document resume ce 072 342 the insurance educator. volume v. institution … · 2014-05-14 ·...

DOCUMENT RESUME

ED 399 349 CE 072 342

TITLE The Insurance Educator. Volume V.INSTITUTION Insurance Education Foundation, Indianapolis, IN.PUB DATE 96

NOTE 18p.

PUB TYPE Collected Works Serials (022) Viewpoints(Opinion/Position Papers, Essays, etc.) (120)

JOURNAL CIT Insurance Educator; v5 n1-2 Jan-Sep 1996

EDRS PRICE MFO1 /PCO1 Plus Postage.DESCRIPTORS Business; Careers; Distributive Education; Driver

Education; Insurance; *Insurance Companies;*Insurance Occupations; Occupational Information;Risk Management; Sales Occupations; VocationalEducation

ABSTRACTThese two issues of a semiannual newsletter provide

secondary educators with a greater knowledge of insurance, access toteaching materials, and insurance career information for students.Articles in the first issue are as follows: "Public Relations: JustWhat Do Those People Do?" (Patricia Hillis); "How U.S. Compares withOther Nations on Radar Detectors: Survey Shows Few Other Countrieswith Permissive Policies on Detector Use"; "Teen Drivers andAutomobile Insurance: Where the Auto Insurance Premium Dollar Goes"(Sean F. Mooney); "Sharing the Road: A Matter of Adopting the RightAttitude and Strategy to Share the Highway Safely with Trucks" (TomWetzel); and "Records: What to Keep, for How Long." A classroomresources section lists annotations of three booklets. Issue twoincludes the following: "Your Financial Safety Net"; an insurancecrossword puzzle; "Teen Drivers and Automobile Insurance: Driving aUsed-Car Bargain Means More than Kicking a Few Tires"; InsuranceEducation Foundation News; "Auto Safety: It's Not Child's Play" (PaulSchattenberg); and "A Success Tale in Two Cities." A list ofinsurance terms and their definitions is included at the end of thearticle. A classroom resources section lists annotations of a videoand two booklets. Each article offers a suggestion for its use by theeducator or students. (YLB)

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Reproductions supplied by EDRS are the best that can be madefrom the original document.

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The Insurance Educator

Volume V

Insurance Education Foundation

U.S. DEPARTMENT OF EDUCATIONOff. e of Educational Research and improvement

E CATIONAL RESOURCES INFORMATIONCENTER (ERIC)

0 This document has been reproduced asreceived from the person or organizationoriginating it.Minor changes have been made to improvereproduction Quality

Points Of view or opinions stated in this docu-ment do not necesaanty represent otticiaiOERI position or policy

PERMISSION TO REPRODUCE ANDDISSEMINATE THIS MATERIAL

HAS BEEN GRANTED BY

TO THE EDUCATIONAL RESOURCESINFORMATION CENTER (ERIC)

BEST COPY AVAILABLE

2

Irigurance EducatorVolume V, Number I January 1996

The purpose of this semi-annual newsletter is to provide secondary educators with a greater knowledge of insurance, access to teaching materials. and insurance career

information for students. This publication is available free of charge to secondary educators who teach insurancein any subject. Please share it with colleagues.

In This IssueInsurance Careers

Public Relations:Just What DoThose People Do?

IEF News

Message from thePresident-Elect

Pages 1 & 3

Insurance Trends

How U.S. ComparesWith Other Nationsou Radar Detectors:Survey Shows FewOther Countrieswith Permissive Policieson Detector Use

Page 2

Page 4

Teen Drivers & AutomobileInsurance

Where the Auto InsurancePremium Dollar Goes Page 5

Special Feature

Sharing the Road:A Matter of Adoptingthe Right Attitude andStrategy to Share theHighway Safelywith Trucks Page 6

Lessons for the Teacher

Records: What to Keep,for How Long Page 7

Classroom Resources

Free Brochures andBooklets Available Page 8

Insurance. CareersPublic Relations: Just What Do Those People Do?

By Patricia HillisAssistant Vice President, Corporate Communications

SAFECO Insurance CompaniesSeattle. Washington

Teachers may want to copy and distribute this article to students and share it with the school

library or careers resource center.

