10/12/2007 Mil Grauer Prepared by: Brian Alvin Life’s Greatest Risks An Introduction to Insurance Mil Grauer

10/12/2007 Mil Grauer Prepared by: Brian Alvin Why Purchase Insurance? In the next hour:  194 people will be injured in car accidents  57 homes will catch fire  230 people will die  1,027 people will become disabled How can you as an individual plan ahead in order to protect yourself against these things that you potentially have no control over?

10/12/2007 Mil Grauer Prepared by: Brian Alvin Life Insurance Provides financial assistance in your absence Helps pay for funeral costs Provides an income for your family Cause of DeathProbability Motor Vehicle Accident1 in 100 Homicide1 in 300 Fire1 in 800 Firearms Accident1 in 2,500 Electrocution1 in 5,000 Asteroid/Comet Impact1 in 20,000 Passenger Aircraft Crash1 in 20,000 Flood1 in 30,000 Tornado1 in 60,000 Venomous bite or sting1 in 100,000 Fireworks Accident1 in 1 million

10/12/2007 Mil Grauer Prepared by: Brian Alvin Cumulative Death Table *numbers are out of 1000 people per year at the specified age. Age in 1990Total U.S.White MaleWhite FemaleBlack MaleBlack Female

10/12/2007 Mil Grauer Prepared by: Brian Alvin Disability Insurance Ensures that when a working person is ill or disabled and unable to work, he or she will still receive a monthly income Savings are often insufficient Age (year)Probability (%) Age at Onset of Disability Recovered (%) Died (%) Still Disabled (%)

10/12/2007 Mil Grauer Prepared by: Brian Alvin Fire Insurance Fire is a very real threat that can destroy your home and possessions Fire is the largest single cause of property loss in the United States  In the last decade, fires have caused direct losses of more than $120 billion and countless billions more in related costs. 12 out of every 100,000 homes burn down every year

10/12/2007 Mil Grauer Prepared by: Brian Alvin Automobile Insurance Automobile accidents are common due to the number of vehicles on the road Even if you are careful, drivers around you may not be as safe  1,163 out of 100,000 vehicles are involved in Bodily Injury Claims annually  3,846 out of 100,000 vehicles are involved in Property Damage Claims annually

10/12/2007 Mil Grauer Prepared by: Brian Alvin Auto Insurance Rates The average cost of car insurance nation wide is $ Most Expensive Cites for Auto Insurance RankingCityAverage Auto Premium 1Detroit, MI$5,162 2Philadelphia, PA$4,142 3Newark, NJ$3,482 4Los Angeles, CA$3,225 5New York City, NY$3,127 Least Expensive Cities for Auto Insurance RankingCityAverage Auto Premium 1Roanoke, VA$758 2Wapakoneta, OH$871 3Chattanooga, TN$911 4Green Bay, WI$948 5Raleigh, NC$949

10/12/2007 Mil Grauer Prepared by: Brian Alvin Liability Insurance A liability lawsuit can completely deplete all of your wealth Especially important for companies since a loss could cause bankruptcy Also known as “third party insurance” It is not uncommon for liability claims to be in the ballpark of $1-10 million!

10/12/2007 Mil Grauer Prepared by: Brian Alvin Long Term Care Insurance To protect against the high costs a family can incur from placing a family member in a LTC facility On average, LTC costs $7,000 a month, or about $84,000 a year  For a person 65 years old, there is a 44% chance that they will be disabled for 90 days or longer and require LTC  Over 5 million individuals between the ages of 18 and 64 needed LTC last year

10/12/2007 Mil Grauer Prepared by: Brian Alvin Risk of Living Too Long Compared to earlier generations, our population as a whole is starting to live longer Life expectancy for a person who reaches the age of 65:  Female19.5 years left  Male16.6 years left By saving early though you can avoid this risk by maximizing the benefit of compounding interest.

10/12/2007 Mil Grauer Prepared by: Brian Alvin Health Insurance People get sick -- It’s just a fact of life $1.7 trillion was spent in 2003 on health care costs – that is $5,671 per person The average annual growth rate in inpatient expenditures per health plan member is 5.9% Cost of hospital stay varies greatly from 52% above the national average in New Jersey to -38% below the national average in Maryland.

10/12/2007 Mil Grauer Prepared by: Brian Alvin Homeowner Insurance The typical homeowner policies covers property damage as well as liability issues that may arise as a result of owning property 7,330 out of 100,000 homeowner policies file claims each year $5,082 is the average severity of a homeowner’s claim

10/12/2007 Mil Grauer Prepared by: Brian Alvin Percent of Losses Incurred on Homeowners Policies Type of Damage/Year Property Damage Fire, Lightning, Debris Removal32.82%31.03%32.72%32.92%22.49% Wind and Hail20.45%21.69%20.81%25.56%48.61% Water Damage, Freezing, Mold22.6%22.14%21.71%22.01%16.62% Theft4.91%4.65%4.53%3.29%2.35% Other Property Damage, (Vandalism and Mischief) 11.63%13.11%12.23%10.62%6.01% Liability Bodily Injury and Property Damage6.43%6.47%7.00%5.29%3.17% Medical Payments1.13%0.88%0.98%0.94%0.74% Credit Card Fraud (forgery and counterfeit currency) 0.03% 0.01%0.00%  84% of claim costs are from property damage, only 4% are from liability suits, and remaining 12% are from settling costs.

10/12/2007 Mil Grauer Prepared by: Brian Alvin Questions?