I NSURANCE

L EARNING O UTCOMES Section 1: Protecting Your Wealth Section 2: Basic Types of Coverage Section 3: The Importance of Life Insurance Section 4: Insurance to Avoid

S ECTION 2

B ASIC P ARTS OF A UTO I NSURANCE Auto insurance protects you against financial loss if you are in a car accident of if something else causes damage to your car. Basic Components: Liability: covers medical costs & property damage of the other driver if you get in a wreck & it’s your fault. Least expensive part of your car insurance. You should always get really good coverage limits. Medical Payment Coverage: pays for all accident related medical costs incurred by you or your family members within 3 year of the accident. Collision: covers damage to your car if it is hit by another car or object. If you owe money on your car the lender will require collision. Coverage will replace your car if totaled in a wreck. Comprehensive : coverage takes care of damage to your car not caused by a collision. (stolen, damaged by faire, flood, hail, tree, etc.) Uninsured/Underinsured Motorist Protection : covers your costs if you are injured by an uninsured motorist of if you are injured in a hit-and- run.

H OW C AN I G ET A G OOD D EAL ON C AR I NSURANCE AS A T EEN D RIVER ? 1. Get good Grades 2. Take a driver’s education class. 3. Shop Around 4. Stay on your Parents Policy through college if possible in order to benefit from multi-car discounts.

T OP T HINGS TO K NOW A BOUT A UTO I NSURANCE 1. You are a statistic. 2. Insurers differ. 3. Don’t just look at price. 4. Go beyond the basics. 5. Demand discounts. 6. At claims time, your insurer isn’t necessarily your friend. 7. Prepare before you have to file a claim.

H OMEOWNER ’ S & R ENTER ’ S I NSURANCE Needs to be “guaranteed replacement cost” instead of extended replacement cost. When you move out of your parent’s house – you need renter’s insurance, which covers the contents of the renter’s apartment in the event of fire, storm, or theft. Umbrella liability policies are a good buy once you have some assets. This gives you additional liability protection above your other policies.

H EALTH I NSURANCE Everyone needs health insurance due to injury or illness. Save on your Premiums Stay on your parents policy until your out of school and on your own (most cases can be on it until age 25). Increase your deductible ( and coinsurance amount) Increase your stop-loss, but never decrease your maximum. Stop-Loss is your maximum out-of-pocket expense. See if an HSA (Health Savings Account) would make sense for your situation. The HSA is a tax-sheltered savings account for medical expenses that works with a high-deductible insurance policy.

B ASIC COMPONENTS OF HEALTH I NSURANCE Basic Health Insurance policies cover hospital, surgical, and physician expenses. Major medical expense insurance covers medical costs that are in excess of those covered by basic health insurance. Dental & Eye Insurance plans cover only expenses for dental work and expenses related to eye care. Copayment is an amount of money you pay to help cover a portion of your medical costs. These may be a set amount or a % of the total cost depending on the policy. Deductible is the amount you must pay before you begin receiving any benefits from your insurance.

L ONG -T ERM C ARE I NSURANCE Care that you need if you can no longer perform everyday tasks by yourself. Causes may be chronic illness, injury, disability, or advanced age. Your odds of needing this level of care increase as you get older. Long-term care insurance is for nursing homes, assisted living facilities or in-home care. A good policy will include in-home care. You should not buy long-term care insurance until age 60. The probability of a nursing home stay before age 60 is almost zero. At least 69% of people over age of 65 will require long-term care at some point. Long-term care insurance is not the same as disability or short-term medical care.

D ISABILITY I NSURANCE Designed to replace income lost due to a short-term or permanent disability. Provides income for you if you have an accident or health condition that prevents you from working. Once you are working full time to support yourself, you will need to have disability coverage. Try to buy disability that pays if you cannot perform the job that you were trained/educated to do. Called Occupational or “ own occ ” disability Beware of short-term policies covering less than five years. Short-Term should be covered by your emergency fund, staying out of debt, and having a money plan. Disability insurance is most affordable if offered through your employer. Your coverage should be for 65% of your current income. The elimination period is the time between the disabling event and when the payments actually begin. A longer elimination period will lower your premium costs.

I DENTITY T HEFT I NSURANCE Identity Theft is the fastest growing white-collar crime in North America today. Happens when someone gains unauthorized access to your personal information. According to identityhawk.com – young adults ages are the highest risk. Takes people an average of 132 days to notice fraudulent activity on their accounts. Don’t buy identity theft protection that only provides credit report monitoring. This is something you can do yourself. Good protection includes restoration services that assign a counselor to clean up the mess. This means someone will spend the time it takes to clean up the mess so you won’t have to. Insurance is all about transferring risk You are paying someone to take on the risk of cleaning up your stolen identity in the aftermath.

D ISCUSSION Q UESTIONS : 1. Why do you need to have comprehensive coverage on your vehicle in addition to collision? 2. What are some things you can do to get a good deal on car insurance as a teen? 3. What does a homeowner’s policy protect you against? 4. List the basic components of health insurance. 5. What is the purpose of long-term care insurance? 6. What is the purpose of ID Theft Insurance? BE SURE TO ANSWER THESE QUESTIONS – IN DETAIL – AND UPLOAD YOUR RESPONSES TO THE NOTES/PODCAST ASSIGNMENT ON CANVAS.