1. What is Insurance? What is the purpose of insurance?
What types of insurance are available?
How do you know what insurance to buy?

2. Why do people buy insurance?
Insurance: something providing protection against a possible event or action An insurance company or agency provides a guarantee of payment for specified loss, damage, illness, or death. To get this, you must pay a premium, or fee. This can be paid monthly, quarterly, or yearly. People usually buy insurance to help protect against things that can threaten their financial health or financial future. In buying insurance, the company will cover a portion or all of the expenses if something does happen.

3. How can insurance companies afford to pay for your losses?
Insurance is based on the principle of risk, a chance of loss (life, property, health…) Companies operate on the principle of shared risk, or risk pooling. This is where money from your premium is put together with others who have bought the same insurance. This pool of money is used to pay for losses of individual members of the group.

4. How can we protect ourselves from risk?
It is virtually impossible to eliminate all risk from our lives; however you can help protect yourself and reduce your chances of risk:
Avoid dangerous situations and activities when possible
Use protective devices and preventive measures
Arm yourself with knowledge (have facts, skills that help you make good decisions)
Have insurance to protect you from major financial losses

5. What is the connection between risk and your premium?
Insurance companies measure your risk by using estimations of an event’s likelihood within a certain group of policyholders (people who have bought insurance)
Using probability and statistics in the law of averages (the larger the group, the more accurately events can be predicted)
Those that have higher likelihood of actually having a negative event pay more for their insurance
TEEN DRIVERS (more likely to have an accident) pay more for auto insurance
SMOKERS (more likely to have more health problems) pay more for health/life insurance

6. What factors affect the overall cost of someone’s premium?
Age
Gender
Marital status (single, married…)
Claims made on an insurance policy from previous incidents
Where you live, drive (more people=more risk)
Type of item insured (car, house) and its value
Your health/overall risk

7. Who plays a role in insurance?
Actuary: a person that calculates the risks based on loss percentages and determines insurance rates/premiums using advanced math Underwriter: a person who evaluates risks and assigns premium amounts; based on key factors such as age, gender, and health Insurance agent: licensed representative of an insurance company who sells insurance policies (contracts) and provides customer service