The day the Northridge earth-quake struck in California wasa holiday for employees of the

giant SAFECO Insurance Cos., but by 8a.m. several members of the publicrelations staff in Seattle were on the job,collecting and verifying catastropheinformation, publicizing the company'semergency phone numbers, responding tomedia inquiries, sending out news releaseswhich told people where to report theirclaims and how to protect their propertyfrom further damage, and checking outcommunity relations opportunities.

Many insurance companies havepublic relations departments, and thosejobs can be very different from othercareers in the industry. Most people inP.R. like it for its variety, fast pace,customer service focus, opportunity tohelp out in their communities, and becausethey like to write. Most thrive on its fastpace, snap decisions, and crisis-modeatmosphere.

The charge of the public relationsdepartment is to contribute to thecorporation's profitability through com-munity relations, communications,activities and strategies that inform,educate and affect the opinion of 4

kJ,

key audiences.Our department at SAFECO has

professional communicators, commu-nity relations representatives, andcontributions staff. All have collegedegrees, and the communications staffmembers all were communications,public relations or journalism majors.We place a high value on creativity,innovation and unquenchable curiosity!No getting in a rut here! We need tolook at new and effective ways ofapproaching our many publics, and newand creative programs. We have toanticipate the value of the Internet toour business and blend that with thevalue of a good, old-fashioned newsrelease.

If you were to join our department(depending on the job you were hiredfor), you would be a skilled writer,planner, project manager and problemsolver. You would be very interested inwhat is going on in your city, commu-nity, country and the insurance indus-try. You would be issues oriented and astrategic planner; you would be awareof community needs; you would becrisis oriented; you would be a goodlistener and speaker, and your knowl-

(continued on page 3)

Message from the President-Elect

Dear Educator:

Just a few weeks ago, I was winding down a 33-year career in insur-

ance as President of the Indiana Lumbermens Insurance Company in

Indianapolis. Our organization has been a contributing member of the

Insurance Education Foundation since IEF's inception in 1988, and I

am acquainted with the IEF staff and several board members. We

contribute to the Foundation because we believe in its mission. During

the past seven years, that belief has grown stronger because we have

witnessed the reaction of educators across the nation to IEF's mission

to improve the public understanding of insurance through education of

teachers and students.

Now I eagerly assume a new challenge. During the Foundation's Annual Meeting in February, I will be elected as

IEF's new presidenta position I am proud to accept. I will work with IEF's staff to do everything we can to help

teenagers begin to understand how to deal with the complexities of risk management when they become insurance

consumers. Working through teachers. we make that happen. IEF's summer workshops, this newsletter and the

Choice-Chance-Control kit are available to any secondary educator who teaches insurance to teenagers. Help us

spread this message to your colleagues by sharing The Insurance Educator.

Your comments and suggestions are always welcome.

Sincerely,

Robert L. HarrisonIEF President-Elect

4

edge would be broad-based, fromlegislative to social concerns to insur-ance topics. You would work well as partof a team or individually, and your daycould swing from the quiet creation of abrochure to the hectic pace of a majorcatastrophe or disaster.

You might evaluate needs in thecommunity for grant-making activities,help our employees create, develop andimplement special projects for their owncommunities, or represent our companyin the community.

Informed employees are especiallyvaluable to any organization, and if youwere on our staff, you would keep theminformed through our bimonthly news-letter. through a quarterly video newsshow, through an electronic mail"newspaper" containing abstracts ofinsurance stories that appeared in theprevious day's press nationwide. Youwould produce a newsletter that educatesemployees about political or insuranceissues that affect our company or ourbusiness, and you would write newsreleases about employee promotions,products, services, or consumer informa-tion. You would write special messages

to our policyholders, set up mediacampaigns to combat a problem (likearson) or write consumer informationbrochures. All this means you wouldhave to be an accurate, careful. concisewriter, with a top-notch grasp ofgrammar. and maybe even an eyetoward design of printed material.

You often would be a contact withour policyholders and customers,particularly those who have problems.You would have to care about them andbe determined to help them cheerfully,quickly and efficiently.

You would respond to calls fromthe media, friendly and hostile, and setup interviews with our executives. Youwould help create communicationsstrategies for telling our company's sideof an issue or event.

