1. How Insurance Works Life is full of risks
The purpose of Insurance is to provide financial protection against different kinds of risks we face in life.

2. Types of Insurance
Insurance Policy – A written agreement between you and the insurance company that explains the following:
what kinds of losses the company will cover
how much it will pay to cover theses losses
how much you will pay for this protection.

3. How Insurance Works
Coverage limits – the maximum amount the company will pay you for your loss
Deductible – The amount of loss that you must pay before the company will step in and pay the rest.

4. How Insurance Works Claim – a request for payment of your losses
For example, imagine that your car insurance has a $500 deductible. If you get into an accident and it takes $1,500 to repair your car, you will have to pay $500 of the bill yourself and the insurance company will pay $1,00.

5. How Insurance Works
Premium – Your insurance premium is the amount of money you must pay per month, per quarter, or per year in order to guarantee your coverage.
Insurance premiums vary widely, according to certain factors.

6. How Insurance Works
Health insurance – very expensive, while property insurance is relatively inexpensive.
That is why people try to find jobs in which their employer will pay for some of their health insurance.

7. How Insurance Works
Property Insurance – You can often choose between different coverage limits. If you don't own a lot of personal property, for example, you could choose a property with a low coverage limit, in exchange for low premiums.
Amount of deductible – If you choose a policy with a higher deductible, your premium will be lower, but your out-of- pocket expense will be greater.

8. How Insurance Works Premium costs are based on the following: Your age
Where you live
Credit history
Marital status
For many types of insurance, companies assume that people who are older, married, live outside of cities, and have good credit scores are less risky to insure

9. Types of Insurance
Car Insurance: The first insurance you are likely to pay – All states require drivers to have at least a minimum amount of car insurance.
Liability coverage – Pays for any personal injuries or property damage.
Collision coverage – pays for any damage to your own car.
Teens pay higher rates because, statistically, they have more accidents than older drivers.
Young male drivers pay more than young females because males have more accidents (according to statistics).

10. Types of Insurance
As you get older, your rates will go down, as long as you keep a safe driving record.
As you get older, you need to invest in other kinds of insurance protection.

11. Types of Insurance Health Insurance – Pays medical bills
Parents' policy will cover you until you are 26
Cheapest way to get health insurance is through your job, if you are lucky enough to have an employer who either pays your premium or a portion of your premium

12. Types of Insurance
Property Insurance – If you live in an apartment, you can get renters' or owner's insurance to help you replace your belongings in case they are stolen or destroyed by fire.
If you buy a house, you need homeowners' insurance to protect your belongings, as well as the value of your house.

13. Types of Insurance
Disability Insurance – If you suffer an injury that keeps you from working for an extended period of time.
Disability Insurance will pay you approximately 75% of your monthly income until you recover.

14. Types of Insurance
Life insurance – This insurance provides money to family members.
When you buy life insurance you name a beneficiary (the person you want to receive the money)‏

15. Types of Insurance Two major types of life insurance: Term insurance
Whole life insurance

16. Types of Insurance Term Insurance Usually cheaper
Pays a higher death benefit
You can only buy a policy for a limited term or period of time
When that term is over, you must purchase a new policy (at a higher rate).
Premiums increase as you get older
Pays off only when you die (No cash value).

17. Types of Insurance Whole life insurance
More expensive and pays less of a death benefit than term
It provides coverage for your whole life and premiums never increase
Also is an investment with a cash value that increases over time
Policy entitles you to withdraw or borrow against the accumulated cash value.

18. Define The Following Terms:
Insurance
Insurance policy
Insurance Premium
Coverage limit
Whole Life Insurance
Deductible
Liability coverage
Collision Coverage
Insurance Claim
Term Life Insurance

19. C. A higher coverage limit D. no coverage limit
If you switched to an insurance policy with a higher deductible, you could probably expect
A. a higher premium
B. a lower premium
C. A higher coverage limit
D. no coverage limit

20. B. Increasing premiums as you get older No cash value
Which of the following is NOT a disadvantage of term life insurance, as compared to whole life insurance?
A. a lower death benefit
B. Increasing premiums as you get older
No cash value
No guarantee of lifelong coverage

21. B. a 30-year old married woman C. an 18-year old boy
Of the following people, which one would probably pay the highest rates for car insurance?
A. a 50-year old single man
B. a 30-year old married woman
C. an 18-year old boy
D. an 18-year old girl

22. B. disability insurance C. Life insurance D. Homeowners’ insurance
Which kind of insurance pays a monthly income to people who are unable to work for an extended period of time?
A. health insurance
B. disability insurance
C. Life insurance
D. Homeowners’ insurance