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
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.
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
– For a relatively small payment called a premium,
you’re protected against the chance of a large
loss or financial setback
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
Life Insurance Insurance
Supplemental Insurance – “Umbrella Policy”
– Disability Insurance
– Long term care Insurance
Homeowners and Condominium
Protects a dwelling, personal possessions and
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.
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.
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.
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.
Policies that provide additional coverage not included in
– Personal Articles, for protection of valuables not fully covered
under a standard home or renters policy.
– 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.
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
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)
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
The amount that you pay first, then the insurance kicks