As a P.R. person, you are expectedto be aware of the issues in our citiesand neighborhoods and to contributeideas to solve or address them. Youwould create special projects to do justthat. For example, you might decide toinvest money to help make a neighbor-hood safer by cleaning it up, reducingcrime and getting the residents involved

in block watches. All this makes it amore attractive neighborhood for yourcompany to insure.

You would receive requests forfunding from nonprofit agencies andyou would have to evaluate each grantto see if the money would be put togood use. You would also look foropportunities to make contributions inthe community. For instance, duringevery major insurance catastrophe inthe country, you would seek outagencies that are helping victims andmake grants directed toward thoseefforts. This means you have to haveinitiative and know how and where tofind the information that leads you tothe right agencies.

Being in public relations for theinsurance industry is a little like drivingbumper carsyou never really have allthat much control over your ownvehicle, and you never know what'sgoing to hit youor from whichdirection. But for those in the profes-sion, it is a stimulating and excitingarena, alternating between fast-pacedcrisis situations and well-planned andexecuted programs.

How U.S. Compares with Other Nations on Radar Detectors: Survey Shows FewOther Countries with Permissive Policies on Detector Use

Reprinted with permission from the Insurance Institute for Highway Safety Status Reports,Vol. 29, No. 4, March 19, 1994

eachers may.waat to refer to this information in response to students' questions about the use of radar detectors.

Asurvey of 21 nations findsonly seven that allow cardrivers to use radar detectors

in some or all jurisdictions, and theUnited States is one of the seven.Detector use is allowed in five Canadianprovinces, but it is banned in the otherfive and in the territories. Fourteen of the21 countries imposed universal bans onthese devices.

Radar detector use in passenger carsis banned in only two U.S. jurisdic-tionsVirginia and the District ofColumbia. It's also banned nationwide incommercial vehicles involved in inter-

state commerce, following a federalregulation issued last in 1993. But radardetector use is still allowed in passen-ger cars traveling in the other 49 states.

"Banning radar detectors incommercial vehicles is a good firststep," says Insurance Institute forHighway Safety President BrianO'Neill. "But it doesn't address use ofthese devices in carsa practice thatcontributes to higher travel speeds, asInstitute research has repeatedlyshown."

The problem in the United States isthat the federal government cannot ban

detector use in cars. Such bans have tobe imposed state by state, like safetybelt and motorcycle helmet use laws. Afederal ban is possible in commercialvehicles involved in interstate com-merce because these vehicles arefederally regulated.

In most other countries, it is illegalto sell as well as use radar detectors.Fines for violations can be as steep asthousands of dollars, and the prohibiteddevices may be confiscated. Punish-ment may be even tougher in France; avehicle may be seized if a radardetector is found.

Country Radar Detector UseAllowed In Cars?

Penalties for OffensesMaximum Speed LimitMaximum

Fine*ConfiscationPossible?***

Australia no varies** yes 68 mphCanada

British Columbia yes n/a n/a 68 mphOntario no $774 yes 62 mphQuebec no $155 yes 62 mph

France no yes*** 81 mphGermany no varies** yes 81 mph****Great Britain no $3,120 yes 70 mphJapan yes n/a n/a 62 mphSpain yes n/a n/a 62 mphSweden no $161 yes 68 mphSwitzerland no yes 74 mphUnited States yes***** n/a n/a 65 mph

* Fines are for first offenses. Dollar amounts reflect Feb. 28, 1994 exchange rates.** Fines in Australia vary among states. Fines in Germany are tied to income.

*** Confiscation refers to seizure of radar detectors, except in France, where a vehicle may be seized.

**** No speed limits are posted on many segments of Germany's autobahns.***** Radar detector use is banned in cars only in Virginia and the District of Columbia.

Dashes () indicate information isn't available.Where detector use isn't banned, n/a indicates information isn't applicable.

6

I41

Teen Drivers & Automobile. InsuranceWhere the Auto Insurance Premium Dollar Goes

By Sean F. Mooney, Ph.D., CPCUSenior Vice President and Economist

Insurance Information Institute

Because the question, "Why are my auto insurance premiums so high?" is so prevalent, teachers may want to share this information in the

classroom and send a copy home to parents.

In 1993, claims accounted for $79of every $100 collected forprivate passenger auto insurance

in the United States. For every $100of revenue. including investmentincome, claims accounted for $71.

