, Slide 2 Slide 3 What is an Insurance Policy? A contract with
an insurance company that spells out what losses are covered, what
the policy costs, and who receives payments if a loss occurs. Slide
4 What is basic insurance? Insurance is a protection against
possible financial loss, and gives you peace of mind. Slide 5 Who
sells Insurance Insurance Companies sell insurance. An insurance
compny, or insurer, is a risk- sharing firm that assumes financial
responsibility for losses from an insured risk. Slide 6 The Purpose
of Insurance The purpose of Insurance is to Provide Economic
Protection against losses that may be incurred due to a chance
happening or event, such as death, illness, or accident. Slide 7
Life and Health Insurance Importance Based on Risk Pooling
Individuals share the financial risks they face Individuals pool
the financial risks associated with death. Slide 8 What people put
into the pot Premium: The amount that everyone puts into the pot
The size of your premium depends on the probability of death.
Actuaries: Statisticians who specialize in estimating the
probability of death Slide 9 Whats provided upon becoming deceased
Face Amount or Face of Policy: The amount of insurance provided by
the policy at death. Owner of a policy is referred to as the policy
holder. Beneficiary: Individual designated to receive the insurance
policys proceeds upon the death of the insured. Slide 10 Earnings
Multiple Approach Purchasing life insurance that covers from 5 to
15 times your annual gross income. Earnings Multiple Approach: Used
to figure out exactly how much insurance this amount to. Slide 11
Large-Loss Principle It is wise to pay for small losses out of your
own pocket and purchase insurance to cover those large losses that
will ruin your financial plans. The purpose, or the meaning of
insurance is to cover financial catastrophes. Slide 12 Computation
for Life Insurance Needs Life Income stream X (1- % of family) X
Earnings Multiple insurance to be replaced income spent Needs= on
deceaseds needs) Slide 13 Needs Approach Immediate needs at the
time of death Debt Elimination Funds Immediate Transitional Funds
Dependency Expenses Spousal Life Income Educational Expenses for
the Children Retirement Income Slide 14 Slide 15 Term Insurance A
type of insurance that pays your beneficiary a specific amount of
money if you die while covered by the policy. Set amount of
coverage for a set amount of years Slide 16 Cash-Value Insurance
Two Components: Life Insurance Savings Plan Slide 17 Contract
Clauses Contract clauses are provisions or stipulations that appear
in your insurance policy Slide 18 Beneficiary Provision:
Beneficiary Provision: Person designated to receive death benefits
when you die. Slide 19 Coverage Grace Period: Coverage Grace
Period: Late-payment period for premiums during which time the
policy stays in effect and no interest is charged. If payments
still arent made, the policy can be cancelled after the grace
period. Slide 20 Loan Clause: Loan Clause: A Clause that provides
the right to borrow against the cash value of the policy at a
guaranteed interest rate. Slide 21 Nonforfeiture Clause:
Nonforfeiture Clause: The choices available to policyholders who
miss premium payments, causing the policy to lapse. Common to
exchange the policys cash value for a paid up policy with a reduced
face value. Slide 22 Policy Reinstatement Clause: A clause that
provides the right to restore a policy that has lapsed after the
grace period has expired. Generally, reinstatement is provided for
within a specified period. Slide 23 Change of Policy Clause
Provides the right of the policyholder to change the form of the
policy. For Example Change from a continuous-premium whole life
policy to a limited-premium whole life policy. Slide 24 Suicide
Clause Insurance company's will not pay off for suicide deaths that
occur within the first two years of the contract. Slide 25 Payment
Premium Clause Defines how you pay your premiums Slide 26
Incontestability Clause States the insurance company cannot dispute
the validity of the contract after a specified period of time,
usually two years. Protects your beneficiary against policy
cancellations due to error, concealment, or innocent misstatement
made by the insured on the original application. Slide 27 Riders
Special Provisions that may be added to your policy, often at an
additional cost, to provide extra benefits or features to a policy
in order to meet your specific needs. Slide 28 Settlement or Payout
Options Alternative ways that a beneficiary can choose to receive
the policy benefits upon the death of the insured. Slide 29
Insurance Costs Slide 30 Traditional Net Cost(TNC) Method A method
of comparing insurance costs that sums up the premiums over a
stated period (usually 10 or 20 years) and subtracts from this the
sum of all dividends over that same period. Slide 31
Interest-Adjusted Net Cost (IANC) Method or Surrender Cost Index A
method of comparing insurance costs that incorporates the time
value of money into its calculations. A method for comparing
insurance costs. Slide 32 Health Insurance Types of Health
Insurance Slide 33 Hospital Insurance Insurance that covers the
costs associated with a hospital stay, including room charges,
nursing costs, operating room fees, and drugs supplied by the
hospital. Slide 34 Surgical Insurance Insurance that covers the
cost of surgery. Slide 35 Physician Expense Insurance Insurance
that covers physicians fees outside of surgery. Slide 36 Major
Medical Expense Insurance Insurance that covers medical costs
beyond those covered by basic health insurance. Slide 37 Aflac
Major Medical Commercial Slide 38 Health Care Choices Fee For
Service or Traditional Indemnity Plan You are reimbursed for all or
part of your medical expenditures, & have a good deal of
