Introduction to insurance


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A general overview of insurance given to college students.

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Introduction to insurance

  1. 1. Introduction to Insurance
  2. 2. Outline <ul><ul><li>Fundamentals of Insurance </li></ul></ul><ul><ul><li>Auto Insurance </li></ul></ul><ul><ul><li>Homeowner’s/Renter’s Insurance </li></ul></ul><ul><ul><li>Umbrella Insurance </li></ul></ul>
  3. 3. Life and Health <ul><ul><li>Health Insurance Could be Discussed at Workplace </li></ul></ul><ul><ul><li>Life Insurance often not Really Necessary for Recent Graduates </li></ul></ul><ul><ul><li>If Specific Questions, Please Ask After Session </li></ul></ul>
  4. 4. “ Insurance is the One Thing that You Buy, that You Hope Never to Use” ~ anonymous
  5. 5. What is Insurance? <ul><ul><li>Risk Sharing </li></ul></ul><ul><ul><li>Everyone Pays a Little so that an Individual Doesn’t Have to Pay a Lot </li></ul></ul><ul><ul><li>Based on Statistics </li></ul></ul><ul><ul><li>Only Risk What You Can Afford To Lose </li></ul></ul><ul><ul><li>The More You Have to Lose, The More You Have To Protect </li></ul></ul>
  6. 6. Definitions <ul><ul><li>Policy – Insurance Contract </li></ul></ul><ul><ul><li>Premium – Cost of Having an Insurance Policy </li></ul></ul><ul><ul><li>Deductible – Cost of Using an Insurance Policy </li></ul></ul><ul><ul><li>Claim – Act of Using an Insurance Policy </li></ul></ul><ul><ul><li>Lapsed – A Policy Terminated by Non-payment of Premium </li></ul></ul><ul><ul><li>Dropped – Disallowed to Renew a Policy </li></ul></ul><ul><ul><li>Declaration Page – Summary of Policy Terms </li></ul></ul>
  7. 7. Risk: An Inverse Relationship As Deductible Increases Premium Decreases
  8. 8. Auto Insurance
  9. 9. Auto Insurance - Coverage <ul><ul><li>Liability Insurance – Legal Requirement </li></ul></ul><ul><ul><li>Collision Insurance </li></ul></ul><ul><ul><li>Comprehensive Insurance </li></ul></ul><ul><ul><li>Medical Payments </li></ul></ul><ul><ul><li>Uninsured Motorist Coverage </li></ul></ul><ul><ul><li>Rental Reimbursement </li></ul></ul>
  10. 10. Liability Insurance <ul><ul><li>Protects Others </li></ul></ul><ul><ul><li>Two Types </li></ul></ul><ul><ul><ul><li>Bodily Injury </li></ul></ul></ul><ul><ul><ul><li>Property Damage </li></ul></ul></ul><ul><ul><li>Limits – Each Person/Aggregate Limit </li></ul></ul><ul><ul><li>Legal Requirement in Illinois </li></ul></ul>
  11. 11. Collision Coverage <ul><ul><li>Protects Your Vehicle </li></ul></ul><ul><ul><li>Two Types </li></ul></ul><ul><ul><ul><li>Actual Cash Value </li></ul></ul></ul><ul><ul><ul><li>Replacement Cost </li></ul></ul></ul>
  12. 12. Comprehensive Coverage <ul><ul><li>Coverage for Problems Other than Driving </li></ul></ul><ul><ul><li>Theft, Fire, Etc. </li></ul></ul><ul><ul><li>Two Types </li></ul></ul><ul><ul><ul><li>Actual Cash Value </li></ul></ul></ul><ul><ul><ul><li>Replacement Cost </li></ul></ul></ul>
  13. 13. Medical Payments <ul><ul><li>Medical Costs for People Involved in an Accident </li></ul></ul><ul><ul><li>Each Person </li></ul></ul>
  14. 14. Uninsured/Underinsured Motorist Coverage <ul><ul><li>Protects You From Others </li></ul></ul><ul><ul><li>Uninsured vs. Underinsured </li></ul></ul><ul><ul><li>Each Person/Aggregate Limit </li></ul></ul>
  15. 15. Rental Reimbursement <ul><ul><li>How Will You Get Around While Your Car is Being Repaired? </li></ul></ul><ul><ul><li>Dollar per Day Credit For Time Period </li></ul></ul>
