3. What is Insurance??
Insurance – an arrangement
between an individual and an
insurance company to protect the
individual from risk.
We buy insurance to help limit the
financial losses when accidents
occur.
4. Insurance Vocabulary
Policy – a contract between the
individual and the insurer specifying
the terms of the insurance
arrangement.
Premium – the fee paid to the
insurer to guarantee coverage.
Deductible – the amount paid out
of pocket by the policy holder for the
initial portion of a loss before the
insurance coverage begins.
5. Example...
You pay money to have car
insurance (Premium)
When you get into an accident that
is your fault, you must pay a certain
amount before the insurance
company picks up the rest
(Deductible)
The higher the deductible, the lower
the premium
6. Learning Goal...
To be able to identify
and explain the
importance of the 5
necessary types of
insurance.
7. Types of Insurance
1. Automobile
2. Health
3. Life
4. Disability
5. Homeowner’s / Renter’s
8. Automobile Insurance
4 Different types:
1. Liability (Required by law)
Pays for bodily injury to other people,
damage to property, court fees
1. Medical Payments
Pays for hospital bills for you and
anyone riding in your car
10. Automobile Insurance
4 Different types:
4. Collision/Comprehensive
Pays to repair your car if it was your
fault or no other car was involved.
Collision – deer, fence post, etc
Comprehensive is for non-driving
risks such as hail, theft, flood,
vandalism, etc.
11. Health Insurance
Covers medical costs if you are
injured or become ill
Each policy is different
Most people receive health
insurance from their employer
Children are covered up to the age
of 19; unless they are attending
college full time (23)
12. Life Insurance
Pays people who are dependent on
someone else if that person dies
Usually offered from an employer,
but can (and should) purchase
independently.
Life insurance is usually very low in
price compared to the coverage you
receive
When should you get life insurance??
13. Life Insurance
2Types of Life Insurance
1. Whole Life
Coverage for life
Includes a savings plan
1. Term Life
Coverage for a specific period of
time.
MUCH cheaper than Whole Life
ALWAYS GO WITH TERM LIFE!!!
14. Disability Insurance
Will pay a percentage of your
income from a job if you are sick or
unable to work for long periods of
time
Usually will pay between 60% and
70%
Also is a common insurance
offered by an employer
15. Homeowner’s / Renter’s
Protects your home and possessions
within the home from damage
Includes Fire, Storm, etc.
Natural Disasters require a special
insurance
Theft
Also covers liability if someone else is
injured on your property and they
sue
16. Learning Goal...
To be able to identify
and explain the
importance of the 5
necessary types of
insurance.
