Unit 6 Insurance Presentation

Transcription

1 Unit 6 Insurance Presentation

2 What is insurance? Spreading risk to protect assets and income It s the most widely used method to protect yourself against financial loss.

3 What is Risk? Everyone has risk such as: Walking across the street Playing football Risk is really the potential for loss.

4 What is Risk Management? Risk Avoidance (take the bus instead to school instead of driving.) Risk Reduction (wearing a seatbelt, having airbags in your car) Risk Transfer (buying insurance)

5 What types of Insurance can you buy? Health Auto Homeowners/Renters Disability Liability Life

6 What s the key to Insurance? Determining how much is needed? Too much can be a waste of money Too little can cause financial devastation!

7 The following slides will explain what each type of insurance really means.

8 Health Insurance Watch the video on Health insurance on Moodle and respond to the questions on the study guide.

9 Health Insurance What does it cover? Pays medical bills when you or your family becomes sick or injured. If your parents or guardian has health insurance, it will cover you until age 26. Best way to get health insurance is through your job. It s much, much cheaper than buying it on your own. So, look for good jobs that offer benefits health insurance! Health insurance can also cover dental and vision insurance. Sometimes, you have to pay extra per month for that coverage. Know your policy!

10 Health Insurance Try to find some startling facts Google what the cost of a major surgery, such as a heart surgery is. Google what does an average prescription cost for someone is?

11 Auto Insurance & Facts Watch the video on How to lower car insurance for teens video on Moodle and respond to the questions on the study guide.

12 Auto Insurance why it s important! Some facts You have a 55% chance of being involved in an accident in the next 3 years. You have a 75% chance of being involved in an accident in the next 5 years. Nearly 8000 teenagers in the U.S. are involved in fatal car crashes each year. 51% are drivers and 47% are passengers of people who die in auto crashes yearly. 53% of teen motor vehicle deaths occur on Friday, Saturday, or Sunday 41% of teen motor vehicle deaths occur between 9 p.m. and 6 a.m. Using seatbelts reduces the risk of serious or fatal injury to front seat passengers by 45-50% Auto crashes is the No. 1 killer of Americans, ages

13 Auto Insurance What is it? Protects the owner of a car from losses as a result of accidents Types of coverage (definitions covered on the following slides) Liability Required by law in State of MN! Collision Comprehensive Personal injury Uninsured/underinsured motorist Towing/rental car

14 Auto Insurance cont d What Auto Insurance covers: Damage to cars, drivers, passengers, uninsured motorists, and property. Repair of other vehicles and medical expenses of people Property damage, such as trees, etc. Theft of car or possessions within car

15 Here s how they break it down and what Minnesota Requires: Minnesota is a No-Fault state means in the event of an accident all drivers involved will have their expenses paid by their own insurance company regardless of who s at fault. No-Fault your auto policy must pay for bodily injury and property damages regardless of who caused the accident. (it s often difficult to determine who caused a multi-vehicle collision). PIP (Personal Injury Protection). regardless of fault, it pays for medical, hospital, funeral costs, etc.

16 Auto Insurance cont d Liability 30/60/10 (minimum levels required) $30,000 bodily injury maximum paid for one person injured in an accident. $60,000 bodily injury maximum paid for all injuries in one accident. $10,000 for repairs to property damage maximum paid for one accident. Uninsured Motorist protects you from injuries or damages caused by a driver of an uninsured or underinsured motor vehicle.

17 What s required if you have a loan on your car: (Lender wants to make sure they get paid back if something happens!) Collision covers your car against collisions it may have with any other object you are at fault. (back into a parking post, etc.) Comprehensive covers your car against vandalism (scratches), theft, broken glass, storms (hail) and falling objects.

18 What drives the cost of Auto Insurance? Your premiums are determined on Model and make of car (how expensive to fix or replace) Age of car Driver s driving record Where you live (zip code) chances of vandalism, etc. Distances driven Age and sex of driver, etc. Credit Report Good grades (B average or above)

19 Homeowners/ Renters Insurance Watch the video on Homeowners insurance on Moodle and respond to the questions on the study guide.

20 Homeowner s Insurance Protects from risk of loss in the home Covers the building and its contents Types of coverage Fire and other hazards Criminal activity Personal liability Acts of nature

21 You should take an Inventory of all your belongings Lists all the items of value in your home Should include receipts for expensive items when possible Is useful when filing an insurance claim You would be surprised how much it would cost to replace all valuable items in your house or apartment. It adds up fast!

