Having Adequate Insurance: Protecting You and Your Loved Ones


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Having Adequate Insurance: Protecting You and Your Loved Ones

  1. 1. Having Adequate Insurance: Protecting You and Your Loved Ones Module 6
  2. 2. Discussion Topics <ul><li>1. Financial Perspectives </li></ul><ul><li>2. Insurance Basics </li></ul><ul><li>3. Personal Insurance </li></ul><ul><ul><li>Health </li></ul></ul><ul><ul><li>Life </li></ul></ul><ul><ul><li>Disability </li></ul></ul><ul><li>4. Property Insurance </li></ul><ul><ul><li>Home </li></ul></ul><ul><ul><li>Auto </li></ul></ul><ul><li>5. Employee Benefits </li></ul>Perspective • Basics • Personal • Property • Benefits
  3. 3. Financial Perspectives: Tithing <ul><li>The prophet Malachi prophesied: </li></ul><ul><ul><li>Bring ye all the tithes into the storehouse, . . . and prove me now herewith, saith the Lord of hosts, if I will not open you the windows of heaven. (Malachi 3:10) </li></ul></ul><ul><li>Paying tithing first shows that we put the Lord first in our lives. </li></ul><ul><ul><li>However, it doesn’t it say that if we pay our tithing, we will get all the financial blessings that we need, regardless of any learning, thought, application, hard work or effort on our part. </li></ul></ul>Perspective • Basics • Personal • Property • Benefits
  4. 4. <ul><li>The prophet Malachi promised that God will open the windows of heaven </li></ul><ul><ul><li>However, there is no promise that the windows of heaven will be financial blessings or that paying tithing will eliminate all our financial problems </li></ul></ul><ul><ul><li>There are still more commandments which relate to finances in addition to just paying your tithing, i.e., living with your means, building a reserve, preparing for retirement, missions and education, etc. </li></ul></ul>Financial Perspectives (continued) Perspective • Basics • Personal • Property • Benefits
  5. 5. Insurance Basics: Three Principles <ul><li>1. Don’t insure the small stuff </li></ul><ul><ul><ul><li>Cover losses that could be catastrophic </li></ul></ul></ul><ul><ul><ul><li>Don’t cover the small stuff </li></ul></ul></ul><ul><li>2. Buy broad coverage </li></ul><ul><ul><ul><li>Buy insurance that covers multiple types of loss </li></ul></ul></ul><ul><ul><ul><li>Don’t buy coverage for limited types </li></ul></ul></ul><ul><li>3. Shop around and buy direct </li></ul><ul><ul><ul><li>At a minimum, check with multiple agents </li></ul></ul></ul><ul><ul><ul><li>Use online sources </li></ul></ul></ul><ul><ul><ul><li>Cut out middle men if possible </li></ul></ul></ul>Perspective • Basics • Personal • Property • Benefits
  6. 6. Insurance Basics: Ned Ryerson <ul><li>http://movieclips.com/watch/groundhog_day_1993/ned_ryerson/ </li></ul>Perspective • Basics • Personal • Property • Benefits
  7. 7. Personal Insurance: Protecting You and Your Spouse <ul><li>You and your spouse are your greatest assets! </li></ul><ul><ul><li>Make sure you have adequate coverage </li></ul></ul><ul><ul><li>Three key areas: </li></ul></ul><ul><ul><ul><li>a) Health </li></ul></ul></ul><ul><ul><ul><li>b) Life </li></ul></ul></ul><ul><ul><ul><li>c) Disability </li></ul></ul></ul>Perspective • Basics • Personal • Property • Benefits
