Unit 4 – Insurance and Risk

Standards & Objectives State Standard(s) Addressed:  CTE P.F #14) Differentiate the benefits and costs associated with various types of insurance. Describe the risks associated with lack of proper coverage. Determine the role of insurance in personal financial planning to preserve and build wealth. Goal(s) Objective(s): 1.Differentiate the benefits and costs associated with various types of insurance including health, auto, property and life. 2.Describe the risks associated with lack of proper coverage. 3.Determine the role of insurance in personal financial planning to preserve and build wealth. UNIT 4: INSURANCE & RISK

Vocabulary! Insurance – is a means of guaranteeing your financial protection against various risks. In exchange for a small payment, you gain protection against a potentially large loss. Premium – is simply the amount you pay for an insurance policy. Coverage Limit – is the maximum amount the insurance company will pay if you file a claim. Deductible – the amount of a loss you must pay out of your own pocket before the insurance company will step in and pay the rest (up to your limit). NOTES

Vocabulary Insurable Interest – the things the insurance company considers when determining your policy factors. Claim – what you must file in order to have your car fixed and your funds received. Comparative Fault – when you are not 100% at fault for the accident, your charges / fines may be reduced. Grace Period – most companies have none! Pay your insurance on time! NOTES

Proof of Loss: verification of purchase (date of purchase, purchased from where, purchase amount). Actual Cash Value (ACV): the current value of an item. (It's what you would get for something if you would try to sell it in the paper). Replacement Cost: the cost of an item, if it is replaced new from the store. Depreciates: the value of an item goes down with time. NOTES

ExposureRisk Potential Loss Accident or Illness PropertyOwnership Liability Loss of income from inability to work; uninsured medical bills; death Your property is damaged, destroyed, lost, or stolen You are found liable for injuries to other people or damages to their property UNLIMITED UNLIMITED Amount needed to replace your property Common Exposures to Loss NOTES

1. Avoid it 2. Reduce it 4. Share it Managing the Possibility of Loss 3. Accept it NOTES

How to Save Money on Insurance Shop at least three placesShop at least three places Read sources of information such as Consumer Reports ®.Read sources of information such as Consumer Reports ®. Purchase more than one type of insurance from the same company.Purchase more than one type of insurance from the same company. Choose the best options: low risk car, non smoker, good health record,Choose the best options: low risk car, non smoker, good health record, Select a higher deductible to reduce monthly payments of insurance.Select a higher deductible to reduce monthly payments of insurance. Avoid filing excessive claims and maintain good credit.Avoid filing excessive claims and maintain good credit. NOTES

Factors Affecting Automobile Insurance Costs Your age Make of car Marital status Do you take the car to work? If you’re a good student Gender Where you live How much you use the car Credit rating Driver’s education Driving record Type of car 6-F

Comparing Costs of Auto Insurance COVERAGESLIMITS YOU WANT Company 1Company 3Company 2 A.Liability 1.Bodily Injury 2.Property Damage B. Medical Payments C. Uninsured & Underinsured Motorists $ ____ per person $ ____ per accident A.Damage to your car 1.Collision 2.Other than collision loss (comprehensive) $ ____ per person $ ____ amount $ ____ Deductible

In an ACCIDENT! 1.CHECK to make sure everyone in all vehicles are alright. 2.CALL the police and emergency services. 3.GET names, numbers, and insurance information for all parities involved. 4.TAKE pictures of everything you can! 5.CLAIMS with your insurance company should be filed within 24 hours.

Example 1 Pete hit Kate's car in the rear bumper while Kate was stopped at the light costing $2500 in repairs to her car. Pete’s car had damage of $3500. Pete has liability coverage at 100% after the deductible. He has a $500 deductible on his policy. How much does Pete pay out of pocket? A.$500 B.$2000 C.$3000 D.$4000 NOTES

Example 2 Johnny has full coverage insurance. He has a $400 deductible and a 20% co-pay on all damages. On the way home from California Johnny wrecked into a light pole after falling asleep at the wheel. His car was totaled for a value of $8,435. What amount should Johnny receive in the form of a check to purchase a new car? A.8435 B.6348 C.400 D.8835 NOTES

