Insurance provides financial protection against losses in exchange for premium payments. An insurance policy outlines what risks are covered up to a specified coverage limit, and the deductible is the amount owed before the insurer pays a claim. Common types of insurance include auto, homeowners, life, health, and disability insurance. Auto insurance covers vehicle damage and liability, while homeowners/renters insurance protects a person's dwelling and possessions. Life insurance pays beneficiaries if the policyholder dies prematurely, and health and disability insurance cover medical costs and lost wages from illness/injury preventing work.

1. An IntroductionAn Introduction
to Insuranceto Insurance

2. What is Insurance?What is Insurance?
 Insurance is a means of guaranteeing youInsurance is a means of guaranteeing you
financial protection against various risks.financial protection against various risks.
 In exchange for a relatively small payment, youIn exchange for a relatively small payment, you
gain protection against a potentially large loss.gain protection against a potentially large loss.
 Some examples of a large loss would includeSome examples of a large loss would include
your house burning down or spending weeks inyour house burning down or spending weeks in
the hospital recovering from an automobilethe hospital recovering from an automobile
accident.accident.

3. Important InsuranceImportant Insurance
Related TermsRelated Terms
 We are going to discuss some importantWe are going to discuss some important
terms related to insurance. These termsterms related to insurance. These terms
include: insurance policy, premium,include: insurance policy, premium,
coverage limit, and deductible.coverage limit, and deductible.
 We will also examine specific types ofWe will also examine specific types of
insurance including: auto, homeowners,insurance including: auto, homeowners,
property, life, health, and disability.property, life, health, and disability.

4. What is an InsuranceWhat is an Insurance
PolicyPolicy
 This is a written contract detailing whatThis is a written contract detailing what
an insurance company will cover, howan insurance company will cover, how
much it will pay, and how much you willmuch it will pay, and how much you will
pay.pay.

5. What is a premium?What is a premium?
 This is the amount of money that you payThis is the amount of money that you pay
for an insurance policy.for an insurance policy.
 Premiums can be paid monthly,Premiums can be paid monthly,
quarterly, semi-annually, or annually.quarterly, semi-annually, or annually.
 The premium is based on the type andThe premium is based on the type and
amount of coverage you choose andamount of coverage you choose and
varies from one insurance company tovaries from one insurance company to
another.another.

6. Factors that affectFactors that affect
insurance premiumsinsurance premiums
 These include:These include:
 Your ageYour age
 Marital statusMarital status
 Whether you live in an urban or ruralWhether you live in an urban or rural
areaarea
 Your credit historyYour credit history
 Also, each special type of insurance isAlso, each special type of insurance is
going to consider other factors.going to consider other factors.

7. Coverage LimitCoverage Limit
 This is the maximum amount the insuranceThis is the maximum amount the insurance
company will pay if you file a claim.company will pay if you file a claim.
 It is important that you select an appropriateIt is important that you select an appropriate
coverage limit because any amount over yourcoverage limit because any amount over your
coverage limit becomes your responsibility.coverage limit becomes your responsibility.
 An example of this would be if you wereAn example of this would be if you were
insured with a coverage limit of $50,000 and ainsured with a coverage limit of $50,000 and a
claim against you was for $60,000. You wouldclaim against you was for $60,000. You would
be responsible for the additional $10,000.be responsible for the additional $10,000.

8. DeductibleDeductible
 This is the amount of a loss you must pay outThis is the amount of a loss you must pay out
of your own pocket before the insuranceof your own pocket before the insurance
company will step in and pay the rest.company will step in and pay the rest.
 An example of this would be if you were in anAn example of this would be if you were in an
auto accident and it caused $1000 worth ofauto accident and it caused $1000 worth of
damage and your deductible was $500.00.damage and your deductible was $500.00.
After you paid the initial $500.00, the insuranceAfter you paid the initial $500.00, the insurance
company would then pay the remainder of thecompany would then pay the remainder of the
bill.bill.

9. Auto InsuranceAuto Insurance
 This is insurance that protects your financialThis is insurance that protects your financial
interests in the event that you are involved ininterests in the event that you are involved in
an automobile accident.an automobile accident.
 It is extremely important to have automobileIt is extremely important to have automobile
insurance because the damage done to your orinsurance because the damage done to your or
another’s vehicle can be extremely expensiveanother’s vehicle can be extremely expensive
to repair.to repair.
 Also, if you hurt someone else while driving,Also, if you hurt someone else while driving,
there’s virtually no limit to what they can suethere’s virtually no limit to what they can sue
you for.you for.

10. Homeowners/PropertyHomeowners/Property
InsuranceInsurance
 This is insurance that protects youThis is insurance that protects you
financially if your house is damaged.financially if your house is damaged.
 Also, this type of insurance protects yourAlso, this type of insurance protects your
possessions that are located within yourpossessions that are located within your
home.home.
 Renters insurance protects your propertyRenters insurance protects your property
within a rented home or apartment.within a rented home or apartment.

11. Life InsuranceLife Insurance
 This type of insurance provides financialThis type of insurance provides financial
support for the people who depend on you insupport for the people who depend on you in
the event of your untimely death.the event of your untimely death.
 There are different types of life insuranceThere are different types of life insurance
policies. Some of these are designed to justpolicies. Some of these are designed to just
provide insurance benefits (term), while othersprovide insurance benefits (term), while others
(whole life, variable life, universal life, etc…)(whole life, variable life, universal life, etc…)
are designed to serve as insurance and a typeare designed to serve as insurance and a type
of investment.of investment.

12. Health InsuranceHealth Insurance
 This type of insurance pays medical billsThis type of insurance pays medical bills
when you or your family becomes sick orwhen you or your family becomes sick or
injured.injured.
 You can purchase an individual healthYou can purchase an individual health
insurance policy for yourself and yourinsurance policy for yourself and your
family, but its usually much morefamily, but its usually much more
expensive than the coverage anexpensive than the coverage an
employer offers.employer offers.

13. Disability InsuranceDisability Insurance
 This type of insurance pays you anThis type of insurance pays you an
income when an illness or injury preventsincome when an illness or injury prevents
you from working for several weeks oryou from working for several weeks or
even years.even years.
 Disability insurance is often a type ofDisability insurance is often a type of
insurance that people don’t purchase.insurance that people don’t purchase.
However, according to the NAIC, peopleHowever, according to the NAIC, people
in their 30s are three times more likely toin their 30s are three times more likely to
suffer a disability than they are to die.suffer a disability than they are to die.