Expensescommissions, statepremium taxes, and general ex-pensesaccounted for 24 percent ofthe premium dollar.

Investments added $11 toincome. Federal taxes took about one-third of pre-tax income, so the bottomline worked out to $5 after-tax profitfor every $100 in premiums, asfollows:

Premium $100Investment Gain +11

Total Revenues $111

Claims & Expenses -103Pre-Tax Income 8

Federal Taxes* -3

After-Tax Income $5

*Based on 35 percent corporate tax rate

The S5 profit on $100 of premiumtranslates to a 6.5 percent rate oncapital (surplus)lower than yields onlong-term U.S. corporate bonds. (Thiscalculation assumes that capital isallocated to each line on the basis ofpremium volume.)

Of note, lawyers' fees account for

$12 out of $100, comprising $6 toplaintiffs' attorneys and $6 to defen-dants' attorneys. The $6 to plaintiffs'attorneys is taken mainly out of the"pain and suffering and other non-economic awards" category. Plaintiffs'attorneys are typically paid on a contin-gency fee basis. Estimated at 10 percent,claims fraud. including bogus medicalbills and illegal chop shop operations,affects each part of the claim dollar.

The charts below show the data ingraphic form. Chart I shows where therevenue dollar (premiums and invest-ment income) comes from, and Chart IIshows where the revenue dollar goes interms of claims, expenses and taxes andafter-tax profits.

CHART IWhere the Revenue Dollar Comes From

(Private passenger Auto Insurance)

Investments10%

Premiums90%

CHART IIWhere the Revenue Dollar goes

(Private passenger Auto Insurance )

After Tax Profits5%

Taxes

AttentionTeachers!

An article in the May 1995 issue of Reader's Digest entitled "Getting the Best Deal on Car Insur-ance" explains several things consumers can do to reduce the cost of automobile insurance. Thisinformation would be helpful during your classroom discussion on the topic of premium rates.

S ecial FeatureSharing the Road: A Matter of Adopting the Right Attitude and

Strategy to Share the Highway Safely with TrucksBy Tom Wetzel

John Deere Transportation ServicesBrookfield, Wisconsin

'ATTENTION DriverEdUcation-Teachers: See;Classroom Resources on page 8 of thmnewskIter.

Ever wonder why truckers hogthe middle lane? Are driversin passenger vehicles safe

around big rigs? What is lumping?Aren't truck drivers heavy drug andalcohol users? Questions like thesehave prompted one company thatinsures long-haul trucks to launch amajor nationwide campaign to helpmotorists understand ways to share theroad more safely with trucks.

John Deere TransportationServices is developing a primer onwhat every motorist must know about

how to share the road safely withtrucks, and the company will proposethat it be adopted for use by all states.Beginning in March 1996, a series ofblind-spot demonstrations will beheld in cities and towns across thecountry. One demonstration has beenscheduled for driver educationteachers attending the annual conven-tion of the American Driver & TrafficSafety Education Association duringAugust in Grand Junction, Colorado.

"Our nation needs to do a farbetter job of educating motorists,

particularly young people, abouttrucks and how to drive with themsafely on the road," says David Webb,executive vice president at John DeereTransportation. "We want to workclosely with driver educators acrossthe country, and the ones we've talkedto are enthusiastic about the cam-paign."

For more information on how toschedule a blind-spot demonstration inyour area, call the John Deere Hotlineat 1-800-672-8666.

Where to Go for InformationIf you need insurance information or want to report insurance fraud, call these numbers:

NationalInsuranceConsumerHelpline

800/942-4242

1 6 1

Report the RipoffInsurance Crime Line

800/835-6422

InsuranceInformationInstitute

Insurance Information InstituteHotline

800/331-9146

8

Records: What to Keep, for How LongReprinted from Your Financial Fitness" with permission from the

National Association of Life Underwriters

Teachers may want to duplicate this information for students' reference or use it for background knowledge when discussing with studentshow life insurance products must fit the need of individual consumers.

Are you drowning in a sea ofpaper? Worrying about whatyou must keep, and for how

long?The first step in getting organized

is knowing what to throw out. Most ofus don't know what we can toss. so wekeep too much. Then we can't findanything.

If this sounds familiar, the follow-ing guidelines will help to tame thepaper monster:

As a first rule of thumb, keeppapers you will need to document factsfor as long as those facts might bequestioned.