Example 3 John has the following renter insurance policy: $250 deductible $30,000 Personal Property Limit $2,500 Special Limit for Certain Property $100,000 Liability NOTES

John moved out of the dorms into an apartment with his friends, Chris and Randy. After talking to an insurance provider, John decided to carry renter insurance on his stuff. He gave the producer the following list of items to be covered: Clothes - $8,000 College books - $2,000 Couch - $150 Coffee table set - $100 Lamps - $25 each = $75 Bed - $200 NOTES

Chris & Randy owned the $ inch TV, $2,000 stereo, and $3,000 computer along with their beds, books and clothes, but they decided that they did not need insurance. While on break from school, Chris had a grease fire in the kitchen, and everything was lost. How much did John pay out of pocket? How much did Chris & Randy pay out of pocket? How much did the insurance company pay to John to replace his property? NOTES

JohnPaysIns. Co. Pays $250 Deductible $0 $0 Clothes $8,000 $0 College Books$2,000 $0 Couch $150 $0 Coffee table set $75 $0 Lamps$75 $0 Bed $200 $250 Total $10,525

QUICK WRITE What are the consequences of not having enough insurance coverage?

Types of Health Coverage Major Medical – a general policy that usually has a deductible and co-insurance with a lifetime maximum coverage limit. Offers doctor visits, hospitalizations, therapy and surgery. PPO – preferred provider organizations, must use in-network care providers. Most coverage is 80/20. HMO – health maintenance organization, required to have a PCP and requirements of preauthorizations are high! NOTES

Waivers and Exclusions – statements that the company will not pay for certain accidents or sicknesses. Waivers signed become part of your policy. Grievance – HMO and PPO plans are required to provide a way for you to appeal coverage or benefits you believe have been paid or applied incorrectly. Pre-Existing Conditions – a condition that occurs before you get health insurance. Health Insurance Terms NOTES

Example 4 1. Bob’s PPO states that his co-insurance is 80/20. Bob’s bill just came in at $ The PPO pays $____ and Bob pays the doctor $_____? NOTES

Example 5 Heather signed a waiver that says her pre- existing condition for bad hair coloring will not be covered. She signed up for an indemnity plan that pays for basic accidents and sicknesses. If Heather had a bad hair coloring accident would the insurance company be required to pay? How long does her waiver last? The waiver lasts until the company agrees to remove it, or she gets new insurance. NOTES

Example 6 You feel that your claim was mishandled or denied. What is the first and least expensive step to help you resolve your dispute? A. File a Grievance B. Call MDI C. Contact a Lawyer D. Pitch a fit in the lobby of the insurance Company NOTES

Quick Write What types of insurance do you believe you need? How would the cost of these effect your monthly budget?

Assignment Insurance Word Problem Worksheet

State Standard(s) Addressed:  CTE P.F #15) Conduct assessments of various types of identity theft situations and scams, then determine strategies and present a plan to safeguard and protect against identity theft. Design and present a plan to lower and protect against risks. Determine what steps should be taken by a victim of identity theft to report and re-build. Goal(s) Objective(s): 1.Conduct assessments of various types of identity theft situations and scams, then determine strategies and present a plan to safeguard and protect against identity theft. 2.Design and present a plan to lower and protect against risks. 3.Determine what steps should be taken by a victim of identity theft to report and re-build. Standards & Objectives UNIT 4: INSURANCE & RISK

Types of Fraud Fake Check Scam – some version of pretending to only have one check or one type of check, requesting the buyer to send the ‘extra’ money to a third party. Skim Scam – when crooks skim data from the magnetic strip on your credit or debit card so they can clone it. Cover your PIN! Phishing – you get an or text impersonating a company you do business with (bank, IRS, charity…). Tricks you to click a link and enter personal data which is then stolen. TAKE NOTES!

Fraud Alert Cancel all your credit, debit and other card accounts.Cancel all your credit, debit and other card accounts. Report loss to Social Security, and apply for a new SS number.Report loss to Social Security, and apply for a new SS number. Call any of the national credit reporting bureaus.Call any of the national credit reporting bureaus. Call police if you are confident your identity has been stolen.Call police if you are confident your identity has been stolen. File a complaint with the Federal Trade Commission at a complaint with the Federal Trade Commission at TAKE NOTES!

