Understanding Risks and Insurance SS.4.FL.6.1 Explain that risk is the chance of loss or harm. SS.4.FL.6.3 Describe ways that individuals can either choose to accept risk or take steps to protect themselves by avoiding or reducing risk. SS.4.FL.6.4 Discuss that one method to cope with the unexpected is to save for emergencies. Gr. 4 Financial Literacy

Vocabulary Consequence: what happens as a result of an action Insurance: contract by which someone guarantees to pay a specified amount for injury or loss Insurance Agent: A representative of an insurance company who sells insurance contracts (policies) and provides customer service. He or she must be licensed by the state in which a policy is sold. Probability: The chance of something happening or not happening within a certain number of occurrences. For instance, your odds of becoming a pro athlete are around 22,000 to 1, while your chances of having your identity stolen are 200 to 1. Risk: possibility of loss or injury Policyholder: someone who is insured Underwriter: Employee of an insurance company who evaluates risk and assigns premium amounts. Age, gender and health are key factors they use to determine risk. Grade 4 Financial Literacy SS.4.FL.6.1, SS.4.FL.6.2, SS.4.FL.6.3, SS.4.FL.6.4

What information can be gained by analyzing the cartoons? (LAFS.4.RI.3.7) Image Source: count=3&s=insurance136baaa Grade 4 Financial Literacy SS.4.FL.6.1, SS.4.FL.6.2, SS.4.FL.6.3, SS.4.FL.6.4 Image Source: ak0.pinimg.com/236x/20/ec/4b/20ec4b740bcf9e6abcc f68e67fc57c31.jpg

Essential Questions How does insurance help protect us from risk? How can you alter your actions to reduce/eliminate risks? Grade 4 Financial Literacy SS.4.FL.6.1, SS.4.FL.6.2, SS.4.FL.6.3, SS.4.FL.6.4

What are risks? Grade 4 Financial Literacy SS.4.FL.6.1, SS.4.FL.6.2, SS.4.FL.6.3, SS.4.FL.6.4 damage/loss of property possible things that could happen (consequences – usually negative) Common Risks illness/injury of a person loss of money (economic hardship) PhysicalHealthFinancial Theft Fire Natural disaster Accident Examples Definition Accident Broken bone Drugs/alcohol Obesity Gambling Risky investments Loss of job/income Result of physical/health risks

Types of Risks Grade 4 Financial Literacy SS.4.FL.6.1, SS.4.FL.6.2, SS.4.FL.6.3, SS.4.FL.6.4 Analyze the situation and identify the potential risk (physical, health, financial, or a combination). Injury (Health/Financial) Illness (Health/Financial) Accident (Physical Health/Financial) Injury (Health/Financial) Theft (Financial Physical) Medical Emergency (Health/Financial) Storm/Fire (Physical/Financial) Accident (Physical/Health) Death (Financial)

Precautions to Minimize RiskProtects you from… Protecting Yourself from Risks Grade 4 Financial Literacy SS.4.FL.6.1, SS.4.FL.6.2, SS.4.FL.6.3, SS.4.FL.6.4 Lock doors Do not leave candles unattended Wear a seatbelt Install fire alarms Install a security alarm Drive cautiously Exercise and eat healthy Purchase insurance Save money Property Damage/Loss Injury/Illness Financial Loss/Debt Think about the ways taking certain precautions can minimize risk.

Grade 4 Financial Literacy SS.4.FL.6.1, SS.4.FL.6.2, SS.4.FL.6.3, SS.4.FL.6.4 Insurance Insurance is a promised payment for a specific potential loss helps protect our valuable possessions

Average Cost Emergency Grade 4 Financial Literacy SS.4.FL.6.1, SS.4.FL.6.2, SS.4.FL.6.3, SS.4.FL.6.4 Why Insurance? emergency room visit to address a bone fracture (non- surgical treatment) minor fender bender without injuries cost of routine surgery roof replacement after storm loss of home/possessions to fire one night hospital stay Can you guess the average cost of the following emergencies? $4,000 $2,000 - $5,000 $20,000 $5,000 $150,000 – 300,000 $20,000 – 50,000

Insurance helps you recover when bad things happen. Grade 4 Financial Literacy SS.4.FL.6.1, SS.4.FL.6.2, SS.4.FL.6.3, SS.4.FL.6.4 Click here to play video outside of PPT.

How Insurance Works Grade 4 Financial Literacy SS.4.FL.6.1, SS.4.FL.6.2, SS.4.FL.6.3, SS.4.FL.6.4 Insurance is based on the principle of shared risk, or risk pooling. The money from your premium is put together with the premiums of many other people. That large pool of money is used to pay for losses suffered by individual members of the group. Insurance companies figure out how much to charge you or someone else by measuring risks. They have to estimate how many accidents, illnesses, or deaths there will be within a certain group of policyholders. This is where math techniques, such as probability and statistics, come in handy. Insurance Premiums YOU PAY A PREMIUM THEY PAY FOR LOSS

Factors in Determining Risks AGE Grade 4 Financial Literacy SS.4.FL.6.1, SS.4.FL.6.2, SS.4.FL.6.3, SS.4.FL.6.4 GENDER HEALTH Your premiums will be higher if the insurance company feels you are at greater risk. Younger people are usually charged _______ than older people for life insurance because they are statistically less likely to die. less Younger people are usually charged _________ than older people for auto insurance because they are statistically less likely to get into an accident. more Life insurance premiums for males are usually __________ than females because women live an average of six years longer than men. more Young men pay __________ for automobile insurance than young women because they are statistically more likely to have an accident. more A person with a preexisting medical condition pays ______ for health insurance because they are statistically more likely to need more medical care. more

Who Pays More? Explain why. Home located in an area with high crime. PROPERTY INSURANCE Home located in an area with low crime Home with storm shutters. Home without storm shutters. Driver with previous accidents/traffic citations. AUTO INSURANCE Driver without a history of accidents/traffic citations. High theft automobile. Low theft automobile. Luxury vehicle. Standard vehicle. LIFE INSURANCE An individual with no health concerns. An overweight individual that smokes. A movie stunt double. A school teacher.

Let’s Review 1.What are some things you could do to reduce/eliminate the risk of a car accident? 2.How can having insurance protect us from potential risks? 3. What factors affect your insurance premiums? Grade 4 Financial Literacy S.S.4.FL.4.2, S.S.4.FL.4.2 it can help protect your finances by helping you pay for emergencies – such as property damage/loss (home or car) and costs of healthcare. Drive with caution Wear a seatbelt Pay attention to the road The three main factors include age, gender, and health. CONGRATULATIONS! Based on your CREDIT SMARTS you have now been approved for your very first credit card. Use it wisely!

What information can be gained by analyzing the cartoons? (LAFS.4.RI.3.7) Image Source: Cartoon-Credit-Card1.png Grade 4 Financial Literacy SS.4.FL.6.1, SS.4.FL.6.2, SS.4.FL.6.3, SS.4.FL.6.4 Image Source: Cartoon-Credit-Card1.png

Sources Grade 4 Financial Literacy S.S.4.FL.2.5,, S.S.4.FL.2.6 Common Craft, Inc., (2009). Insurance. [Full Video]. Available from Life Happens Lesson Resources from Scholastic Lesson content adapted from PwC’s Earn your Future Curriculum – Risk Management and Insurance – Grade 3-5 Lesson responsibility-report-2011/community/financial-literacy-curriculum-pdfs/8-risk- management-3-5/1-pwc-risk-management-3-5-lesson.pdf