In the case of tax-related matters(the root of most record-keeping), thismeans keeping substantiating docu-ments for deductions like medicalexpenses or casualty losses for at leastthree years after filing the return.Anything backing up a deduction takenon your 1994 tax return, filed in 1995,must therefore be kept until 1998. Thisis the usual audit period for federalincome tax returns. But your state mayhave different rules, and all bets are off(on both federal and state levels) ifyou've seriously under-reportedincome.

Documents substantiating long-term tax claims must be kept almostindefinitely- -or, at least, until threeyears have elapsed after the return filedfor the year the asset was sold. Items inthis category include buy and selldocuments on securities, and recordson a home purchase and home im-provements. Receipts for homeimprovements and renovations canincrease the -cost basis" of your house

and thereby reduce the taxable gain,saving considerable sums when yousell.

But there are things you can throwout: Telephone and utility bills aren'tneeded once the next statement reportsyour payment in full (unless you run abusiness from home and need the billsto back up tax deductions). Credit cardstatements and department store billsmay be discarded as soon as yourpayment has been accurately recordedand you're sure there is no problemwith the product you purchased. Mutualfund activity statements may be tossedafter you receive a quarterly summaryof all account activity.

It isn't even necessary to keepevery canceled check you everwrote. Try this: As youbalance your bank state-ment each month. file tax-related checks by appro-priate categories-medical expenses. forexample. or charitablecontributions. Then therest can be discarded inan annual year-endhouse cleaning, alongwith expired warran-ties and out-of-dateapplianceinstructions.

Where tokeep things?Use a safe-deposit box orfireproof boxfor papers thatare extremelyvaluable or

difficult to replace. such as birth andmarriage certificates, deeds, titles andsecurities. An accordion file, with apocket for each month or category, is agood place for current papers. And oldtax returns, along with the documenta-tion for those returns, can be tuckedaway in an out-of-the-way but acces-sible closet. Make a note of whatyou've put where, and keep a list athome of everything in your safe-deposit box.

9fwal

ClassroomResources

The following three booklets (35 plus pages each) are available from the

Independent Insurance Agents of America. 127 South Peyton Street.

Alexandria, VA 22314: The Consumer's Guide to HomeownersInsurance, The Consumer's Guide to Auto Insurance, and The

Graduate's Independent Guide to Insurance. One copy per teacher.

Growing Toward the Future (12-page brochure): tips for making wise

consumer decisions about homeowner, life and auto insurance. Write for

free copy on school letterhead to: The Horace Mann Companies,

Attention: Dr. Janis Grace, One Horace Mann Plaza. Springfield. IL

62715.

Sharing the Road (45-page book) explains how the trucking industry

works, safety issues. etc. Available from John Deere Insurance. Request

a copy by calling the JOHN DEERE HOTLINE at 1-800-672-8666.

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10

Insurance Education Foundation3601 Vincennes Road

P.O. Box 68700Indianapolis. IN 46268

(317) 876-6046

Insurance Education FoundationStaff

Robert L.Harrison

President-Elect

Nancy M.Coleman

Executive Director

Mary S. VerschooreExecutive Assistant

The Insurance EducatorEditorial Advisory Board

Cynthia LyleUSAA

San Antonio, TX

Jim StahlyState Farm Mutual

AutomobileInsurance Co.

Bloomington, IL

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Irigurance EducatorVolume V, Number II September 1996

The purpose of this semi-annual newsletter is to provide secondary educators with a greater knowledge of insurance, access toteaching materials, and insurance career

information for students. This publication is available free of charge to secondary educators who teach insurance in any subject. Please share it with colleagues.

In This Issue.

Lessons for the TeacherYour FinancialSafety Net Pages 1 & 2

.

-Teen Drivers & AutomobileInsuranceDriving -a used-carbargain means more-.than kicking:a- .few tires.., Pages 3.& 4

IEF News"The Risk Challenge Pages 4 &.5

Special. Feature.Auto Safety: It'sNot Child's Play Pages 5 & 6

Insurahce'CareeriA Success Tale inTwo Cities Pages 6 & 7

Classroom-ResourcesFree Teaching AidsAvailable

(EF

Page 8

IAft a a

Your Financial Safety NetReprinted from "Your Financial Fitness"

with permission from theNational Association of Life Underwriters

This financial information may be too advanced for younger high school students but isincluded here for your benefit and as background knowledge when discussing with studentsthe options they will be considering to protect their future assets .

