Type Of Insurance Worksheet

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Type Of Insurance Worksheet – 1 Types of Insurance Grades 9-12 Take Care of Your Money Completion Time: 60 minutes National Content Standards for Family and Consumer Science Standards: 1.1.6, 2.1.6, 2.5.4, 2.6.1, 2.6.3, National Council on Teaching Economics Standards: National Standards for Business Education! Career Development: ! Economics: IV.1, IV.2! Personal Finance: III.2, V.2, VIII.1, VIII.3, VIII.4 Objectives Upon completion of this lesson, students will be able to:! Understand the relationship between risk and insurance. Explain the different types of insurance. Introduction Life is full of risks and dangers. People get injured while playing sports, riding in cars, or living at home. Risk is the uncertainty of the outcome of a situation. Accidents can be unexpected events that lead to loss or damage. Insurance is an arrangement between an individual (consumer) and an insurer (insurance company) to protect the individual against risk. Insurance plays an important role in many individuals’ financial management plans. Almost one in twelve dollars in the American economy is spent on insurance (Goldsmith, 2001). The purpose of insurance is to help individuals limit their financial losses in the event of an accident. It helps the person to be prepared for the unexpected. To buy insurance, consumers buy a policy. A policy is a contract between an individual and an insured that defines the terms of an insurance arrangement. A policy holder is the consumer who purchased the policy. The policy specifies the premium and deductible amounts. A premium is a payment to an insurer to cover certain conditions. Deductible is the amount paid out-of-pocket by the policyholder for the first part of the loss before coverage begins. The amount of premium or deductible varies depending on the type of insurance and the terms of the policy. Types of Insurance: 1. Automobile 2. Health 3. Life 4. Disability 5. Homeowner/Car Insurance: According to the Insurance Education Foundation, the probability that a person will be involved in a car accident is 70%. The first three years of driving. Car Insurance Arrangements Between Family Economics and Financial Education October 2004 Insurance Section Types of Insurance Page 1

2 Individual (consumer) and insurance (insurance company) to protect the individual from the risk of a car accident. The purpose of car insurance is to help individuals limit their financial losses in the event of a car accident. When people buy car insurance, they transfer part of the financial risk of the accident to the insurance company. There are four types of coverage for car insurance. 1. Liability insurance covers the insured in case of injury or damage to other people or their property. It is the minimum amount of insurance required by law for cars. 2. Medical Payment Insurance covers any injury sustained by the driver or any passenger of the insured vehicle. It also covers family members who are injured as passengers in any car or injured while on foot or on a bicycle. 3. Uninsured or underinsured motorist insurance covers injuries or damages to the driver, passenger or vehicle that is insufficiently insured. 4. Personal injury insurance covers damage to the vehicle. Two optional types of coverage are available: a. Collision – Covers a collision with another object, car or rover. b. Comprehensive – Covers all bodily injuries except for collision and other specified losses. Health Insurance: Health care costs are enormous and affording health care can be difficult for the average person. Large medical expenses can wipe out an individual’s savings. Health insurance can be purchased to protect individuals from this risk. Health insurance protects against financial loss from injury, illness and disability. Its purpose is to provide coverage for emergency or routine medical expenses. Health insurance can cover hospital, surgical, dental, vision, long-term care, prescription and other major expenses. Coverage depends on the policy as the conditions vary between different health policies. Health insurance can be purchased by an individual or their employer. Some children may be covered by their parents’ health insurance until they turn 19 or are in college. According to Personal Finance (Goldsmith, 2001), the majority (61%) of Americans have employer-based health insurance. Life Insurance: Seventy percent of American adults have life insurance (Goldsmith, 2001). Life insurance is a contract between the insurer and the insured that specifies the amount to be paid to the beneficiary upon the death of the insured. A contract is a policy that specifies the amount to be paid to the beneficiary after the death of the insured person. The beneficiary is the beneficiary of any policy if the insured person dies. The purpose is to give money to family members or dependents when a wage earner dies. A dependent is someone who relies on someone else for money. Life insurance is not necessary if a person is single without dependents. Life insurance is important for people who have a dependent spouse, dependent children, an aging or disabled dependent relative, or business owners. Disability Insurance: One in ten people will be disabled by age 65 (Insurance Education Foundation). Insurance exists to protect against the risk of loss of income due to physical injury. Disability insurance replaces a portion of a person’s income if they are unable to work due to illness or injury. Insurance usually pays 60% to 70% of full-time wages. It does not pay 100% salary because there is no incentive to return to work. Factors such as the length or severity of the injury affect the percentage of income a person receives. Many employers offer disability insurance as part of their benefits package. Homeowner’s/Renter’s Insurance: Family Economics and Financial Education October 2004 Revised Insurance Section Types of Insurance Page 2

Type Of Insurance Worksheet

3 According to the Insurance Education Foundation, a fire occurs in someone’s home every 74 seconds in the United States. Homeowner’s and renter’s insurance can protect against this risk. Homeowner’s insurance combines property and liability insurance into one policy to protect a home against damage caused by an accident. A disaster is an event such as fire, falling trees, lightning, and other events that can cause financial loss. Property insurance protects the insured against financial loss due to destruction or damage to property or assets. Liability coverage protects the insured from being held liable for other financial losses. Homeowner’s insurance should cover the replacement cost of rebuilding the home if it’s a total loss. Renter’s insurance protects the insured against loss of the contents of the dwelling, not the dwelling. It covers major perils, provides liability protection and provides additional living expenses if the residence is uninhabitable due to one of the covered perils. Renter’s insurance is important because the landlord’s insurance for the apartment does not cover the tenant’s personal property. In this lesson, students learn the basics of five types of insurance (auto, health, life, disability, homeowners/renters) and identify what insurance covers different types of risks. Unit 1. Students play a true/false game to assess how much they know about insurance. Directions are as follows: a. Give each student a scratch pad and marker. b. The teacher reads a statement to the class from Insurance Questions Sheet B1. Each student must decide whether it is true or false, write the answer on a scratch pad, and hold up the paper for the teacher to see. c. After each student has an answer, the teacher can explain the answer and explain why the statement is true or false. d. Keeping score is optional. 2. Distribute the F1 insurance information sheet after the game. Give students time to read the information sheet in class. 3. What does this risk cover? H1 directions are as follows: a. Before class, what covers this risk? Playing cards H1 and put them in a hat or plate. b. Divide the students into three groups. What covers this risk for each group? Playing cards H1. Keep score for each team on the board. c. Draw a card from the hat and read the danger card to the class. Each group must decide what type of insurance can cover the risk they read. They should hold the flashcard that they think is the correct answer. d. After each group has had a chance to guess, reveal the answer to the students. Discuss and answer each risk with the class before drawing another risk card from the hat. e. For each correct answer, the team gets one point. No points are awarded for wrong answers. List the five types of insurance discussed above

Recorded Statement Planning Worksheet For Auto Accident Claims

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