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Insurance

Part 2

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Aim of Lesson

Students learn about the different types of insurance and the circumstances each type covers.

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PRSI

• Every employer is obliged by the state to collect Pay Related Social Insurance (PRSI) from their employee’s wages.

• In addition the employer has also to contribute, a percentage of the wages paid to the employees to PRSI.

• The state uses this money for unemployment, maternity leave, state pensions, disability benefit etc.

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Vehicle Insurance

• By law every vehicle must be insured before it is driven on the road.

• This prevents drivers doing damage to other people or their property and the injured party having to pay for the damage themselves.

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Third Party Vehicle Insurance

• This type of vehicle insurance covers damage you do with your vehicle to other people or their property.

• By law it is compulsory.

• Note this type of insurance does not cover any damage done to your own vehicle or yourself.

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Third Party Fire and Theft Vehicle Insurance

• In addition to offering the same protection as Third Party, this type of insurance covers you if your vehicle is stolen or burnt.

• It will be more expensive than third party.

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Comprehensive Vehicle Insurance

• In addition to the benefits of third party this type of insurance covers damage done to your vehicle and compensates you for injures received by you the driver.

• It is the most expensive type of vehicle insurance.

His sports car and my old banger are

both covered

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Factors that determine the cost of Vehicle Insurance

• Age of Driver

• Type of licence the driver has, full or provisional

• Driving experience of driver

• Engine size of vehicle

• Value of Vehicle

• Where the insured lives, Dublin is more expensive

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Private Health Insurance

• This provides the insured with private health care in case of sickness or injuries.

• Examples of companies providing such care are VHI and BUPA.

• It is in addition to the health care provided by the state.• Patients covered by this type of insurance normally get

treated by the consultant personally and get a semi private or private room in hospital.

• Treatment in non emergency cases tends to be received quicker.

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Life Assurance

• This is based on when the death will occur.• It offers protection in the form of financial

security for the family in the event of the death of a loved one.

• Questions will normally be asked about the health of the person, whose life is being insured and if they are a drinker or smoker.

• There are different types of life assurance as listed in the next slides.

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Term Assurance

A premium is paid for a certain period of time and if the insured dies within that period their relatives get a lump sum.

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Whole life Assurance

• A premium is paid annually or in instalments for the rest of the insured person’s life.

• A lump sum is paid to their relatives on death.• Thus as the risk is greater the older the person

gets the more money the insurance company will have received and hence the company will make a greater profit.

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Endowment Assurance

• A premium is paid for a certain number of years for example 20.

• If the person insured is still alive at the end of this period, they receive a lump sum and if the person dies in the meantime a lump sum is paid to the relatives.

• Thus this form of assurance can act as a form of savings.

• This is normally the most expensive type of life Assurance, as money has to be paid out by the insurance company in all circumstances.

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Travel (Holiday) Insurance

• The theft of goods, credit cards or money.• Medical expenses. • Cost of extending the duration of the holiday due to

illness and the cost of alternative travel arrangements, if the holiday has to be extended or cut short due to an illness.

• Return travel, if a close relative is seriously ill or dies.• The cost of cancelling the holiday, if you, your travelling

companions or a close relative is ill or dies.

While on holiday travel insurance normally covers the following:

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Salary Protection Insurance

• This covers one, in the case where they are forced to give up work early due to serious illness and thus would find themselves receiving none or a reduced pension.

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House and House Contents Insurance

• House insurance normally covers the actual building, while house contents normally covers the contents.

• 2 houses of the same size in the same estate would require the same house insurance, but different contents insurance.

• In an apartment the house insurance is normally covered in the management fee, while each individual resident will be responsible for their own contents insurance.

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Mortgage Protection Insurance

• This insurance is compulsory by law for anyone taking out a mortgage from a bank or other financial institution.

• On the death of any of the people, who took out the mortgage, the full amount of the mortgage that is owed will be paid.

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Loadings

• This is , where the insurance company charges extra due as a greater risk.

• For example this occurs when the driver is charged more, because they live in a certain area or they have penalty points on their licence.

• With house insurance, if your house has had a lot of claims due to theft, the insurance company could put a loading on it.

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No Claims Bonus

• This is a reduction given, because no claims have been made.

• It is the insurance company’s way of saying you are less of a risk.

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Ha Ha They do not know about my fire fighting

skills!!

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Goods or Cash in Transit Insurance

• This covers the cost of goods or cash that is in the process of being delivered.

• It is difficult to get insurance for cash in transit, because it is difficult to prove the amount of money involved.

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The End

Notice all these risks are insurable risks!!

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