Want to be safe and sound,no matter what happens?Build adequate cash

reserves as a base for your financialhouse, then buttress that foundation withinsurance.

Cash reserves should be both liquidand accessible so that they can serve asyour emergency cushionthe life raftyou need to meet unexpected expenses.If you are laid off from your job, or yourcar needs engine work, this is the moneythat can pay the bills.

What's both liquid and accessible?Savings accounts. checking accountsand money market mutual funds keepcash totally liquid although the trade offmay be a low rate of interest. You maydo a bit better in certificates of deposit,although you will probably facepenalties if you mustwithdraw moneybefore maturity.Another alterna-tive is short-termbond funds.although with-drawals areactually sales and

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Insurance is the second essentialstrand in your financial safety net.Consider:

Disability income insurance toreplace income lost if you areunable to work for a long periodof time because of extendedillness or injury. As important aslife insurance, yet often overlooked, disability incomeinsurance should be part of everywage earner's protection plan.Life insurance protects peopledependent on you from loss ofincome after your death.

Term insurance, which is lifeinsurance with no savings element, isless expensive at younger ages and maybe a good way for young parents to buy

the large amount ofcontinued on page 2

may generate a tax liability.

1

continued from page 1

insurance protection they need. Butpremiums for term insurance go up eachyear.

Permanent or whole life insurancehas a fixed premium which does notchange with age. This makes it moreexpensive for younger people, but youdo get more for your money: accumu-lating cash values, which can be tappedif you need the money; and the potentialof meeting estate taxes that may be dueat death. Variable life and universal life

are flexible versions of whole lifeinsurance that may also meet yourneeds. Your agent can help you decidewhat's best for you.

Property insurance can protectyour home and belongings fromloss caused by theft, fire, and ahost of other hurtful events.

In buying homeowners insurance.consider replacement cost coverage forboth home and contents; without it.you'll receive only the depreciated value

Attention Can you use an extra insurance crossword puzzle? Use this asa review of terminology before your next quiz. Add more

Teachers:_ interest by timing students as they complete the puzzle.

5

6

7

10

11 12

15

16

Across

5. Pays for fire loss to auto6. Price of policy8. Stop policy9. Most expensive life insurance

type11. Recipient of face value of life

insurance13. Amount of policy15. Common hazard to property

often insured against16. Time period of policy17. Amount per class

17

2

8

13 14

Down:

3 4

1. Kind of insurance that pays at death2. First dollars paid by policy owner3. Insurance protects against

loss4. You buy insurance to

yourself or others5. Files a report after an auto accident .7. Insurance contract

10. Person covered by insurance policy12. Being can save you

money14. A person who sells insurance15. Amount received by the beneficiary

of a life insurance policy

of your property and may find it veryexpensive to replace either your houseor your furniture. Consider flood andearthquake coverage, which must bepurchased separately, if there is anychance your region is vulnerable tothese disasters. And, if new zoning orbuilding codes are in force since yourhouse was built, you may also want toconsider a special policy rider thatwould cover the higher cost of rebuild-ing to meet the new standards.

Obey thespeed

limit andavoid

speedingtickets tosave gas,

tires, wearand tear.

Teen Drivers & Automobile InsuranceDriving a used-car bargain means more than kicking a few tires.

Reprinted with permission from Under 25 Magazine. Spring 1996USAA, San Antonio. Texas

Teachers may want to use this information when students are learning that the cost of automobile insurance premiums can be reduced by

purchasing a used rather than a new automobile.

After careful budgeting andfrugal spending throughouthigh school, Mary Oliveri

finally has enough money' to buy hervery own car. A new car is out of the

question; she certainly can't affordoneat least, not yet. And sincesaving the money has been a challengefor her, she wants to reward herselfwith the best used car she can findand she can afford.

Mary is one of the many youngadults longing for the independencethat cars of their own will give them.Throughout high school, she haddreamed of a brand-new vehicle, butshe's had to overhaul her new-cardreams because of new-car stickershock. So today she's shopping for areliable used car.