  16. 16. Recommended Coverage Amounts Source: Ernst & Young’s Personal Financial Planning Guide <ul><ul><li>Liability – Bodily Injury, Property Damage </li></ul></ul><ul><ul><ul><li>Standard: 100/300 Coverage </li></ul></ul></ul><ul><ul><ul><li>Recommended: 250/500 Coverage </li></ul></ul></ul><ul><ul><li>Actual Cash Value vs. Replacement Cost </li></ul></ul><ul><ul><li>Medical Payments – Std:1000, Rec:$10000 </li></ul></ul><ul><ul><li>Uninsured/Underinsured Coverage </li></ul></ul><ul><ul><ul><li>Protect Yourself at Least as Much as Others </li></ul></ul></ul>
  17. 17. Discounts <ul><ul><li>Protective Devices </li></ul></ul><ul><ul><li>Safety Devices </li></ul></ul><ul><ul><li>Multiple Policies </li></ul></ul><ul><ul><li>Multiple Vehicles </li></ul></ul><ul><ul><li>Car Type </li></ul></ul><ul><ul><li>Good Driver </li></ul></ul><ul><ul><li>Loyalty </li></ul></ul>
  18. 18. Declaration Page
  19. 19. Homeowner’s (Renter’s) Insurance
  20. 20. Homeowner’s Insurance - Coverage <ul><ul><li>Dwelling Protection – The Living Structure </li></ul></ul><ul><ul><li>Other Structures Protection – ie. Garage </li></ul></ul><ul><ul><li>Personal Property – All Your Stuff </li></ul></ul><ul><ul><li>Special Coverage – Flood, Quakes, Nukes </li></ul></ul><ul><ul><li>Living Expense – Temporary Housing </li></ul></ul><ul><ul><li>Liability Protection </li></ul></ul><ul><ul><li>Guest Medical Protection </li></ul></ul>
  21. 21. Recommended Coverage Amounts Source: Ernst & Young’s Personal Financial Planning Guide <ul><ul><li>Minimum: Appraised Value (Owned Property) </li></ul></ul><ul><ul><li>How Much is Your Stuff Worth? </li></ul></ul><ul><ul><ul><li>Write it Down!!!! </li></ul></ul></ul><ul><ul><li>Personal Liability </li></ul></ul><ul><ul><ul><li>Standard: 100K </li></ul></ul></ul><ul><ul><ul><li>Recommended: 300K </li></ul></ul></ul><ul><ul><li>Medical Payments – Std:1000, Rec:$5000 </li></ul></ul>
  22. 22. Declaration Page
  23. 23. Umbrella Policies <ul><ul><li>“ Kick In” When Other Policies Max Out </li></ul></ul><ul><ul><li>Relatively Cheap </li></ul></ul><ul><ul><li>May Make Sense If You Have a Lot to Lose </li></ul></ul>
  24. 24. Should I File a Claim?
  25. 25. Pros and Cons of Filing a Claim <ul><li>Pros </li></ul><ul><ul><li>Getting What You Paid For </li></ul></ul><ul><ul><li>Possibly Saving Money </li></ul></ul><ul><ul><li>Ensuring You Aren’t Left Paying For Repairs </li></ul></ul><ul><li>Cons </li></ul><ul><ul><li>Payment of Deductible </li></ul></ul><ul><ul><li>Possible Increase in Premium </li></ul></ul><ul><ul><li>Risk Being Dropped </li></ul></ul>
  26. 26. Questions to Ask Before Filing <ul><ul><li>Will The Policy Cover It? </li></ul></ul><ul><ul><li>Would the Claim Exceed the Deductible? </li></ul></ul><ul><ul><li>Can I Afford to Fix it Myself? </li></ul></ul><ul><ul><li>If Not at Fault, Will The Other Guy Pay? </li></ul></ul><ul><ul><li>How Long Will It Take? </li></ul></ul><ul><ul><li>What Documentation Do I Need? (Police Report, Estimates) </li></ul></ul>
  27. 27. Summary <ul><ul><li>Principles of Insurance </li></ul></ul><ul><ul><li>Aspects of Auto/Home/Umbrella Insurance </li></ul></ul><ul><ul><li>Considerations when Filing a Claim </li></ul></ul>
  28. 28. Summary <ul><ul><li>Insurance Exists to Protect You From Catastrophe </li></ul></ul><ul><ul><li>I Hope Now You’ll Make Adult and Informed Decisions about How Much Risk You’re Willing to Accept </li></ul></ul>
  29. 29. Questions