
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Collision Coverage
• Protects Your Vehicle• Two Types
o Actual Cash Valueo Replacement Cost
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Comprehensive Coverage
• Coverage for Problems Other than Driving• Theft, Fire, Etc.• Two Types
o Actual Cash Valueo Replacement Cost
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Medical Payments
• Medical Costs for People Involved in an Accident
• Each Person
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Uninsured/Underinsured Motorist Coverage
• Protects You From Others• Uninsured vs. Underinsured• Each Person/Aggregate Limit
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Rental Reimbursement
• How Will You Get Around While Your Car is Being Repaired?
• Dollar per Day Credit For Time Period
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Recommended Coverage AmountsSource: Ernst & Young’s Personal Financial Planning
Guide
• Liability – Bodily Injury, Property Damageo Standard: 100/300 Coverageo Recommended: 250/500 Coverage
• Actual Cash Value vs. Replacement Cost• Medical Payments – Std:1000, Rec:
$10000• Uninsured/Underinsured Coverage
o Protect Yourself at Least as Much as Others
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Discounts
• Protective Devices• Safety Devices• Multiple Policies• Multiple Vehicles• Car Type• Good Driver• Loyalty
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Declaration Page
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Homeowner’s (Renter’s) Insurance
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Homeowner’s Insurance - Coverage
• Dwelling Protection – The Living Structure• Other Structures Protection – ie. Garage • Personal Property – All Your Stuff• Special Coverage – Flood, Quakes,
Nukes• Living Expense – Temporary Housing• Liability Protection • Guest Medical Protection
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Recommended Coverage AmountsSource: Ernst & Young’s Personal Financial Planning
Guide
• Minimum: Appraised Value (Owned Property)
• How Much is Your Stuff Worth? o Write it Down!!!!
• Personal Liabilityo Standard: 100K o Recommended: 300K
• Medical Payments – Std:1000, Rec:$5000
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Declaration Page
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Umbrella Policies
• “Kick In” When Other Policies Max Out• Relatively Cheap• May Make Sense If You Have a Lot to
Lose
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Should I File a Claim?
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Pros and Cons of Filing a Claim
Pros• Getting What You
Paid For• Possibly Saving
Money• Ensuring You Aren’t
Left Paying For Repairs
Cons• Payment of
Deductible• Possible Increase in
Premium• Risk Being Dropped
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Questions to Ask Before Filing
• Will The Policy Cover It?• Would the Claim Exceed the Deductible?• Can I Afford to Fix it Myself?• If Not at Fault, Will The Other Guy Pay?• How Long Will It Take?• What Documentation Do I Need? (Police
Report, Estimates)
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Summary
• Principles of Insurance• Aspects of Auto/Home/Umbrella
Insurance• Considerations when Filing a Claim
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Summary
• Insurance Exists to Protect You From Catastrophe
• I Hope Now You’ll Make Adult and Informed Decisions about How Much Risk You’re Willing to Accept
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Questions