Missouri High School Personal Finance Institute Heart of Missouri Regional Professional Development Center Graham McCaulley Extension Associate, MU Personal Financial Planning Extension
Risk a word to describe the uncertainty of outcomes in life Loss from risk or unexpected outcomes can be costly
Risk control: Control exposure to risk by avoiding or reducing Risk financing: You can finance all or part of the risk by retaining it You can transfer a large part of the by purchasing insurance
Types of Personal Risk Earnings Medical Liability Physical Assets Financial Assets Longevity
Risk Financial Peril Insurance Disability/illness Loss of income, medical expenses, personal maintenance Disability income, major medical, hospital insurance, long-term care insurance Death Loss of income, medical/funeral expenses, unpaid debts Life insurance, credit/mortgage insurance Extended life span Loss of income, lower level of living Annuities, retirement planning, personal investments Damage or loss of property Replacement or repairs Homeowner s or renter s policies (property insurance) Automobile collision and comprehensive coverage Legal liability Damages awarded to an injured party Comprehensive personal liability, liability coverage in auto policy
Insurance provides indemnification (reimbursement) Saving different schools of thought on this
A fee that must be paid for you/your family to have a insurance plan Who pays for your premium? You may be responsible for the entire premium (e.g., auto insurance) OR Your employer may pay for all of it OR You and your employer may share this cost
The amount you pay before your insurance plan begins to cover any of your expenses (e.g., car repair, healthcare expenses) The higher the deductible, the lower the premium For example, if your deductible is $1,000, your plan won t pay anything until you ve met your $1,000 deductible
The share of the cost you must pay for a healthcare service Calculated as a percent (%) of the total cost you pay The insurance company pays the rest This cost sharing begins only after your deductible is paid for in full for that year
Liability Personal Injury Protection Collision Comprehensive Uninsured or Underinsured Motorist
Renters property likely isn t covered Typically, the landlord or property owner only carries insurance on the rental unit itself. Most renters need coverage Renters insurance policies give a wide range of coverage for both personal property and liability Renters insurance is usually quite affordable
Improves your health by: Preventing health problems Finding a health problem early on Better managing health conditions Preventing health problems from getting worse Decreased risk of medical bankruptcy and less financial stress More productive employees Less strain on social services
1. Guaranteed coverage to all: Can NOT deny you coverage due to a pre-existing condition 2. Can NOT have an yearly or lifetime coverage limit 3. Can NOT drop your insurance if you get sick 4. No cost to you for preventive care 5. Children CAN stay on parent s insurance up to age 26
Financial intermediaries include commercial banks, savings and loan associations, savings banks, credit unions and money market mutual fund companies. Financial intermediaries act as the gobetween borrowers and lenders.
Keep money safe Track transactions, organize finances Earn interest
Banks Credit Unions Deposit Rates Loan Rates Loans
Deposit Accounts What banks offer customers to hold their money for deposits and withdrawals for the short and long term Checking accounts The bank takes the money from your account and pays it to the person named on the check or paid by a checking account debit card Savings accounts A savings account is an account that earns interest (money generally not as liquid than a checking account)
Overdraft protection is when a bank or credit union covers overdrafts on a checking or share draft account. New rule (CARD Act of 2010): Banks should ask you before enrolling you in an overdraft protection program Linked Accounts Line of Credit
Unbanked and underbanked Payday (and related) lending- check cashing, money orders, used as a deposit advance Prepaid cards
http://missourifamilies.org/money/ http://www.learnvest.com/knowledgecenter/banking-101/ http://www.consumerfinance.gov/blog/studentbanking-101/ Weagley, R. O., & Ivey, S. G. (2011). Personal and family finance workbook. Dubuque, IA: Kendall Hunt. McCaulleyG@missouri.edu