NEFE High School Financial Planning Program Unit 6 – Your Money: Keeping it Safe and Secure Unit 6 - Insurance: Protecting What You Have

NEFE High School Financial Planning ProgramNEFE High School Financial Planning ProgramUnit 6 – Your Money: Keeping it Safe and Secure

Unit 6 - Insurance:Unit 6 - Insurance:Protecting What You HaveProtecting What You Have


Objectives

• Identity ways to manage risk

• Describe how insurance is use to protect against financial loss

• Explain the features and protection related to car insurance

• Examine how insurance needs vary from person to person because of lifestyle and life situation

• Access how insurance fits into financial planning


Success is defined by . . . • You identify lifestyle characteristics that will affect you insurance

needs now and three years from now• You outline your insurance needs related to your current lifestyle• You outline you potential insurance needs related to your

predicted lifestyle 3 years from now• You estimate the monthly or annual costs of each type of

insurance• You describe how your insurance needs will affect your budget• You list at least 3 specific ways you can reduce your insurance

costs• You describe specific ways you can avoid, reduce, accept and/or

share the risk of personal and financial loss• You provide rationale for choosing insurance and other risk

management options


ExposureExposure RiskRisk Potential LossPotential Loss

Accident or Accident or IllnessIllness

PropertyPropertyOwnershipOwnership

LiabilityLiability

Loss of income from Loss of income from inability to work; inability to work; uninsured medical bills; uninsured medical bills; deathdeath

Your property is Your property is damaged, destroyed, damaged, destroyed, lost, or stolenlost, or stolen

You are found liable for You are found liable for injuries to other people injuries to other people or damages to their or damages to their propertyproperty

UNLIMITEDUNLIMITED

UNLIMITEDUNLIMITED

Amount needed Amount needed to replace your to replace your propertyproperty

Common Exposures to LossCommon Exposures to Loss

6-A6-A


Avoid itAvoid it

Share itShare it

Alternatives forAlternatives forManaging the Possibility of LossManaging the Possibility of Loss

Accept itAccept it

6-B6-B

Reduce itReduce it

Share itShare it

??AVOIDAVOIDNIGHTNIGHT

DRIVINGDRIVING

ALWAYSALWAYSWEARWEAR

SEATBELTSSEATBELTS????

??

??OBEYOBEY

SPEEDSPEEDLIMITSLIMITS

MA

NA

GIN

G L

OS

SM

AN

AG

ING

LO

SS F

RO

M IN

JUR

YF

RO

M IN

JUR

Y

INJURYINJURYIN AIN ACARCAR

ACCIDENTACCIDENT

6-C6-C


Avoid itAvoid itReduce itReduce it

Share itShare it

Managing the Possibility of LossManaging the Possibility of Loss

Accept itAccept it6-D6-D


My Personal Financial Risk ExposuresMy Personal Financial Risk Exposures

Exposure Risk How to Evaluate Potential Loss

How much would I lose if I couldn’t work for:1 week?1 month?1 year?

UnlimitedUnlimited

Acc

iden

t or

Illne

ss

LostIncome

Death Permanent UnlimitedUnlimited

MedicalBills

What is the most this could cost me? UnlimitedUnlimited

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My Personal Financial Risk My Personal Financial Risk ExposuresExposures

Exposure Risk How to Evaluate Potential Loss

Liability

Liability for injuries

to other people or damages to their

property

What is the most this could cost me? UnlimitedUnlimited

Property Owner-

ship

Damaged, destroyed

lost, or stolen

This will be the total dollar amount for the particular item(s) from your Personal Property Inventory (Part A)

$ _______

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Factors Affecting Automobile Factors Affecting Automobile Insurance CostsInsurance Costs

Your ageYour age

Make of carMake of car

Marital statusMarital status

Do you take the car to work?Do you take the car to work?

If you’re a good studentIf you’re a good student

GenderGenderWhere you liveWhere you live

How much How much you use the you use the

carcarCredit ratingCredit rating

Driver’s educationDriver’s education

Driving recordDriving record

Type of carType of car

6-F6-F


Auto Insurance CoverageSuggested Minimums

Coverage Type Suggested Minimum Coverage

Liability

Medical Payments

Uninsured / Underinsured

Motorist

$100,000 per person $300,000 per accident

$100,000 per person $300,000 per accident

$10,000 per person

6-G6-G


Auto Insurance Coverages

A. LiabilityBodily injury or property damages that you are responsible for because of an

accident involving your car

B. Medical Payments

Medical and/or funeral expenses for you, members of your family, and

other persons injured in an accident while in your vehicle. Also covers your

family members as pedestrians if struck by an auto.

Policy Section What It CoversSuggested Minimum Coverage

6-H-16-H-1


Auto Insurance Coverages

Bodily InjuryYour injuries caused by an uninsured,

hit-and-run, or underinsured driver.

PropertyDamages to your vehicle caused by

uninsured or underinsured driver

C. Underinsured and underinsured motorists

Policy Section What It CoversSuggested Minimum Coverage

6-H-26-H-2


Comparing Costs of Auto Insurance

6-I6-I

COVERAGES LIMITS YOU WANT

Com

pany 1

Com

pany 3

Com

pany 2

A. Liability1. Bodily Injury

2. Property Damage

B. Medical Payments

C. Uninsured & Underinsured Motorists

$ ____ per person$ ____ per accident$ ____ per accident

A. Damage to your car1. Collision2. Other than collision

loss (comprehensive)

$ ____ per person

$ ____ amount

$ ____ Deductible$ ____ Deductible


How to Save Money on InsuranceHow to Save Money on Insurance• Shop at least three places; compare rates Shop at least three places; compare rates

and policies; ask about discounts and and policies; ask about discounts and special rates.special rates.

• Read sources of information such as Read sources of information such as Consumer ReportsConsumer Reports®®..

• Purchase more than one type of insurance Purchase more than one type of insurance from the same company; insure all cars from the same company; insure all cars with the same company.with the same company.

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How to Save Money on InsuranceHow to Save Money on Insurance• Choose the right car.Choose the right car.

• Don’t smoke.Don’t smoke.

• Select a higher deductible.Select a higher deductible.

• Carefully consider before adding riders or Carefully consider before adding riders or floaters.floaters.

• Have a good driving record & good grades Have a good driving record & good grades (“B” or better).(“B” or better).

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How to Save Money on Insurance• Ask about discounts.

• Eliminate collision and comprehensive coverage if car is older.

• Reduce your daily driving.

• Drive defensively.

• Avoid theft and vandalism.

• Avoid filing excessive claims.

• Keep tabs on credit.

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Other Types of Insurance

• Health Insurance– Pays medical bills when you or your family get sick or injured

• Property Insurance– Protects your “stuff” such as electronics, furniture etc

• Life Insurance– Provides financial support for those that depend on you if you die

• Disability Insurance– Protects your earnings if you cannot work for a time period (weeks to

years)

• Liability Insurance– Protects you in case you are legally responsible for injuring someone

or damaging someone’s property


Still More Types of Insurance

• Boat• Travel• Wedding• Malpractice• Errors and Omissions• Pet Health• Kidnap and Ranson

• Bottom line – you can insure almost anything

Documents

NEFE High School Financial Planning Program Unit 6 – Your Money: Keeping it Safe and Secure Unit 6 - Insurance: Protecting What You Have