7.10.1.

G
1

Types of Insurance
Essentials

The Essentials to Take

Charge of Your Finances

7.10.1.G
1

What is Insurance?
Insurance is an
arrangement between
an individual
(consumer) and an
insurer (insurance
company) to protect
the individual against
risk

Family Economics & Financial Education October 2010 The Essentials to Take Charge of Your Finances Types of Insurance
Essentials Slide 2
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America
Institute at the University of Arizona

Why is it important to
have insurance?

Family Economics & Financial Education October 2010 The Essentials to Take Charge of Your Finances Types of Insurance
Essentials Slide 3
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America
Institute at the University of Arizona

7.10.1.G
1

What is an Insurance
Policy?
A policy is a
contract
between the
individual and
the insurer
specifying the
terms of the
insurance
arrangements
A premium is
a fee paid to
the insurer to
be covered
under
specified
terms outlined
in the policy

7.10.1.G
1

A deductible is the
amount paid out of
A
pocket by the
policyholder
policyholder for the
is a consumer
initial portion of a
who
loss before the
purchases the
insurance coverage
policy
begins- the
deductible is stated
Family Economics & Financial Education October 2010 The Essentials to Take Charge of Your Finances Types of Insurance
Essentials Slide 4
in the policy
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America
Institute at the University of Arizona

7.10.1.G
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Types of Insurance
Automobil
e

Health

Homeowner
s/
Renters

Disability

Life

Family Economics & Financial Education October 2010 The Essentials to Take Charge of Your Finances Types of Insurance
Essentials Slide 5
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America
Institute at the University of Arizona

Automobile Insurance

Liability
insurance

Medical
payment
insurance

Uninsured
or
underinsure
d motorists
insurance

7.10.1.G
1

Physical
damage
insuranc
e
Collision
Comprehen
sive

Family Economics & Financial Education October 2010 The Essentials to Take Charge of Your Finances Types of Insurance
Essentials Slide 6
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America
Institute at the University of Arizona

7.10.1.G
1

Types of Auto Insurance

Medical Payment
Insurance covers
injuries sustained
by the driver of the
insured vehicle or
any passenger
regardless of fault
It is the minimum
amount of
insurance required
by law for
automobiles

It also covers family

members injured as
passengers in any
car, pedestrians, or
bicyclists

Family Economics & Financial Education October 2010 The Essentials to Take Charge of Your Finances Types of Insurance
Essentials Slide 7
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America
Institute at the University of Arizona

Types of Auto Insurance

7.10.1.G
1

Uninsured or Underinsured
Motorists Insurance covers injury or
damage to the driver, passengers, or the
vehicle caused by a driver with
insufficient 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
Why
would an individual want automobile
losses

insurance coverage beyond liability (the

minimum required by law)?

Family Economics & Financial Education October 2010 The Essentials to Take Charge of Your Finances Types of Insurance
Essentials Slide 8
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America
Institute at the University of Arizona

7.10.1.G
1

Health Insurance

Health insurance provides protection

against financial losses resulting from injury,
illness, and disability

May cover hospital, surgical, dental, vision, longterm care, prescription, or other major expenditures
Specific coverage depends upon the individual
policy

Why would it be important to have

health insurance?

Health care costs are extremely high

Large medical expenses could deplete an
individuals savings

Family Economics & Financial Education October 2010 The Essentials to Take Charge of Your Finances Types of Insurance
Essentials Slide 9
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America
Institute at the University of Arizona

7.10.1.G
1

Health Insurance

May be purchased by the individual or

through their employer
Individuals often seek coverage for
dependents (spouses and children)
Many health insurance policies offer dependent
coverage but there is no requirement to do so
If dependent coverage is offered, children may
stay on their parents health care plan until age
26 with no stipulations

Federal government website to learn about

health insurance and compare policies:
http://www.healthcare.gov/index.html

Family Economics & Financial Education October 2010 The Essentials to Take Charge of Your Finances Types of Insurance
Essentials Slide 10
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America
Institute at the University of Arizona

7.10.1.G
1

Life Insurance

Provides money for family

members or dependents when a
wage
earner
dies
A dependent is a person who relies
on someone else financially
Family Economics & Financial Education October 2010 The Essentials to Take Charge of Your Finances Types of Insurance
Essentials Slide 11
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America
Institute at the University of Arizona

7.10.1.G
1

What Covers This Risk?

While driving, you hit and injure a

pedestrian in a crosswalk
Automobile!

Family Economics & Financial Education October 2010 The Essentials to Take Charge of Your Finances Types of Insurance
Essentials Slide 12
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America
Institute at the University of Arizona

7.10.1.G
1

What Covers This Risk?

After losing her husband to a heart

attack, a wife is left alone to care
for 2 children
Life!