Mary's in good company. Ameri-cans spend more then $100 billion onsome 18 million used cars each year.reports Jack Gillis. author of The CarBook and The Used Car Book. Andwith good reason: On average. a usedvehicle sells for $8.000 less than atypical new car.

The trick to driving a used-carbargain is to choose the right car.Some cars simply last longer thanothers and make better used cars.Others have received plenty of lovingcare from their first owners and canstand up to many more thousands ofmiles.

Obviously the best used car is onethat. first. is known for its workman-ship and. second. has been wellmaintained. At least two of the top-rated consumer publications (such asConsumer Reports) issue "used -car

buying guides" in the spring of eachyear. These guides will tell you notonly which older cars are consistentlyholding their value but also what youcan expect to pay. It's a good idea toperuse these guidelines and narrowyour choices to a few of the listedmodek.

Finding a car that's been wellmaintained is not as clear cut. Someconscientious car owners have keptdetailed records of routine mainte-nance. But to verify those records, or ifmaintenance records aren't available.you'll still want to do some checkingyourself. Here are a few things to lookfor:

Before you get in the car.Check the car's body for rust, particu-larly around the fenders, on rockerpanels, in door frames and below doors.Look for evidence of collision damage.such as uneven gaps between bodypanels. uneven body sidemolding, or bumps orwaves in the metal.

Check the tires forwear: uneven wear maysignal an alignmentproblem. For the samereason. be cautious of acar with all new tires. andexamine the spare tire

instead.To test the suspen-

sion. push down on eachcorner of the car. Morethan one bounce maymean worn shockabsorbers. Then look atthe car to see if it is level.One corner lower thli

i3

the other may indicate a broken orworn spring.

Inside the car. Look carefullyat the odometer. Because low mileagecan add considerably to the resale valueof a car, unscrupulous sellers some-times tamper with the odometerregardless of federal law prohibition.How can you tell if the odometer hasbeen changed? Telltale signs arenumbers that are slightly misaligned orfingerprints around the odometer.

If the wear you've noticed on thetires or the body of the car doesn'tappear consistent with the odometerreading, be suspicious. Look inside thedoor frame or under the hoodyoumight find an oil and lubrication stickerwhich tells you the actual miles the carhas been driven. If you don't see anystickers, be suspicious.

Other indicators of heavy use canmininteed mt pa VC 4

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be found on the upholstery, carpet, armrests and seats. Also, look for wornareas and metal showing throughrubber on the accelerator, brake orclutch pedals.

Under the hood. Check cables,belts and clamps to see whether theyare in good condition and fit snugly.Make sure hoses are not soft or discol-ored.

Examine the oil, antifreeze andautomatic transmission fluids. Dirtyfluids indicate poor maintenance andcan lead to engine trouble.

The test drive. Make sureyour test drive realistically reflects yourdriving habits. Drive along city streets,highways or expressways and countryroads. Take as much time as you needto familiarize yourself with the car andto give it an adequate test.

Test every accessory and electricalcomponent one at a time. Watch thealternator indicator to see if the batteryis charging properly. Look for any oil

pressure or temperature warnings; ifthese come on, chances are the car isoverheating or there is a leak in theradiator or an oil leak.

To check the power steering, turnthe steering wheel while the car isstanding still. You shouldn't hearanything other than the crunch of thetires.

As you drive, listen for rattles,squeals and squeaks. Pay attention toany undue bouncing or pulling to theright or the left. Be conscious of theengine's idling speed. Check theresponse of the gas pedal, the brakes,the clutch (if the car has one) and thegear shift.

A professional evaluation.As critical as you might be about theused car, the smartest thing you can dois take the car to a mechanic you trustfor a thorough inspection. Themechanic's fee will be money wellspent and will save you time, moneyand aggravation later if you decide to

buy the car.One final check. As an

additional safeguard, call the NationalHighway Traffic Safety AdministrationHotline at 1-800-424-9393 and askwhether that make and model has everbeen recalled. If it has, make sure allrecall repairs have been made.

If you buy a used car from a dealer,look for and read the "buyer's guide"which must be displayed in the windowof all used cars sold by dealers. Thebuyer's guide explains who must payfor repairs after purchase. It will tellyou whether there is a warranty on thecar, what the warranty covers andwhether a service contract is available.Be sure you get a copy of the buyer'sguide when you purchase the car froma dealer.

