Unit 8: INSURANCE

1. According to the Unit 8 reading: Risk is defined as ….. Chance of loss from some type of danger.

2. Define Risk Management How you deal with the chance of a potential personal or financial loss

3. Identify the four options for managing your risk Avoid risk - walk Reduce risk – slow down Accept risk – Don’t buy the warranty Share risk – Insurance

4. Identify three potential risks that teens face. For each one, explain how a teen can reduce the risk of that specific situation or avoid the risk all together.

5. Define Insurance - Guaranteeing your financial protection against various risks

6. Define Insurance policy – Written contract detailing what an insurance company will cover, how much it will pay, and how much you will pay

7. Define Premium - Amount you pay for an insurance policy #8. How can premiums be paid? Monthly, quarterly, semi-annually, annually

9. Explain why Insurance is considered “sharing the risk”? If you take the risk of driving and do not have insurance, then you own all the risk take all of the responsibility to pay If you take the risk of driving and you do buy insurance, then you own a % of the risk and share a % of the risk with the insurance company. You take some responsibility to pay and the insurance company shares some of the responsibility to pay

10. List 4 factors that affect your insurance premium: Type of …and Amount of…Insurance you choose. Size of deductible Various companies Age Marital status Where you live Credit History

11. In the US, insurance is a … and not a ….. PRIVILEGE RIGHT

12. Define coverage limit – Max amount the insurance co. will pay

13. Define deductible The amount of a loss you must pay “out of pocket” before the insurance co. will pay the rest.

14. If you have health insurance and need a minor surgery that costs $2000. Your deductible is $500. How much will you pay and how much will your insurance pay? Bill $2000 Pay your deductible $500 Balance = $1500 – paid by insurance co.

15. If your deductible is higher, your premiums are usually … Lower Why do You think?

16. What’s the benefit if you have multiple insurance policies from the same agent/company? Discounts Lower premiums Name some Insurance co’s.

17. Make a list of at least three personal belongings that you would hate to lose. Estimate and write the approximate cost to replace them. House Car Wedding Ring $200,000 $10,000 My life

18. Factors affecting Auto Ins. Age Older = lower Gender Female = lower Marital Status Married = lower Type of Car Family car = lower How often you use car Less = lower Location Rural = lower Driving Record Clean = lower Claim Record Less = lower Credit History Higher = lower

19. Is it cheaper to be on your parent’s insurance, or to buy your own? Parents

20. Types of Coverage General Liability Covers damage you cause to others property and/or bodily injury outside of your car Medical Payment Bodily injury expenses to you and people inside of your car Also covers you in accident with car if you are on foot or bike or in a friend’s car

Collision covers damages you cause to your car (accident with another car or object) Comprehensive Fire, vandalism, break in, theft, natural disasters (anything except actual collision) Uninsured Motorist Lost wages and medical expenses if you are in accident with driver with no insurance

Underinsured Motorist Covers you when the cost of repairs (accident caused by another driver) exceeds his coverage limits