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
© 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
© 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?
© 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
© 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
© 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
© 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
© 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)?
© 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?
© 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
© 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
© 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!
© 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!
© 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!
© 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
© 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
© 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
© 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!
© 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!
© 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!
© 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
© 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
© 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!
© 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!
© 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!
© 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!
© 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!
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