22 Renter s Insurance much like homeowners Protects renters from the risk of losing personal property in their homes or cars Covers the cost of repairing or replacing personal property Is a low-cost way to manage risk

23 Disability Insurance Watch the video on Disability insurance on Moodle and respond to the questions on the study guide.

24 Disability Insurance Provides money to replace a portion of normal earnings Pays when the insured is unable to work Covers an injury or illness that is not job-related May be short-term or long-term

25 Liability Insurance Watch the video on Liability insurance on Moodle and respond to the questions on the study guide.

26 Life Insurance 2 Types to know Watch the video on Life insurance (on Moodle) and respond to the question on the study guide.

27 Life Insurance It s about protecting your loved ones Life insurance can provide benefits for children when a parent dies.

28 Life Insurance Is typically meant to financially protect people in your life when you die. Two types: Term Life: a benefit is paid to the beneficiaries of the policyholder if death occurs. (it s the cheapest). Whole Life (Cash Value): a benefit is paid to the beneficiaries of the policyholder if death occurs. (it s more expensive) But, it s more It accumulates a cash value Can be used for retirement Can borrow money (loan) against it (collateral) for emergency situations, etc.

29 Insurance Vocabulary

30 Insurance Vocabulary Agent: A person who sells you insurance. Policy: An insurance contract. Read it carefully!!! Policyholder: A person who purchases the insurance policy. Coverage: Items or circumstances for which the insured is promised payment.

31 Insurance vocabulary cont d Providers: The hospital, clinic or doctors that will bill you for the services they performed. Ex: Park Nicollet Clinic, Hopkins Chiropractic Service, etc. Benefits: The actual amount paid by the insurance company for financial loss you ve obtained. (ie. The bill you received from the clinic).

32 Insurance terms cont d Claims: A formal request for payment for the financial loss. Ex: you turn in the bill for your clinic visit and they pay the agreed upon portion. Premium: The amount you pay to the insurance company (each month) for the insurance protection. Medical emergencies can be very expensive.

33 Insurance vocabulary cont d Deductible: Amount of the loss (bill) you must pay before the insurance company begins to reimburse you. Lower Premium = Higher Deductible Higher Premium = Lower Deductible Which is better?? You decide.

34 Insurance vocabulary cont d Co-Insurance: It s your portion of the payment. Ex: 80/20 means 80% of the bill is covered by insurance and you pay the remaining 20%. Co-Pay: as with medical insurance, it is a set dollar amount for an office visit or a prescription. Ex: $ Every time you get a prescription from the pharmacy, you have to pay $20 for your prescription.

35 In general, how can we bring down the cost of insurance?

36 Reducing Costs of insurance Choosing higher deductibles can save you money on insurance To lower costs for car insurance Take driver training classes Maintain a good driving record Buy more than one insurance policy from the same company Own a car with a high safety rating

37 Car Buying What to do What not to do

38 Car Buying Tips Decide what you want to buy. Identify the top 3 choices Research qualities of car don t just trust your first impulse! Get pre-approved for loan from the bank first! You can many times get a better rate on the loan. Visit dealerships Notice sticker prices Consider taxes and licensing fees Consider the warranty or the worth of buying an additional warranty Test drive the car Always!! If the dealership won t let you, DON T buy it!! Make an Offer Decide value (check out Kelly Blue Book value or Carsoup.com) Consider the trade in what s the value of your vehicle? Don t be pressured or too desperate to buy! Make them wait for your business. ***Check out these websites:

39 Car Buying General Facts A Title is proof of ownership of a car. Make certain you always get that if you buy a car from another person. If you take out a loan on the car, the bank keeps the title until you pay off the loan. Often times, you may do better to sell your used car outright to another person, than trading it in at a dealership. In the State of Minnesota, you can return a car you purchased up to 5 days after the purchase date with no ramifications. Depreciation means that your car loses value as it gets older. Most cars do except if it would happen to be considered a collector item. Always consider the cost of insurance on the car, the cost of typical repairs and maintenance on that car model as well as how much it will cost you per month to keep it fueled with gas. You need to add all of that up to figure the true cost of owning that car not just the purchase amount of the car!

40 Best Time of the Year to Buy a Car End of Month Salespeople are trying to fill their quotas! Late December People are Holiday Shopping End of Model Year (September/October) Dealers want to reduce inventory and make room for newer models What protects you if you are sold a non-working car? Lemon Laws Apply to the 1st Year or 12,000 miles of the vehicle You ve taken the car to a dealer for unsuccessful attempts to repair it. Your car has been out-of-service for at least 30 days ***You must have good documentation of this!!