Slide 1 INSURANCE BASICS 1.1Insurance and Risk 1.2Basic Policy Types 1.3Purchasing Considerations 1

Slide INSURANCE AND RISK Define risk. Describe how insurance works. GOALS GOALS

Standards BMA-IBT-10 Research and interpret the various risks involved in operating a business while determining the role of insurance for a business Identify possible business threats and employ risk management strategies and techniques to minimize potential financial loss Identify types of business insurance and the need for insurance in a business Explain basic insurance concepts: insurance, policyholder, premium, probability, risk, claim, coverage, deductible, policy, insured, insurer, and liability Analyze risks to make insurance decisions. Slide 3

Risk Insurance Insured Premiums Insurer Insurance policy Coverage Claim Uninsured Underinsured Slide 4 TERMS

Slide 5 Pg. 4 Do you agree with Aaron or Susan? What are some other options they should consider? Insurance Scene

Types of Insurance Automobile Health Homeowners/Renters Life Disability Homeowner/Property

Slide 7 LIFE CARRIES RISK Risk - Involved in any situation in which some kind of loss or misfortune is possible Financial Physical Material Insurance - Provides compensation for loss and spreads the cost of sharing risk Indiv that are concerned about potential risks pay insurance companies for protection against specific types of risk such as floods, medical costs, car accidents. Is intangible—you cannot actually see or touch what you are getting. Some are not motivated to purchase insurance. Risks are intangible too—many times are not realized until you experience a loss or survive a close call.

WTBS… Write down 3 risks you may face. List whether they are Financial, Physical, or Material. 5 minutes Slide 8

Slide 9 DEALING WITH RISK Ways to deal with risk include: 1.Avoid 2.Reduce 3.Ignore 4.Transfer For example: Avoid risk– By not smoking Reduce risk – by limiting the number of cigarettes you smoke Ignore risk – by smoking 3 packs a day Transfer – by buying health insurance to compensate you for medical treatment for conditions caused by smoking. Insurance transfers risk.

WTBS… List 1 risk and write down how you can avoid, reduce, ignore, and transfer the risk. 7 minutes Why do you think people ignore risk? Slide 10

Slide 11 List and describe four ways to deal with risk. 1.Avoid 2.Reduce 3.Ignore 4.Transfer  checkpoint

Slide 12 HOW INSURANCE WORKS Insured - Individuals who buy insurance Premiums - Periodic payments for an insurance policy Depending on the type of insurance, premiums are paid monthly, every 6 months, or once a year. Premiums create a pool of money that the insurer invests to earn more money, which is used to compensate the insured for losses Insurer - The company providing insurance

Slide 13 Insurance policy - Written contract between the insurer and the insured Each individual contract covers a specific losses such as theft, accident, fire, flood, illness, or death. Coverage - A specific type of loss such as flood coverage or fire coverage. Individuals agree to pay premiums on an insurance policy, the insurer agrees to reimburse them for their loss on the specific coverage included in their policy. When a loss occur, the insured files a claim. Claim - Written request for reimbursement to cover loss or damage that occurred from a specific event.

Slide 14 WHO PROVIDES INSURANCE? Most insurance is provided by private, for-profit corporations. Other sources of insurance coverage include: The U.S. government Joint programs from the federal and state governments Most recipients of government insurance pay minimal or no premiums for coverage.

Slide 15 INCREASING COSTS High cost of insurance causes many Americans to be: Uninsured - Having no insurance Underinsured - Not having enough insurance Premiums for most types of insurance have increased dramatically. Catastrophic events such as earthquakes, hurricanes, floods, and wildfires have cause premiums to become high. Insurance companies have excluded wildfires or floods from customer’s coverage or charge higher premiums, if customers built houses in an area that is prone to wildfires or flooding.

Slide 16 Who do you think has more responsibility for the rising cost of insurance: the insurance companies or consumers? Why?  checkpoint