The Risks of Identity Theft IDENTITY THEFT VICTIMS COULD: Have any and all of their financial accounts invaded and emptied.Have any and all of their financial accounts invaded and emptied. Be asked to repay debts they did not incur.Be asked to repay debts they did not incur. Lose job opportunities.Lose job opportunities. Lose their good credit rating.Lose their good credit rating. Be refused loans.Be refused loans. Be sued for things they have no part of.Be sued for things they have no part of. Even be arrested for crimes they didn’t commit.Even be arrested for crimes they didn’t commit. 5-M TAKE NOTES!

1 SCAMMED! 5-N The news of my father death, and my uncle,s involvement in an air crash in december 2002 while on a business trip to benin republic caused my mother heartfailure and other related complications of which she later died in the hospital After we have spent a lot of money on her. Before our mother died, she told us that our father deposited some money which he made from diamond sales and contracts at this bank here in Ivory Coast and that we should pray and find a trust worthy foreign business partner who would help us to transfer and invest this money in profitable business venture overseas.She told us to do this quickly so that we can leave Ivory Coast and, then settle down abroad. She gave us the bank document to prove the deposit and then told us that my father used my name as the next of kin and beneficiary to the money in the bank in the event of his death. If you are willing to assist us, please let us know immediately so that you will arrange the transfer of the money to your account with the bank. 2

Preventing and Protecting Keep your personal information in a safe place, under lock and key if possible.Keep your personal information in a safe place, under lock and key if possible. Sign new credit cards; destroy old ones.Sign new credit cards; destroy old ones. Shred bill statements and other private mail.Shred bill statements and other private mail. Check and double-check all your statements for unauthorized use.Check and double-check all your statements for unauthorized use. Don’t fall for Internet scams.Don’t fall for Internet scams. 1 of 2 TAKE NOTES!

Only enter into secure transactions on the Internet.Only enter into secure transactions on the Internet. Monitor your credit history yearly, if possible do this three or more times per year.Monitor your credit history yearly, if possible do this three or more times per year. Lock your credit when you are not applying for new accounts with the three credit agencies.Lock your credit when you are not applying for new accounts with the three credit agencies. Purchase Identity theft insurance.Purchase Identity theft insurance. 2 of 2 Preventing and Protecting

Dealing With Deception You walk up to an ATM and a guy who appears to be waiting his turn walks up behind you. But he’s uncomfortably close—right over your shoulder—as you get ready to enter your PIN. 5-O-1 What should you do? 1 of 7

You’re at a cash register in a store and have given the clerk your credit card. She holds on to it, probably to verify your signature. But then she says she needs to grab something from the back and starts to walk away with your card in hand. 5-O-2 What should you do? Dealing With Deception 2 of 7

A caller says she’s from your credit card company and wants to offer you a higher credit limit for being such a good customer. You reply, “Great, what do I have to do?” And she tells you to give her your Social Security number for verification. 5-O-3 What should you do? Dealing With Deception 3 of 7

You’ve found a pair of shoes at a great price on a Web site you just found. You start the check-out process and notice that the padlock at the bottom of your computer screen is open and that the Web page address starts with “http” instead of “https.” 5-O-4 What should you do? Dealing With Deception 4 of 7

You get an from an online bookstore you frequently buy from. It says that the credit card on your account has expired and gives you a link to update your information. 5-O-5 What should you do? Dealing with Deception 5 of 7

Your friend sends you an about cool new software that lets you share music with others for free. He sends you the link to download the software, which is from a site you’ve never heard of. 5-O-6 What should you do? Dealing With Deception 6 of 7

You’re bummed out about losing in an online auction. But then you get an stating the winner backed out and that you can have the item if you still want it, and to just send your credit card information via . 5-O-7 What should you do? Dealing With Deception 7 of 7

Assignment Conduct assessments of various types of identity theft situations and scams, then determine strategies and present a plan to safeguard and protect against identity theft. Design and present a plan to lower and protect against risks. Determine what steps should be taken by a victim of identity theft to report and re- build.