1. INSURANCE TYPES AND CHARACTERISTICS

2. WHAT IS INSURANCE? We have insurance because life is full of different risks. Insurance – an agreement between an individual (consumer) and insurer (insurance company) to protect the individual against risks. The purpose of insurance is to help individuals limit financial losses when an unexpected event occurs. Policy – contract between the individual and the insurer specifying the terms of insurance agreements. Premium – amount paid to by the policyholder to be covered under specific terms. Deductible – amount paid out of pocket by the policyholder for the initial portion of a loss before the insurance coverage begins.

3. TYPES OF INSURANCE Automobile insurance – purpose of this insurance is to protect a consumer when an automobile accident occurs. -Drivers have a 70% chance of getting into an accident in their first three years behind the wheel. -Five types of automobile insurance 1.Liability – covers the consumer if injuries or damage occur to other people or property. Minimum amount of insurance required by law. 2.Medical payment – covers injuries sustained by the driver or passengers. 3.Uninsured or underinsured motorists – covers injury or damage to driver and passengers caused by a driver with insufficient insurance. 4.Physical damage – covers damages caused to the vehicle 5.Automotive repair – covers repairs to the vehicle such as replacement of transmission.

4. TYPES OF INSURANCE Health insurance – provides protection against financial losses resulting from illness, injury, and disability. Purpose is to provide coverage for emergency or routine healthcare costs. Health insurance may cover hospital, surgical, dental, vision, long-term care, prescription, and other major expenditures. Coverage differs between different policies. May be purchased by individuals or through an employer (61% of healthcare plans are employer based).

5. TYPES OF INSURANCE Life insurance – contract between consumer and insurer to pay a sum to a beneficiary upon the insured’s death. 70% of American adults have life insurance. Purpose of life insurance is to provide money for family members or dependents when the insured dies. Only necessary for those with dependents.

6. TYPES OF INSURANCE Disability insurance – prevents the risk of losing income due to a disability. Typically covers between 60 – 70% of ones income if they become unable to work due to illness or injury. It will never pay 100% of the former income because that would not provide any incentive to return to work. Length or severity of disability will determine how much of the income is covered. Most employers will offer disability insurance as a part of employee benefits.

7. TYPES OF INSURANCE Homeowner’s insurance – combines property and liability insurance into one policy to protect a home from damage costs due to perils. Protects against perils such as fire, falling trees, lightning and others. Property insurance – protects from financial losses due to damage to property or possessions. Liability insurance – protects from being held liable for others financial losses. Renter’s insurance – protects from the loss of belongings in a dwelling rather than the dwelling itself. -Covers perils, provides liability protection, and additional living expenses if the dwelling is uninhabitable. -Necessary if landlord’s insurance policy does not cover renter’s personal belongings.