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Bus 12 insurance oct 28, 2010

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  • Talk about what insurance deals with – Risk
  • First Define Insurance, then play the video to provide an overview The Lecture will reinforce the information contained in the Video ( 6 ) mins - Play Video – Insurance Overview Talk about what insurance deals with – Risk
  • What is an insurable loss? The risk of loss must be definable & Measurable There must be a large base to insure – to spread potential losses The potential loss must be predictable The loss must be an accident – if something is certain to happen or if it is expected to happen = it is not an insurable event The loss must not be Catastrophic
  • What is Risk? Possibility of an adverse outcome If there the chance of loss is uncertain, there is risk. Ironically, if loss is certain, there is no risk, the loss will occur
  • Why are they important ? What would happen if they were injured or died – who is at risk ? Who would suffer if something happened ?
  • Why are they important ? What would happen if they were injured or died – who is at risk ? Who would suffer if something happened ?
  • Two primary forms of Life Insurance: Term & Permanent Provides cash upon the death of the insured Term Insurance Most policies are Term Insures for a specific time period Less expense than permanent insurance Very few renew past age 65 Permanent Insurance In-force past age 65 – making it a tax payment vehicle for large estates with potential inheritance tax due 2 primary forms: whole life & universal life
  • What is Homeowner insurance? Typically required by your lender Typically (2) Sections to a policy: Section 1 – Coverage (with tons of caveats) Dwelling Other structures Contents = Personal Property Loss of use Section 2 – Personal Liability & Med pmts to others ( 1 )mins – Play Video – Save Money on Home Owner Insurance
  • Annuities are designed to do (2) things: Provide an income source so that the holder never outlives their income source Typically a tax-deferred vehicle – similar to an IRA for tax benefit Various forms
  • It is important that the insurance company will be there to honor claims – thus financial strength is critical Rating agencies to determine financial strength: Fitch, Moody, S&P, AM Best IMSA – association monitoring its members ability to operate ethically, lending credibility and hopefully with long term staying power National Association of Insurance Commissioners (NAIC) developed ratios for risk at insurance companies to meet = Risk based capital ratio Asset, Credit, Underwriting, off-balance sheet risks MF Act of 1945 – established state regulation of the insurance industry
  • 1. Health insurance – after the deductible is paid by the insured; the insurance company and the insured shares the cost of incurred expenses – usually in a predetermined manner: eg 80/20 – typically each covered item may have a different ratio
  • Personal Auto Policy (PAP) – (4) General areas of coverage Liability Insurance Covers potential damage to others caused by the insured Medical payments Coverage Pays medical expenses of insured & family Uninsured motorist Coverage Covers when the other party has limited or not insurance Physical damage, loss or comprehensive coverage Covers damage or loss of your car

Bus 12 insurance   oct 28, 2010 Bus 12 insurance oct 28, 2010 Presentation Transcript

  • Insurance October 28, 2010 Bus 12 – Money Matters R. Okumoto
  • Lecture Topics
    • What is Insurance?
    • What is I nsurance to you?
    • Who is Important to you ?
    • What is Important to you ?
    • How to Buy and Select Insurance
    Bus 12 – Money Matters R. Okumoto
  • What is Insurance?
    • “ If there were no risk in the world, then there would be no need for insurance”
    • Insurance Defined :
    • Insurance is a financial arrangement with two primary characteristics :
      • Risk of financial loss is transferred from an individual to a group
      • Losses are equitably shared by all members of the group
  • What is Insurance?
    • Insurance is Legal Gambling!
    • Its foundation is based on Probability Theory
      • The Formula is simple:
        • The Insurance company determines if a loss is insurable
        • You pay your premium for your insurance coverage
        • The Insurance company invests your money
        • The Insurance company waits for claims
        • Both sides are betting or hoping for no losses or claims
  • Video 1 Bus 12 – Money Matters R. Okumoto Insurance Overview
  • What is Insurance to You? “ Peace of Mind” “ Source of Security” “ Allows you to sleep at night”
  • Why Buy Insurance?
    • Insurance is purchased to manage the (3) basic rules of risk :
    • Do not risk more than you can afford to lose
    • Consider the odds of loss
    • Do not insure small items (costs)
  • Who is Important to you?
    • Family?
    • Friends?
    • Pets?
    • People who work for you?
    • People who employ you?
  • What is Important to you?
    • Health?
    • Life?
    • Home?
    • Car?
    • Your Earnings?
  • Protect You and Your Family
      • Life Insurance
      • Health / Medical Insurance
      • Disability Insurance
      • Long-term Care Insurance
  • Video 2 Bus 12 – Money Matters R. Okumoto Term versus Whole Life Insurance
  • Video 3 Bus 12 – Money Matters R. Okumoto Susie Orman on Life Insurance
  • Video 4 Bus 12 – Money Matters R. Okumoto How Health Insurance Works
  • Protect Your Property
      • Home Owner Insurance
      • Renter Insurance
      • Auto Insurance
  • Video 5 Bus 12 – Money Matters R. Okumoto Save Money on Homeowners Insurance
  • Video 6 Bus 12 – Money Matters R. Okumoto Save Money on Car Insurance
  • Protect Your Retirement
      • Annuities
      • Permanent Life Insurance
  • How to Select Insurance Companies
    • Criteria for Selection:
      • Rating Agencies
      • Financial Size
      • Age of firm
  • Key Life Insurance Terms
      • Premium
      • Death Benefit Value
      • Term Insurance
      • Permanent Insurance
        • Whole Life
        • Universal Life
  • Key Medical Insurance Terms
      • Coinsurance
      • Co-Payment & Deductible
      • Covered Expenses / Exclusions
      • Preexisting Condition
      • Major Medical Coverage
      • HMO
      • PPO
  • Video 7 Bus 12 – Money Matters R. Okumoto Co-Pay And Coinsurance
  • Video 8 Bus 12 – Money Matters R. Okumoto PPO versus HMO
  • Key Property & Casualty Insurance Terms
      • SPECIFIC TO CARS
      • Part A – Liability Coverage
      • Part B – Medical Payment Coverage
      • Part C – Uninsured Motorist Coverage
      • Part D – Physical Damage or Loss Coverage
  • Insurance October 28, 2010 Bus 12 – Money Matters R. Okumoto