© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc.

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of InsuranceFunded 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

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Risk, Responsibility, Reality This video clip provides an overview of

insurance policies Risk, Responsibility, Reality Video Clip

http://www.griffithfoundation.org/auto-insurance/auto-insurance-30-minutes/

© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of InsuranceFunded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at

the University of Arizona

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Insurance

Take Charge of Your Finances 1.10.1.G1



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Risk Risk is the uncertainty about a

situation’s outcome This can be an unpredictable event

which leads to loss or damage



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Insurance Terminology Insurance is an arrangement

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

A policy is a contract between the individual and the insurer specifying the terms of the insurance arrangements



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Insurance Terminology A policyholder is a consumer who

purchases the policy A premium is a fee paid to the insurer

to be covered under 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



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Types of Insurance Types of insurance can include:

Automobile Health Life Disability Homeowners/Renters



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Automobile Insurance Automobile Insurance is an

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



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Automobile Insurance Types There are four types of coverage for

Automobile Insurance: Liability insurance Medical payment insurance Uninsured or underinsured motorists

insurance Physical damage insurance

Collision Comprehensive



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Liability Insurance Liability Insurance covers the

insured if injuries or damages are caused to other people or their property It is the minimum amount of insurance

required by law for automobiles



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Medical Payment insurance Medical Payment Insurance

covers injuries sustained by the driver of the insured vehicle or any passenger regardless of fault It also covers family members injured

as passengers or if injured as a pedestrian



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Uninsured motorists insurance Uninsured or Underinsured

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



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Physical damage insurance Physical Damage Insurance covers

damages caused to the vehicle Collision – covers a collision with another

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

damage losses except collision and other specified losses



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Health Insurance In 2005 there were nearly 47 million

Americans or 16 percent of the population without health insurance (http://www.nchc.org/facts/coverage.shtml )

Health insurance provides protection against financial losses resulting from injury, illness, and disability Health insurance may cover hospital, surgical,

dental, vision, long-term care, prescription, or other major expenditures

Health insurance may be purchased by the individual or through their employer



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Life Insurance Life insurance is a contract

between an insurer and policyholder specifying a sum to be paid to a beneficiary upon the insured’s death

The contract is a policy which states the amount to be paid to the beneficiary upon the insured person’s death



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Life Insurance A beneficiary is the recipient of any

policy proceeds if the insured person dies

A dependent is a person who relies on someone else financially



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What Covers This Risk? You hit and injure a pedestrian in a

crosswalk

Automobile!



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What Covers This Risk? After losing her husband to a heart

attack, the wife is left alone to care for 2 children

Life!



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What Covers This Risk? You need a cast after breaking an

ankle while roller-blading

Health!



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Disability Insurance Disability Insurance replaces a

portion of one’s income if they become unable to work due to illness or injury



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Homeowner’s/Renter’s Insurance Homeowner’s Insurance

combines property and liability insurance into one policy to protect a home from damage costs due to perils.

A peril is an event which can cause a financial loss like fire, falling trees, lightning and others



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Property Insurance Property Insurance protects the insured

from financial losses due to destruction or damage to property or possessions

Liability Insurance protects the insured party from being held liable for other’s financial losses

Homeowner’s insurance should cover the replacement cost which will pay to rebuild the home if it is completely destroyed



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Renter’s Insurance Renter’s Insurance protects the insured

from loss of the contents of the dwelling rather than the dwelling itself

Renter’s insurance may be provided by a parent or guardian while an individual is still a full time student or under the age of 18 However, each policy is different and should

be inspected by the policy holder



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What Covers This Risk? You apartment is broken into and your

computer is stolen

Renters!



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What Covers This Risk? You are injured in an automobile

accident and are unable to work for 2 months

Disability!



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What Covers This Risk? Your garage was destroyed by a fire

which started by a lightning bolt hitting your home

Homeowners!



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Conclusion Review the following terms and

concepts: Risk Insurance Policy Policyholder Premium Deductible Types of Insurance



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What Covers This Risk? Sick at home from food poisoning

after eating a carnival corndog

Nothing!



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What Covers This Risk? You have brake failure. You hit a

telephone pole and cause damage to the front of the car

Automobile!



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What Covers This Risk? You get pulled over and receive a

speeding ticket on your way to the mall

Nothing!



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What Covers This Risk? A daughter, who is financially

responsible for her mother’s nursing home bills, dies from an undetected heart defect

Life!



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What Covers This Risk? A doctor diagnoses a child with

tonsillitis during a visit to a clinic

Health!



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KWL Chart Reference the W column on your worksheet

Were there any questions you were unable to answer from the video?

Can you answer those questions now based upon the content?

If so, what are the answers? Record the new information in the L column

If not, what additional questions do you have?

© Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc.

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