1. Insurance Companies Copyright 2014 by Diane Scott Docking1

2. Learning Objectives Understand the different types of insurance companies Understand the various insurance products offered by: o Life insurance companies o Property and casualty insurance companies o Health insurance companies o Other insurance companies Copyright 2014 by Diane Scott Docking2

3. Types of Insurance Companies Life Insurance Property & Casualty Insurance Health Insurance Other Copyright 2014 by Diane Scott Docking3

4. Purpose of Insurance Companies The primary function of insurance companies is to compensate policyholders if a pre-specified event occurs, in exchange for premiums paid o insurance underwriters assess and price risk o insurance brokers sell insurance contracts Insurance is broadly classified into three broad groups o life insurance policies provide protection against untimely death or illness, and/or transfer wealth through time to retirement o property-casualty insurance protects against personal injury and liability associated with specific events o health insurance protects against medical conditions Insurance companies also sell a variety of investment products similar to other financial institutions. Copyright 2014 by Diane Scott Docking4

5. Life Insurance Ordinary Life o Term life o Whole life o Endowment life o Variable life o Universal life o Variable Universal life (VUL) Group Life Credit Life Copyright 2014 by Diane Scott Docking5

6. Life Insurance Ordinary life insurance is marketed to individuals— policyholders make periodic premium payments in exchange for coverage o Term life beneficiary receives payout at time of death if insured lives beyond the term of the contract, no benefits are paid o Whole life policy protects over entire lifetime beneficiary receives face value of contract upon death has value and can borrow against it Copyright 2014 by Diane Scott Docking6

7. Life Insurance o Endowment life beneficiary receives payment at time of death if insured lives beyond the term of the contract, insured receives face value of the contract o Variable life premiums are invested in market securities value of policy depends on the value of the securities o Universal life allows the insured to change both the premiums and the maturity of the contract o Variable universal life a universal policy where the premiums are invested in variable rate earning assets Copyright 2014 by Diane Scott Docking7

8. Life Insurance Group life insurance covers a large number of persons under a single policy o contributory—both the employer and the employee cover a share of the premiums o noncontributory—the costs are borne entirely by the employer Credit life insurance protects lenders against borrower death Copyright 2014 by Diane Scott Docking8

9. Property & Casualty Insurance Videos: http://www.youtube.com/watch?v=BQr8bkuPZDs http://www.youtube.com/watch?v=x58tgSOFYNs http://www.youtube.com/watch?v=2Ga3tGWOgF Copyright 2014 by Diane Scott Docking9

10. Property & Casualty Insurance Property insurance involves coverage related to the loss of real and personal property Casualty insurance offers protection against legal liability exposure Types: o Auto o Home owners o Renters Copyright 2014 by Diane Scott Docking10

11. Property & Casualty Insurance Property insurance involves coverage related to the loss of real and personal property Casualty insurance offers protection against legal liability exposure Types: o Auto o Home owners o Renters Copyright 2014 by Diane Scott Docking11

12. Property & Casualty Insurance Property insurance involves coverage related to the loss of real and personal property Casualty insurance offers protection against legal liability exposure Types: o Auto o Home owners o Renters Copyright 2014 by Diane Scott Docking12

13. Major P&C lines Copyright 2014 by Diane Scott Docking13

14. Health Insurance o HMO – Health Maintenance Organization o PPO – Preferred Provider Organization o POS – Point Of Service plan Dental Insurance Vision Care Plans Mental Health Plans Long-term Care Insurance Medicare Medicaid Copyright 2014 by Diane Scott Docking14

15. Health Insurance o HMO – Health Maintenance Organization o PPO – Preferred Provider Organization o POS – Point Of Service plan Dental Insurance Vision Care Plans Mental Health Plans Long-term Care Insurance Medicare Medicaid Copyright 2014 by Diane Scott Docking15

16. Health Insurance o HMO – Health Maintenance Organization o PPO – Preferred Provider Organization o POS – Point Of Service plan Dental Insurance Vision Care Plans Mental Health Plans Long-term Care Insurance Medicare Medicaid Copyright 2014 by Diane Scott Docking16

17. Health Insurance o HMO – Health Maintenance Organization o PPO – Preferred Provider Organization o POS – Point Of Service plan Dental Insurance Vision Care Plans Mental Health Plans Long-term Care Insurance Medicare Medicaid Copyright 2014 by Diane Scott Docking17

18. Health Insurance o HMO – Health Maintenance Organization o PPO – Preferred Provider Organization o POS – Point Of Service plan Dental Insurance Vision Care Plans Mental Health Plans Long-term Care Insurance Medicare Medicaid Copyright 2014 by Diane Scott Docking18

19. Health Insurance o HMO – Health Maintenance Organization o PPO – Preferred Provider Organization o POS – Point Of Service plan Dental Insurance Vision Care Plans Mental Health Plans Long-term Care Insurance Medicare Medicaid Copyright 2014 by Diane Scott Docking19

20. Health Insurance o HMO – Health Maintenance Organization o PPO – Preferred Provider Organization o POS – Point Of Service plan Dental Insurance Vision Care Plans Mental Health Plans Long-Term Care (LTC) Insurance Medicare Medicaid Copyright 2014 by Diane Scott Docking20

21. Health Insurance o HMO – Health Maintenance Organization o PPO – Preferred Provider Organization o POS – Point Of Service plan Dental Insurance Vision Care Plans Mental Health Plans Long-Term Care (LTC) Insurance Medicare Medicaid Copyright 2014 by Diane Scott Docking21

22. Other Insurance Disability Insurance o Social Security o Private Workers’ Compensation (Workman’s Comp.) Unemployment Insurance Copyright 2014 by Diane Scott Docking22

23. Other Insurance Disability Insurance o Social Security o Private Workers’ Compensation (Workman’s Comp.) Unemployment Insurance Copyright 2014 by Diane Scott Docking23

24. Insurance Regulation During the financial crisis Congress considered adding a federal regulator of the insurance industry, but left regulation to the states Dodd-Frank bill created the Federal Insurance Office (FIO) that reports to Congress and the President on the insurance industry o The FIO is supposed to identify systemic risks arising from insurers, monitor international insurance events, eliminate state regulatory gaps and encourage the offering of insurance products to underserved segments Copyright 2014 by Diane Scott Docking24

25. Conclusion A necessary evil. You have to have it! Copyright 2014 by Diane Scott Docking25