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ESChapter 25.ppt - ImhoffES

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									Chapter 25

Insuring Against Loss
Nature of Insurance

 Use insurance to protect themselves
  from risk due to fire, accident, or other
  catastrophes.
 People pay a yearly premium that goes
  into a common fund.
 When disaster strikes one member, the
  common fund pays for the loss.
    Kinds of Risks
   Personal Risks                   Liability Risks
     – Catastrophes that affect       – Certain events may affect
       individuals.                     the person or property of
     – Accidents, illness,              others.
       disability, and                – Injury may result from an
       unemployment.                    auto accident that YOU
   Property Risks                      caused.
                                      – Visitor to your home
     – Property is damaged.
                                        might be hurt.
     – Losses include auto
       accidents, natural
       disasters, fire, and
       vandalism.
Paying for Claims
   Deductible                      Co-insurance
    – A set amount of money          – For each insurance claim
      set by your insurance            you and the insurance
      company. (Example:               company split the cost.
      $100 or $500)                  – Usually 80% paid by the
    – When claims are filed            insurance company and
      you must pay full amount         20% paid by you. Or
      of claim until you have          some other percentage
      reached the deductible           determined by you and
      amount.                          the insurance company.
    – Once that amount has
      been reached, the
      insurance company will
      pay 100% of the rest of
      the bill for that year.
Health Insurance

 Pays expenses resulting from illness or
  accident.
 Most necessary form of insurance.
 Health Maintenance Organization
  (HMO) is a group that members join to
  lower costs of health insurance.
Types of Health Insurance

   Hospital Expense             Surgical Expense
    – Provides for hospital       – Covers variety of
      charges such as               medical procedures
      room and meals,               and operations.
      operating room use,         – May be performed
      laboratory fees, and          on inpatient or
      drugs/medicine.               outpatient basis.
    – Most common form
      of health insurance.
    Types of Health Insurance

   Medical Expense           Major Medical Expense
    – Also known as           – Protects against huge
      Physician’s Expense.      expenses resulting from a
                                serious illness or
    – Pays for the doctor’s     accident.
      medical visits while
                             Disability Coverage
      patient is in the
      hospital.               – Pays benefits to
                                someone unable to work
                                because of illness or
                                injury.
                              – Sometimes called loss-of-
                                income insurance.
Life Insurance

   Terms
    – Face Value
      • The amount of money to be paid in the event of
        the policy holder’s death.
    – Premium
      • Price of the policy.
    – Beneficiary
      • The name of the person to whom the death
        benefits are to be paid.
Types of Life Insurance

   Term                       Cash Value
    – Provides protection       – Protection is teamed with
      only.                       savings account.
                                – Permanent…when the policy
    – Buy for a specified         is paid up after a certain
      period of time.             number of years, the
    – Pay as long as you          policyholder owns the
                                  insurance.
      need the coverage
                                – A portion of the premium is
      then the policy is
                                  set aside and accumulates in
      dropped or                  a type of savings account
      terminated.                 that can be borrowed
                                  against.
Home Insurance
 In addition to the home itself, household
  furnishings and personal belongings are
  covered.
 The basis for all home insurance policies is
  coverage against the various damages or
  perils.
 Liability coverage is also a part of home
  insurance. Protects you against a claim
  resulting from an accident or injury occurring
  on your property.
 Will also protect you if someone in your family
  causes an injury away from home.
Auto Insurance

 Everyone who drives a vehicle is
  responsible for operating it safely and
  paying for any damage the vehicle
  might cause.
 All states now have laws that state that
  drivers pay for damages they cause to
  people or property.
    Types of Auto Insurance

   Bodily Injury Liability  Property Damage
    – Applies if you kill or  Liability
      injure someone in an   – Won’t repair YOUR car.
      accident in which      – WILL cover the other
      you are at fault.        person’ car or property.
    – Pedestrian, rider in
      your car, or someone
      in another car.
Types of Auto Insurance

   Uninsured Motorists            Medical Payments
    – Applies to bodily             – Insurance company
                                      agrees to pay medical
      injuries that you               expenses resulting from
      suffer as a result of a         accidental injury.
      hit-and-run accident.         – Includes you and family
    – Also covers you in              members whether in your
                                      car or someone else’s.
      the event of an
                                    – Also applies if you are
      accident in which the
                                      struck by a car.
      other driver does not
                                    – Payment made
      have insurance.                 regardless of who is at
                                      fault.
Types of Auto Insurance
   Auto Collision               Auto Comprehensive
    – Your car is covered.        – Protects against loss
                                    from theft, vandalism,
    – Pay to have your car          fire, windstorms, and
      repaired or replaced          other perils.
      regardless of who is       No Fault
      at fault.                   – To reduce time &
    – Doesn’t cover repairs         costs…each person pays
      greater than actual           for own losses regardless
                                    of who caused the
      value of the car.             accident.
    – Most expensive of           – We don’ t have in WI!!
      car insurance.

								
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