1. Module 4 Protecting Your Wealth
Insurance
Module 4
Protecting Your Wealth

2. Before you Begin Protecting your Wealth
Understand Why insurance is an important part of a healthy financial plan.
Identify ways to lower the cost of insurance premiums.
Identify insurance for the type of risk that young adults might face.
Basic Types of Coverage
Identify common types of risks.
Health Insurance, Auto Insurance
Distinguish between necessary and unnecessary types of coverage.
Understand the importance of property (Home Owner) and liability protection.
The Importance of Life Insurance
Differentiate between term and cash value life insurance.
Examine the importance and purpose of a will.

3. Agree or disagree
Insurance rates can vary depending on the company, and I can save money if I shop around.
I must always have collision insurance on my automobile, even if its an old car that is not worth much.
If an employer offers me health insurance but requires me to pay part of the premium, it is not a good deal and I should not get it.
I only need to have renters insurance if I have a lot of valuable items.
Everyone should have life insurance.
Health care insurance coverage should be viewed as an essential component of your personal financial plans.
With health care insurance that covers the whole family, children may be included up to age 26 as long as they are full-time students.
Disability insurance is helpful only if you make a lot of money—and then only if you are out of work for a long period of time (at least six months to a year).

4. Key Terms
Beneficiary-recipient of assets passed on from the death of a friend or relative.
Claim-Paperwork filed with an insurance company in order to get them to cover a loss for someone they insure.
Coverage-Applies to the amount of protection you have through an insurance company in the event of a loss.
Deductible-Amount you must pay before you begin receiving any benefits from your insurance company.
Liability-The state or quality of being obligated according to law or equity.
Medicare-a health insurance plan administered by the federal government to help persons age 65 and over, and others receiving monthly Social Security disability benefits, to meet their health care costs
Out-of-Pocket Expenses-Specific amount of money that you pay when insurance only covers a portion of costs.

5. Key Terms
Pre-existing condition clause-a clause included in most individual health insurance policies permitting permanent or temporary exclusion of coverage for any physical or mental problems the insured had at the time the policy was purchased.
Premium-Amount you pay monthly, quarterly, semiannually or annually to purchase different types of insurance.
Will-A legally enforceable declaration of how a person wishes his or her property to be distributed after death.
Health savings account (HSA)-a tax-free savings account—funded by employees, employer, or both—to spend on routine medical costs.
Disability income insurance-insurance that provides families with weekly or monthly payments to replace income when the insured is unable to work because of a covered illness, injury, or disease.
Medicaid-a state-run, public assistance program that provides health insurance benefits only to those who are unable to pay for health care.

6. Why Insurance
We have talked a bunch in this course about building wealth, Module 4 and insurance is all about protecting that wealth.
What is the purpose of insurance?
Insurance eliminates risk. What does that mean?
Economic loss in the event of serious accidents or illnesses resulting in health care cost or expensive property damage.
Rising cost of health care. Insurance allows individuals to avoid these full cost.
Explain the role of insurance in your financial plan?
What are some of your experiences with insurance?
Why is it important to understand that insurance is a financial product?

7. Rising cost of Health Care?

8. Protecting Your Wealth
Insurance transfers the financial risk of major catastrophes thereby protecting your wealth.
The Seven Basic Types of Coverage Needed:
Homeowners or Renters Insurance
Auto Insurance (Liability or Full Coverage)
Health Insurance
Disability Insurance
When you are established in your career.
Long-term Care insurance
When you are 60 years or over
Identity Theft Protection
Life Insurance
When you have dependents who rely on your income

9. Ways to save on your premiums
A deductible is what you pay out of pocket before the insurance company kicks in any money
Higher deductibles mean lower premiums. Also, means more money out of pocket at the time of an incident.
Make sure you carry adequate liability coverage (mainly for automobiles). Liability, covers property damage and medical bills if you are at faulty in a car wreck or if someone gets hurt on your property.
Consider dropping collision on older cars and going with liability.

10. Auto Liability Limits

11. Chapter 9 Section 2-Basic Types of Coverage
Insurance
Chapter 9
Section 2-Basic Types of Coverage

12. Basic Types of Coverage
Car insurance
Liability-covers medical costs and property damage of the other driver if you get in a wreck and it is your fault. Least expensive form of insurance.
Full Coverage-covers medical costs and property damage of the both drivers if you get in a wreck regardless of fault. If you do not own your car you must carry full coverage. What is normally covered under full coverage:
Collision Insurance-Covers damage to your car if it is hit by another car or object. If you do not own your car you must carry collision coverage as part of your insurance policy.
Medical Payment Coverage-pays for all accident related medical costs incurred by you or your family members within three years of an accident. There are limits placed on this.
Comprehensive-Coverage takes care of damage to your car not caused by a collision. Car is stolen, damaged by hail, fire, flood etc.
Uninsured motorist protection-Covers your car if you is hit by an uninsured motorist.

13. Basic Types of Coverage
Another important type of coverage.
Gap Insurance
Gap insurance is normally sold separately at the time of the care purchase. The finance office at the dealership will offer you GAP insurance. It is normally a one time premium payment.