  8. 8. Personal Insurance: Health <ul><li>How do you protect your health? </li></ul><ul><li>Things that could be devastating to family finances </li></ul><ul><li>Choosing the best plan </li></ul><ul><ul><li>Major medical coverage </li></ul></ul><ul><ul><li>Choice of providers </li></ul></ul><ul><ul><li>Lifetime maximums </li></ul></ul><ul><ul><li>Deductibles and copays </li></ul></ul><ul><ul><li>Guaranteed renewable </li></ul></ul>Perspective • Basics • Personal • Property • Benefits
  9. 9. <ul><li>The Process of Buying Health Insurance </li></ul><ul><ul><li>First, try to get it through your employer. </li></ul></ul><ul><ul><ul><li>This is generally the cheapest method </li></ul></ul></ul><ul><ul><li>Second, see if you belong to a qualifying group </li></ul></ul><ul><ul><ul><li>Again, groups insurance is generally less expensive </li></ul></ul></ul><ul><ul><li>Finally, buy individual coverage </li></ul></ul><ul><ul><ul><li>Look for a company committed to health insurance, not where health is a sideline business </li></ul></ul></ul><ul><ul><ul><li>Look into a high deductible health plan </li></ul></ul></ul>Personal Insurance: Health Perspective • Basics • Personal • Property • Benefits
  10. 10. <ul><li>The Best Health Insurance: Diet, Exercise, and the Word of Wisdom </li></ul><ul><ul><li>Don’t drink or smoke </li></ul></ul><ul><ul><li>Get plenty of rest </li></ul></ul><ul><ul><li>Exercise regularly </li></ul></ul><ul><ul><li>Eat healthy foods </li></ul></ul><ul><ul><li>Make time for relaxation </li></ul></ul><ul><ul><li>Have regular medical check-ups </li></ul></ul>Personal Insurance: Health Perspective • Basics • Personal • Property • Benefits
  11. 11. Personal Insurance: Life <ul><li>How much is your life worth? </li></ul><ul><li>How much earning potential they have </li></ul><ul><ul><li>Insure against the loss of those earnings </li></ul></ul><ul><li>How much to buy </li></ul><ul><ul><li>Cover what would be lost in stream of income (10-15 times income is recommended) </li></ul></ul><ul><li>Term vs. cash value comparisons </li></ul><ul><ul><li>Term is much less expensive and gives the required coverage </li></ul></ul><ul><ul><li>Proceed with caution when mixing insurance and investments. Know what you are buying </li></ul></ul>Perspective • Basics • Personal • Property • Benefits
  12. 12. Personal Insurance: Disability <ul><li>How do you protect your income stream? </li></ul><ul><li>Like life insurance, disability insurance should cover a portion of the loss of income </li></ul><ul><ul><li>Typically provided by employers </li></ul></ul><ul><ul><li>Your coverage should replace about 60% of your income </li></ul></ul><ul><ul><li>You are more likely to become disabled than die </li></ul></ul>Perspective • Basics • Personal • Property • Benefits
  13. 13. Insurance: Property <ul><li>How do you protect your property? </li></ul><ul><li>Homeowners insurance </li></ul><ul><ul><li>What losses would be catastrophic? </li></ul></ul><ul><ul><li>What would it cost to replace your home and its contents? </li></ul></ul><ul><ul><li>What would your costs be while rebuilding? </li></ul></ul><ul><li>Renters insurance </li></ul><ul><ul><li>Loss of personal property </li></ul></ul><ul><ul><li>Don’t estimate—add it up! </li></ul></ul><ul><ul><li>What form, what riders, how much? </li></ul></ul>Perspective • Basics • Personal • Property • Benefits
