© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to

© 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

Insurance

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Risk, Responsibility, Reality

This video clip gives an overview of insurance policies

Risk, Responsibility, Reality Video Clip http://www.theiei.org/edu/materials/rr

r/classroom.wmv



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Risk

Risk is the uncertainty about a situation’s outcome This can be unpredictable events

which lead 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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After losing her husband to a heart attack, the wife is left alone to care for 2 children

Life!



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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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You apartment is broken into and your computer is stolen

Renters!



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You are injured in an automobile accident and are unable to work for 2 months

Disability!



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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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Sick at home from food poisoning after eating a carnival corndog

Nothing!



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You have brake failure. You hit a telephone pole and cause damage to the front of the car

Automobile!



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You get pulled over and receive a speeding ticket on your way to the mall

Nothing!



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A daughter, who is financially responsible for her mother’s nursing home bills, dies from an undetected heart defect

Life!



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A doctor diagnoses a child with tonsillitis during a visit to a clinic

Health!

Documents

© Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to