14. Top things to know about auto insurers
You are a statistic (a risk not a person)
Insurers differ-prices vary as well as service and reliability.
Don’t just look at price-you pay for what you get.
Go beyond the basics-liability isn’t enough.
Demand discounts-do your research and know what's out there. Discounts for : safe driving, defensive driving courses, grades.
At claim time your insurer isn’t necessarily your friend-What’s fair to you may not match your insurer. Remember this is a 400 plus billion dollar a year industry.
Prepare before you make a claim-Know what's on your policy and keep it updated.

15. Basic Types of Coverage
Homeowners and Renters Insurance
Homeowners insurance will cover the cost of repairing or replacing your home in the event that it is damaged or destroyed in a fire or theft or any other type of crisis related to these issues.
Remember flood and windstorm insurance require separate policies and premium payments.
Renters insurance covers the contents or belongings of your home up to a certain monetary amount in the event that your belongings are damaged or destroyed in a fire or theft or any other type of crisis related to these issues.

16. Property Inventory Form

17. Lowering Your home owners insurance premiums
Increase your deductible.
Bundle your homeowners and auto insurance
Manage your credit score
Use features on your home that qualify you for discounts.
Smoke detectors
Deadbolt locks
Security alarms
Fire extinguisher
Avoid risk insurers don’t like
Swimming pools
Trampolines
Pit Bulls
Shop around!

18. Basic Types of Coverage
Health Insurance transfers the financial risk of major catastrophes to your health.
Two types of plans-Group and Individual Health Plans
Group plans are normally offered as an employee benefit or organization and maintained by that employer. The two main advantages of group plans are that they spread the risk over the entire group to keep premiums down and the cannot deny you coverage based on health issues.
Individual plans are purchased in the open market which means that they are not provided by a group or an employer. Self employed or retirees normally use this type of coverage. These plans are normally more expensive and can deny coverage if you have a history of poor health.

19. Basic Types of Coverage
What is covered by basic health insurance:
Basic health insurance policies cover hospital expenses and most surgical and physician expenses. There are some major medical expense medical costs that are in excess of those covered by basic health insurance. An example of that may be the birth of a child. Be sure to check your policy to see what is covered.
Dental and eye insurance plans-cover only expenses for dental work and expenses related to eye care.(Doesn’t include braces or eye surgeries)
With the majority of medical expenses a copayment must be paid. A copayment is an amount of money you pay to help cover a portion of your medical costs. Copayments may be a set amount or a percentage of the total cost, depending or your insurance policy.
Just like with auto and homeowner insurance, many medical plans carry a deductible that must be met. A deductible is the amount you must pay before you begin receiving any benefits from your insurance company.

20. Basic Types of Coverage
Disability Insurance-Long term solution designed to replace income lost due to a short term or permanent disability.
Short-term Disability Insurance-designed to cover any disability that is less than five years.
Long-term Disability Insurance-designed to cover disability that will cover more than five year.
Elimination Period-The time between the disabling period and when the payments actually begin.
The most affordable way to get disability insurance is through your employer.

21. Basic Types of Coverage
Long-term Care insurance
Long-term care is care that you need if you no longer can perform everyday tasks by yourself. Normally this type of care helps with the cost of nursing homes, assisted living homes and in-home care.
You should not buy long-term care until you are at least 60
69% of people 65 or alder will require long- term care at some point.
In 2016 the cost was $225 a day or $6,844 per month for a semi-private room in a nursing home.

22. Live From Financial Peace Plaza
AccessfoundationsU.com & click on the Ask Dave link to select a radio call by topic.
Select and listen to an Ask Dave radio call.
Summarize the caller’s situation, including financial information needed to make a decision, followed by the advice that Dave gave the caller.
Write a brief 1 paragraph reflection about the call. What is your opinion about the caller’s situation? What was your initial reaction to the situation? What did you think of Dave’s advice? Does it relate to anything they have learned in class?
Pair up with a classmate and share your radio-call topics and what you’ve learned from them.

23. Which Insurance Policies Are Needed?

24. Chapter 9 Section 3-The Importance of Life Insurance and Wills

25. The Importance of Life Insurance
Life insurance-is intended to replace income in the case of someone’s death. The income replacement is necessary for anyone that was a dependent (child/spouse) of the deceased persons income.
Types of Life Insurance:
Term Life Insurance-For specified period, is substantially cheaper.
Whole Life Insurance-Usually for life and is more expensive because it funds some sort of savings plan.
What is a beneficiary?

26. The Importance of a will
What's with the Will?
A will is a legally enforceable document expressing how a person’s property should be distributed upon his or her death.
As of % of Americans were without a will. Why?
If there is no will the state will draw the will which the deceased failed to draw. This is called intestacy.

27. Common features of a will
Wills will feature the following:
Introductory Clause
Direction of Payments
Disposition of Property
Appointment Clause
Tax Clause
Simultaneous death clause
Execution and attestation clause
Witness clause

28. What makes a Will valid
Sound mind-You must be of “sound mind” to make a valid will. Generally, mental capacity is presumed. Setting aside a will requires clear and convincing proof of mental incapacity.
Freedom of Choice-When you prepare and execute your will, you must not be under the undue influence of another person. Threats, misrepresentations, inordinate flattery, or physical or mental coercion are all types of undue influence.
Proper Execution-To be considered properly executed, a will must meet the requirements of the state’s wills act or its equivalent. It must also be demonstrable that it is, in fact, the will of the testator or deceased.

29. Chapter Summary
In groups of two complete the chart.