Risk Management and Insurance by alicejenny


									Risk Management and Insurance
What is risk?

   The chance of loss from some type of
Risk as a teenager

   Getting hurt in a car accident or while riding
    their bike
   Having their bike, phone, backpack, etc. stole
   Getting jumped by a gang
Risk as an adult

   Getting a deadly disease
   Getting laid off from a job
   Having a fire or flood ruin their home
   Having a spouse die or get very ill.
   Nationwide Commercial
   Travelers Insurance
        How do you manage the risk?

      Avoid the risk.
        –   For example, don’t ride in a car if the driver has been drinking
      Reduce the risk.
        –   Since many risks cannot be avoided altogether, the more practical choice is
            trying to reduce the risk. Risk-reducing behaviors could include always wearing
            your seatbelt, locking up your bike, or avoiding walking around dangerous parts
            of the neighborhood after midnight.
      Accept the risk.
        –   This is good if the likelihood of danger or loss is very small or the loss itself will
            not have major consequences in your life. For example, it might be very
            inconvenient to go without a backpack, so you use one even though there is
            some chance of it being stolen.
      Share the risk.
        –   This is what insurance and investments do, especially insurance. You pay the
            insurance companies a sum of money a little, and if disaster occurs, they help
            you handle the loss.

Risk management – how you deal with the potential of personal or financial loss.
What is Insurance?

What is insurance?

   Insurance is protection against large-scale
    financial loss

    –   For a relatively small payment called a premium,
        you’re protected against the chance of a large
        loss or financial setback
Insurance Premiums

   The payment you make to an insurance
    company in exchange for its promise of
    protection and help
   Can be paid monthly, quarterly, semi-
    annually or annually
Types of Insurance

   Auto Insurance
   Homeowners/Condominium Insurance
   Renters Insurance
   Life Insurance Insurance
   Health Insurance
   Supplemental Insurance – “Umbrella Policy”
   Other Insurances:
    –   Disability Insurance
    –   Long term care Insurance
    –   Others
Homeowners and Condominium

   Protects a dwelling, personal possessions and
    personal liability.
   Typically protects against fire, theft, collapse,
    explosion, falling objects, and other perils. Coverage
    for additional perils, such as earthquakes, can be
    added, if needed.
   Condominium unit owners insurance is similar, but
    specifically designed for a unit in a building that is
    owned and insured by a Condominium Association
    or similar organization.
Renter’s Insurance

   For people who do not own a home but instead rent
    a house or an apartment.
   Protects personal property against fire, theft,
    vandalism, and other perils similar to homeowner’s
   Like the Homeowners policy, it also protects the
    renter if they are held legally liable for bodily injury or
    damage to the property of another person.
Life Insurance

   Protect families when a spouse or parent
   Term life insurance provides death protection
    for a stated time period (term), generally from
    5 to 30 years.
   Whole life insurance provides permanent
    coverage for as long as the insured lives and
    continues to make timely premium payments.
Health Insurance

    Covers a variety of medical expenses for individuals
    and family members.
   Employers often offer health insurance as a benefit,
    paying the entire cost or asking the employee to pay
    part of the monthly fee.
   Health coverage can include doctor visits, tests and
    hospital stays. Coverage varies. Dental and eye care
    insurance may also be offered.
    Supplemental Insurance

    Policies that provide additional coverage not included in
    standard policies.
   Examples:
    –   Personal Articles, for protection of valuables not fully covered
        under a standard home or renters policy.
            collections
    –   Personal Liability Umbrella, to provide additional liability
        protection over and above homeowner, automobile, boat, and
        other standard policies (for example, if someone is injured in
        your home or in an auto accident).
    –   Flood, for flood damage.
Homeowner’s Insurance

   What is Homeowners Insurance

    –   Complete the worksheet to answer questions
        about homeowner’s insurance
Life and Health Insurance

   Read the articles and complete the questions
    about life insurance and health insurance
    Auto Insurance

   Required by law in New Jersey
   Liability coverage to pay for losses caused to
   No-fault coverage to pay driver and passenger
    expenses caused by injuries from an accident,
    regardless of fault.
   Collision coverage to pay for vehicle damage
   Comprehensive coverage to pay for vehicle
    theft or damage (other than collision damage)
Auto Insurance

   Cost is based on many factors
    –   Number of tickets and/or accidents,
    –   Type and use of vehicle
    –   Location (urban/suburban/rural)
    –   Age and gender
    –   Insurance amounts purchased
    –   Deductibles
            The amount that you pay first, then the insurance kicks

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