freedom to choose your doctor or hospital. Managed Health Care or
Prepaid Care Plan Most of your expenses are already covered and
dont need to be reimbursed Limited to receiving healthcare from
specific doctors, hospitals, & clinics. Slide 39 Government
Sponsored Health Care Plans Government Sponsored Plans fall into
two categories: State Plans: Which provide for work related
accidents & illness and Federal Plans Such as Medicare &
Medicaid. Slide 40 Workers Compensation Laws State laws that
provide payment for work-related accidents and illness. Slide 41
Medicare A government insurance program enacted in 1968 to provide
medical benefits to the disabled and those over 65. It is divided
into two parts. Part A- Hospital Insurance Part B- Supplemental
Medical Insurance Slide 42 Medigap Insurance Plans Insurance sold
by private insurance companies aimed at bridging gaps in Medicare
coverage. Slide 43 Medicaid A government medical insurance plan for
the needy. Slide 44 Controlling Health Care Costs Slide 45 Flexible
Spending Accounts A savings plan established by an employer that
allows each employee to have pretax earnings deposited into a
specially designated account. Slide 46 Health Savings
Accounts(HASs) Allows individuals to pay for current health
expenses and save for future qualified medical and retiree health
expenses on a tax-free basis. Slide 47 COBRA & Changing Jobs If
you decide to leave a company, or lose your job, you will be given
the opportunity to continue your health insurance coverage for 18
months to 3 years after you leave the company. Slide 48 Choosing No
Coverage Called Opting Out When employees opt out they can receive
a minimum of $300 in cash or other benefits for doing so. Slide 49
Disability Insurance Health insurance that provides payments to the
insured in the event that income is interrupted by illness,
sickness, or accident. Slide 50 Long-Term Care Insurance Insurance
thats aimed at covering the costs associated with long-term nursing
home care, commonly associated with victims of stroke, chronic
illness, or Alzheimer's disease, or those who can no longer manage
to live on their own. Slide 51 Slide 52 Protecting Your Home Needed
for every peril, that is, there was an insurance policy to cover
fire, theft, windstorm damage, and so forth. Homeowners insurance
simplified the process by offering protection against multiple
perils in one overarching policy. Gives families peace of mind.
Slide 53 Types of Policies Slide 54 Packaged Policies: HOs HOs
stands for homeowners insurance Insurance which covers more than
just the home. Provide liability insurance Cover Renters Slide 55
Supplemental Coverage Endorsement A written attachment to an
insurance policy to add or subtract coverage. Slide 56 Insurance
Needs Slide 57 Coinsurance Provision Requires you pay a portion of
your own losses if you dont purchase what they consider an adequate
level of insurance. Slide 58 80 Percent Rule Your home is insured
for at least 80 percent of its replacement cost. Intended to
discourage homeowners from insuring for less than the replacement
cost of their homes. Slide 59 Insurance Credit Score A credit
score, based on the same information as your traditional credit
score, which is used in determining what your home and auto
insurance rates will be. Slide 60 Deductible The amount that you
are responsible for paying before insurance coverage kicks in.
Slide 61 Automobile Insurance Slide 62 Personal Automobile Policy
(PAP) A standardized insurance policy for an individual or family.
Contains both liability and property damage coverage, and each
package of insurance includes four basic parts. Liability Coverage
Medical Expenses Coverage Uninsured Motorists Protection Coverage
Damage to your automobile coverage Slide 63 Liability Coverage
Split-Limit Coverage Allows for either separate coverage limits for
bodily injury and property damage, split- coverage limits per
person, or both. Combined Single Limit The coverage applies to a
combination of both bodily injury and property damage liability.
Slide 64 Medical Expenses Coverage The medical expenses coverage
pays all reasonable medical and funeral expenses incurred within
three years of an accident by the policy holder, his or her family
members, and other persons injured in an accident involving a
covered automobile. Slide 65 Uninsured Motorists Protection
Coverage Coverage against injuries caused by hit- and-run drivers
or by an uninsured motorist or a negligent driver whose insurance
company is insolvent. Slide 66 Coverage for Damage to Your
Automobile Includes both collision loss and other than collision
loss, generally called comprehensive physical damage coverage.
Collision Loss Provides benefits to cover damages resulting from an
accident. Slide 67 Buying Automobile Insurance Slide 68
Determinants of the Cost of Automobile Insurance The Type of
Automobile The use of your automobile The drivers personal
characteristics The drivers driving record Where you live Discounts
that you qualify for Your insurance credit score Slide 69 How to
Keep Your Costs Down Shop comparatively Consider only high-quality
insurers Take advantage of discounts Buy a car thats relatively
inexpensive to insure Improve your driving record Raise your
deductibles Keep Adequate Liability Insurance Slide 70 Slide 71
Government Sponsored Plans fall into two categories: State Plans:
Which provide for work related accidents & illness and Federal
Plans Such as Medicare & Medicaid Types of Health Insurance
Include: Hospital Insurance Surgical Insurance Physician Expense
Insurance Major Medical Expense Insurance You need enough
homeowners insurance to cover the replacement of your home in the
event of a complete loss. Keep your automobile costs down follow
the guidelines outlined in our presentation. Things like keep a
good driving record or improve your driving record.