  14. 14. <ul><li>Liability insurance </li></ul><ul><ul><li>Protect your assets against a lawsuit </li></ul></ul><ul><ul><li>Umbrella insurance </li></ul></ul><ul><ul><li>What form, what riders, how much, </li></ul></ul><ul><ul><li>and when? </li></ul></ul><ul><li>Automobile insurance </li></ul><ul><ul><li>Look for special discounts </li></ul></ul><ul><ul><li>Don’t cover the little stuff </li></ul></ul><ul><ul><li>Limits of liability </li></ul></ul><ul><ul><li>Protects you from a lawsuit if you are at fault </li></ul></ul><ul><ul><li>Protects against uninsured motorists </li></ul></ul><ul><ul><li>Take as high a deductible as you can afford </li></ul></ul><ul><ul><li>Comprehensive and collision: what’s the difference, what do you need? </li></ul></ul>Insurance: Property Perspective • Basics • Personal • Property • Benefits
  15. 15. Employee Benefits <ul><li>A good benefits package can be better than a 40% raise </li></ul><ul><li>Retirement </li></ul><ul><ul><li>Defined contribution </li></ul></ul><ul><ul><ul><li>Capture the match! </li></ul></ul></ul><ul><ul><li>Defined benefit (pension) plans </li></ul></ul><ul><ul><ul><li>Examples </li></ul></ul></ul><ul><ul><li>Employee contribution </li></ul></ul><ul><ul><ul><li>401(k), 403(b), Keogh plans </li></ul></ul></ul><ul><ul><ul><li>Examples </li></ul></ul></ul>Perspective • Basics • Personal • Property • Benefits
  16. 16. Employee Benefits (continued) <ul><li>Health Care </li></ul><ul><ul><li>HMOs, PPOs, Health Savings Accounts (HSAs) </li></ul></ul><ul><ul><ul><li>Examples </li></ul></ul></ul><ul><li>Flexible Spending </li></ul><ul><ul><li>Examples (healthcare, childcare) </li></ul></ul><ul><ul><li>Tax Advantages </li></ul></ul><ul><li>Group Life </li></ul><ul><ul><li>Examples (basic, supplemental) </li></ul></ul><ul><li>Tuition Reimbursement </li></ul><ul><ul><li>How prevalent </li></ul></ul>Perspective • Basics • Personal • Property • Benefits
  17. 17. Summary <ul><li>1. Financial Perspectives: Tithing </li></ul><ul><ul><li>Tithing is an important first step! </li></ul></ul><ul><li>2. Insurance Basics: Principles of Buying Insurance </li></ul><ul><li>3. Personal Insurance </li></ul><ul><ul><li>Life </li></ul></ul><ul><ul><li>Disability </li></ul></ul><ul><ul><li>Health </li></ul></ul><ul><li>4. Property Insurance </li></ul><ul><ul><li>Home </li></ul></ul><ul><ul><li>Auto </li></ul></ul><ul><li>5. Employee Benefits </li></ul>
  18. 18. FHE Suggestions <ul><ul><li>Review sections of Personal Finance for Dummies applicable to your situation </li></ul></ul><ul><ul><li>Check current auto coverage, check rates </li></ul></ul><ul><ul><li>Call two competitors for quotes </li></ul></ul><ul><ul><li>Check health insurance rates </li></ul></ul>
  19. 19. Resources: Best websites for this module! <ul><li>BYU Marriot School Personal Finance Website </li></ul><ul><ul><li>http://personalfinance.byu.edu </li></ul></ul><ul><ul><ul><li>Intermediate Lesson: 1. Insurance Basics </li></ul></ul></ul><ul><ul><ul><li>Intermediate Lesson: 2. Life Insurance </li></ul></ul></ul><ul><ul><ul><li>Intermediate Lesson: 3. Health, Long-term Care, and Disability Insurance </li></ul></ul></ul><ul><ul><ul><li>Intermediate Lesson: 4. Auto, Homeowners, and Liability Insurance </li></ul></ul></ul><ul><li>Determine how much personal (health, life, and disability) and property insurance you need, check rates, etc. </li></ul><ul><ul><ul><li>http://moneycentral.msn.com </li></ul></ul></ul>
  20. 20. Exhibits <ul><li>Exhibit 6.1 Community Resources </li></ul>
  21. 21. Having Adequate Insurance: Protecting You and Your Loved Ones Module 6