©2012 National Endowment for Financial Planning | Lesson 6-2: How Insurance Works2

How Insurance Works

PREPARE TO APPLY FOR INSURANCE OR TO FILE A CLAIM

©2012 National Endowment for Financial Planning | Lesson 6-2: How Insurance Works3

PreviewToday we will answer these questions:• How do I get insurance?• What is covered by insurance?• How do I get insurance payments if I have

an accident?

Use what you learn today to be prepared to apply for insurance or to file a claim.

©2012 National Endowment for Financial Planning | Lesson 6-2: How Insurance Works4

What Do You Think?

• Can Katie insure the saxophone she rents from school in case she accidentally puts a ding in the instrument?

• Can Aaron’s dad purchase insurance to recover cruise fees paid in advance if the family is unable to go on the trip?

©2012 National Endowment for Financial Planning | Lesson 6-2: How Insurance Works5

INSURE-able

The risk must have certain qualities to be insurable.

• Insurable interest

• Numerous

• Specific loss

• Unintentional and unexpected

• Reasonable cost

• Estimatable

©2012 National Endowment for Financial Planning | Lesson 6-2: How Insurance Works6

Yes or No?Are these INSURE-able situations?

1. Katie insure the school’s rental saxophone

2. Aaron’s dad purchase cruise trip insurance

3. A parent or guardian purchase your life insurance

4. You buy insurance to cover pens/pencils lost at school

5. You insure your vocal chords when you are a famous

singer

©2012 National Endowment for Financial Planning | Lesson 6-2: How Insurance Works7

Get Covered

©2012 National Endowment for Financial Planning | Lesson 6-2: How Insurance Works8

Coverage and Conditions

Coverage Examples - Rent

Specify amount limits:• Up to $XXX on jewelry usually at

residence

• Up to $XXX on electronic equipment usually at residence

What is excluded from coverage:• Property of a boarder

• Animals

• Loss caused by earth movement (i.e earthquake, mudflow)

• Intentional loss

Condition Examples - Rent

What to do in case of a loss:• Give notice to an agent

• Report any theft to police

• Protect property from further damage

• Submit request within XX days

Payment procedures:• Amount paid determined after

deductible is applied to the loss

• Who payment will be made to

• Option for cash settlement or pay cost to repair or replace

©2012 National Endowment for Financial Planning | Lesson 6-2: How Insurance Works9

Cover a Loss

©2012 National Endowment for Financial Planning | Lesson 6-2: How Insurance Works10

Law and Order of Insurance

Take Responsibility• Provide accurate

information

• Be honest

• Know procedures

• Pay premiums on time

• Keep own records in order for quick retrieval

Know Rights• Know details upfront

• Receive notice of any policy or premium changes

• Expect fair and prompt processing of claims

• Receive explanation of why claim is denied

• Expect that personal information is securely protected

©2012 National Endowment for Financial Planning | Lesson 6-2: How Insurance Works11

Reflection

What are two habits you can

take on now so you are

ready to manage your own

insurance paperwork and

tasks?

©2012 National Endowment for Financial Planning | Lesson 6-2: How Insurance Works12

Challenge Assignment 6-B

Take an Inventory

Put the finishing touches on your personal property inventory.

Create a system to easily maintain your inventory and any evidence to prove ownership and value when applying for insurance or filing an insurance claim.