Risk - chance transfers risk. cannot be. individual to an en6rely. insurance controlled. organiza6on

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1 To protect yourself there is Insurance: is an contract between an individual (consumer) and an insurer (insurance company) to protect the individual against risk. Risk - chance Insurance of loss from an transfers risk event that is managed by from an cannot be individual to an en6rely insurance controlled organiza6on 55 The insurance purchased is called a policy: which is a contract between the individual and the insurer specifying the terms of the insurance arrangements. 57 In order for a policy to remain active a premium: is a fee paid to the insurer to be covered under specified terms, must be paid on a regular basis. Monthly Bi-Annually Annually The policyholder: is a consumer who purchases the policy. That person can utilize the policy by filing a claim. 58 Before the insurer begins making payments on a claim, the policyholder must first reach their deductible: is the amount paid out of pocket by the policyholder for the initial portion of a loss before the insurance coverage begins Home Owners Health Life Types of Insurance Disability Auto 61 1

2 Automobile Insurance is an arrangement between an individual (consumer) and insurer (insurance company) to protect the individual against risk from automobile accidents. 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. 64 Uninsured or Underinsured Motorists Insurance covers injury or damage to the driver, passengers, or the vehicle caused by a driver with insufficient insurance. 65 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. 67 ü Drivers Personal Characteristics Age, gender, marital status can alter rates. Ex: Highest Rates (teenage males), Lowest Rates (teenage females) 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. 68 ü Type of Auto Higher rates are charged for vehicles classified as: Intermediate-Performance, High-Performance, & Sports Vehicles. Color can also make a difference: Black Red 66 ü Rating Territory rates increase if the primary location and use of the auto has a high rate of accidents, claims filed, average cost of claim paid, theft & vandalism, etc. ü Use of the Auto the fewer the miles driven (less than 3 to 5 a day) premiums are lower. ü Driving Record rates increase based on the type of driver you are. Things that increase rates: Cited moving violations & Accidents, Even higher premiums or denied insurance: Driving Under the Influence, Vehicular Assault or Homicide 2

3 HEALTH INSURANCE The most popular category of health care are: Managed Care Plans subscribers/users contract with the provider organization, which uses a defined group of providers who have agreed to provide services at a set cost. Health insurance provides protection against financial losses resulting from injury, illness, and disability. 74 Managed Care Plans include: Health Maintenance Org. a group of hospitals, physicians, & other health care providers who have joined to provide health care services to its members. HMOs Health Maintenance Organiza6on PPOs Preferred Provider Organiza6ons Both state and federal governments require a health benefit, paid almost in full by employers, to cover employee s injured on the job. Worker s CompensaGon this compensates workers for jobrelated illness or injury. Health insurance - provides money to pay for health care Some things covered are: s sk d Ri ere v Co Doctors visits Hospital bills Medical procedures Mental health treatment Vision care PreventaGve care Dental care PrescripGon drugs Preferred Provider Org. A health provider who combines characteristics of an HMO with an indemnity plan to provide comprehensive health services to its subscribers in a set network. vit also may be purchased by the individual or through their employer. vaccording to the Affordable Care Act every citizen must have health insurance. vfailure to do this can result in a tax being levied. 81 3

4 LIFE INSURANCE The ironic part of this insurance is the name: Life insurance is a contract between an insurer and policyholder specifying a sum to be paid to a beneficiary upon the insured s death. Often this is purchased to offset an debts left behind by the deceased. 83 There are three main types of life insurance: Term Life Insurance Whole Life Insurance Provides protecgon against loss of life for a specified period of Gme. Only pays benefits if an individual dies during the period in which the policy are covered. 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. 84 Is a permanent policy in which the policyholder pays a specified premium each year for the duragon of engre life. Premium depends on age at the Gme of purchase. Pays the beneficiary the sum total of the policy. Universal Life Insurance Has a flexible premium Is an adjustable-benefit life insurance policy which accumulates account value Allows policyholders to change the amount of insurance as their needs for insurance changes You hit and injure a pedestrian in a crosswalk Automobile - Liability! 89 After losing her husband to a heart attack, the wife is left alone to care for 2 children Life! 90 4

5 You need a cast after breaking an ankle while playing soccer Health! On occasions accidents happen. When they do financial hardships can occur. Disability Insurance replaces a portion of one s income if they become unable to work due to illness or injury. 91 Homeowner s Insurance combines property and liability insurance into one policy to protect a home from damage costs due to events which can cause a financial loss like fire, falling trees, lightning and others. 92 Things not covered by standard policies vary from one company to another, but most likely they Earthquake will include: Flood 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. ü Renters insurance (HO-4), a special kind of homeowners insurance. ü It provides no coverage for the building itself. ü Instead, it covers your personal possessions and protects you against liability claims if you rent a house or apartment. 97 Types of Coverage Basic homeowners insurance includes coverage against the following risks: The[, Fire and lightning, Smoke, Frozen pipes, Ice and snow. Liability coverage is for cases when someone is injured in your house. Court fees. Cover your costs in case it's impossible to live in the house due to fire or any other damage. Tornado 93 Some either choose not to own or can t afford a mortgage. For those that rent there is Renter s Insurance protects the insured from loss of the contents of the dwelling rather than the dwelling itself. Volcano Terrorism 96 Replacement Cost VS Actual Cash Value These terms are actually very important in determining how much money you will get if you ever have to file a claim. When you get a quote from your insurance agent, make sure you know which type of coverage is described. 5

6 Replacement Cost Actual Cash Value Replacement cost coverage, by comparison, reimburses you for the amount that it will cost to replace your property. If you bought a $2000 TV two years ago, you'll receive enough money to go out and buy another television just like the old one. Actual cash value coverage reimburses you for only the amount that your property was worth at the Gme it was stolen, damaged, or destroyed. That $2000 TV bought 5 years ago might be worth $700 today. You are injured in an automobile accident and are unable to work for 2 months Your garage was destroyed by a fire which started by a lightning bolt hitting your home Property Insurance protects the insured from financial losses due to destruction or damage to property or possessions. 102 Your apartment is broken into and your several items are stolen Renters! Disability! Homeowners! 103 Sick at home from food poisoning after eating a carnival corndog 104 You have brake failure. You hit a telephone pole and cause damage to the front of the car Nothing! You get pulled over and receive a speeding ticket on your way to the mall Automobile - Collision! Nothing!

7 A daughter, who is financially responsible for her mother s nursing home bills, dies from an undetected heart defect A doctor diagnoses a child with tonsillitis during a visit to a clinic Health! Life!