Family Economics & Financial Education October 2010 The Essentials to Take Charge of Your Finances Types of Insurance
Essentials Slide 13
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America
Institute at the University of Arizona

7.10.1.G
1

What Covers This Risk?

You need a cast after breaking an

ankle while roller-blading
Health!

Family Economics & Financial Education October 2010 The Essentials to Take Charge of Your Finances Types of Insurance
Essentials Slide 14
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America
Institute at the University of Arizona

7.10.1.G
1

Disability Insurance

Disability Insurance replaces a

portion of ones income if they
become unable to work due to illness
or injury
Insurance typically pays between 6070% of ones full-time wage

Factors such as the length or severity of

a disability influence the percentage of
income a person will receive

Family Economics & Financial Education October 2010 The Essentials to Take Charge of Your Finances Types of Insurance
Essentials Slide 15
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America
Institute at the University of Arizona

7.10.1.G
1

Homeowners Insurance
Peril -an event
which may cause
a financial loss like
fire, falling trees,
lightning and
others

Property Insurance
-protects the insured
from financial losses
due to destruction or
damage to property or
possessions

Liability
Insuranceprotects the insured
party from being
held liable for
others financial

Family Economics & Financial Education October 2010 The Essentials to Take Charge of Your Finances Types of Insurance
Essentials Slide 16
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America
Institute at the University of Arizona

7.10.1.G
1

Renters Insurance

Family Economics & Financial Education October 2010 The Essentials to Take Charge of Your Finances Types of Insurance
Essentials Slide 17
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America
Institute at the University of Arizona

7.10.1.G
1

What Covers This Risk?

Your rented apartment is broken

into and your computer is stolen
Renters!

Family Economics & Financial Education October 2010 The Essentials to Take Charge of Your Finances Types of Insurance
Essentials Slide 18
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America
Institute at the University of Arizona

7.10.1.G
1

What Covers This Risk?

You are injured in an automobile

accident and are unable to work for
2 months
Disability!

Family Economics & Financial Education October 2010 The Essentials to Take Charge of Your Finances Types of Insurance
Essentials Slide 19
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America
Institute at the University of Arizona

7.10.1.G
1

What Covers This Risk?

Your garage was destroyed by a

fire which started by a lightning
bolt hitting your home
Homeowners!

Family Economics & Financial Education October 2010 The Essentials to Take Charge of Your Finances Types of Insurance
Essentials Slide 20
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America
Institute at the University of Arizona

7.10.1.G
1

Summary
An arrangement between an
individual (consumer) and an insurer
(insurance company) to protect the
individual against risk

The purpose of insurance is to help

individuals limit their financial losses
when an accident occurs
Family Economics & Financial Education October 2010 The Essentials to Take Charge of Your Finances Types of Insurance
Essentials Slide 21
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America
Institute at the University of Arizona

7.10.1.G
1

Summary
A premium is the fee paid to the insurer to be
covered under the 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

Life
Automobi
Homeowners/Rente
le
Disability
Health
Family Economics & Financial Education October 2010 The Essentials to Take Charge of Your Finances Types of Insurance
Essentials Slide 22
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America
Institute at the University of Arizona

7.10.1.G
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What Covers This Risk?

Sick at home from food

poisoning after eating a carnival
corndog
Nothing!

Family Economics & Financial Education October 2010 The Essentials to Take Charge of Your Finances Types of Insurance
Essentials Slide 23
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America
Institute at the University of Arizona

7.10.1.G
1

What Covers This Risk?

While driving, you have brake

failure. You hit a telephone pole
and cause damage to the front of
the car
Automobile!

Family Economics & Financial Education October 2010 The Essentials to Take Charge of Your Finances Types of Insurance
Essentials Slide 24
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America
Institute at the University of Arizona

7.10.1.G
1

What Covers This Risk?

While driving to the mall, you are

pulled over and receive a
speeding ticket
Nothing!

Family Economics & Financial Education October 2010 The Essentials to Take Charge of Your Finances Types of Insurance
Essentials Slide 25
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America
Institute at the University of Arizona

7.10.1.G
1

What Covers This Risk?

A daughter, who is financially

responsible for her mothers
nursing home bills, dies from an
undetected heart defect
Life!

Family Economics & Financial Education October 2010 The Essentials to Take Charge of Your Finances Types of Insurance
Essentials Slide 26
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America
Institute at the University of Arizona

7.10.1.G
1

What Covers This Risk?

A doctor diagnoses a child with

tonsillitis during a visit to a clinic
Health!

Family Economics & Financial Education October 2010 The Essentials to Take Charge of Your Finances Types of Insurance
Essentials Slide 27
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America
Institute at the University of Arizona