How Insurance Works

PREPARE TO APPLY FOR INSURANCE OR TO FILE A CLAIM

2 ©2014 National Endowment for Financial Planning | Lesson 6-2: How Insurance Works

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.

3 ©2014 National Endowment for Financial Planning | Lesson 6-2: How Insurance Works

What Do You Think?

• Can Katie insure the saxophone she rents from school in case she needs to pay to pay to repair a ding that she accidentally caused to 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?

4 ©2014 National Endowment for Financial Planning | Lesson 6-2: How Insurance Works

INSURE-ableThe risk must have certain qualities to be insurable.

•Insurable interest

•Numerous

•Specific loss

•Unintentional and Unexpected

•Reasonable cost

•Estimable

5 ©2014 National Endowment for Financial Planning | Lesson 6-2: How Insurance Works

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

6 ©2014 National Endowment for Financial Planning | Lesson 6-2: How Insurance Works

Get Covered

7 ©2014 National Endowment for Financial Planning | Lesson 6-2: How Insurance Works

Coverage and ConditionsCoverage 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

©2014 National Endowment for Financial Planning | Lesson 6-2: How Insurance Works8

Cover a Loss

9 ©2014 National Endowment for Financial Planning | Lesson 6-2: How Insurance Works

Law and Order of InsuranceTake 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

10 ©2014 National Endowment for Financial Planning | Lesson 6-2: How Insurance Works

Reflection

What are two habits you can

take on now so you are

ready to manage your own

insurance paperwork and

tasks?

11 ©2014 National Endowment for Financial Planning | Lesson 6-2: How Insurance Works

Challenge

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.

12 ©2014 National Endowment for Financial Planning | Lesson 6-2: How Insurance Works