Regardless of whom you buy from,get a mileage disclosure statement, abill of sale, the proper title and registra-tion and copies of all financial transac-tions.

IEF News

The Insurance EducationFoundation has experiencedanother successful summer of

high school teacher workshops. We'rehappy to announce that an additional168 teachers from throughout the U.S.have completed this specialized course,bringing the total number of "gradu-ates" to 1109 from 49 states and PuertoRico. As one teacher summed up hisexperience, "Excellent information andvaluable interaction with other teach-ers. This workshop was much morethan I expected, and the informationprovided will be invaluable to me in theclassroom." Teachers often ask about a"refresher" course, more teachingmaterials and other programs to helpthem with the topic of insurance in the

classroom. SO this fall thefoundation will launch the pilot of anew program centered around the directinvolvement of students. It's called

The RISIl Challenge

It's a contest, yes. But not yourordinary competition that involvesstudents writing essays. Nope! Wedon't permit essays. Instead, weencourage teenagers to do somethingthey seldom have an opportunity todobe CREATIVE!

We're asking students to submit anentry that demonstrates something theyhave learned about insurance. Theyhave their choice of mediavideo,poster, brochure or infomercial.

14

Teenagers will be creating teaching aids(don't tell them), that might be used tohelp others learn more about insurance.Contest participants decide whetherthey want to create a group or anindividual entry (and keep all the prizemoney); they select their target audi-ence, their topic, their mediumand goto it!

We're excited about this newoutreach to students. During the 1996-97 school year, TI. RISS Chalks,. will

be the pilot of the program that we hopeto expand in years to come. Eligibilitythis year extends to students who learnabout insurance from a teacher whoattended one of IEF's High SchoolTeachers Insurance Education Work-

continued on page 5


shops during the summer of 1996.That's 168 of you. The pilot programparticipants are going to work out the"bugs" for future contests.

The competition was the brainchildof an advisory arm of IEF, the NationalAdvisory Council of SecondaryTeachers (NACST)a group of 27high school teachers from 21 states andCanada. NACST members have takenadvantage of insurance education

programs sponsored by the InsuranceEducation Foundation since 1988.Council members will serve as judgesfor the competition.

NACST member and contestchairman Glen March explains,"Students who will be faced withfinancial decisions in the near future asadult consumers must have sufficientknowledge about how to deal with theinsurance industry." The business

educator at Conifer High School inConifer, Colorado, further states, "It isour responsibility as educators toprovide students with a good back-ground in this area. IEF provides whatwe need to get the job done."

By the time you receive the nextissue of The Insurance Educator inJanuary, the contest will be drawing toa close, and we'll let you know moredetails. Stay tuned!

Special FeatureAuto Safety: It's Not Child's Play

Children are our most preciousnatural resource. Of course,the first priority of any respon-

sible parent is to protect this resource.This is particularly true when the childis traveling inside a vehicle.

Over the years, both passive andactive auto safety devices have proventheir worth in hundreds of thousands oftraffic crashes. According to theNational Highway Traffic SafetyAdministration (NHTSA), use of childsafety seats (an "active" safety device)reduces fatal injuries by 69 percent forinfants and 47 percent for toddlers.National auto safety research organiza-tions place the overall number of livessaved by air bags (a "passive" device) atsomewhere between 900 and 1.500.

But unless they are used properly,some safety deviceseither individuallyor in combinationmight pose a seriousrisk, especially to children. Recently,there have been reports of childrenbeing badly injured or even killed by thedevices designed to protect them.

"Parents must become knowledge-able of the potential hazards of safetyrestraints and do everything they can to

mitigate the possibility of safety devicesaccidentally harming their children,"says Gloria Craven, assistant vicepresident of National Programs forUSAA, the nation's fifth largest privatepassenger auto insurer. "Some positiveguidance on how to further ensurechildren's safety is already available

The current theory isthat during the side

impact, children may beshifted into an irregular

position in the frontseat. When the air bag

deploys, it hits themwhile in this position,causing serious neck,head or brain injuriesand possibly death.

from national research organizations likeNHTSA and the Insurance Institute forHighway Safety (IIHS). As moreresearch is done and as auto safety devicetechnology and design change, evenmore information will be forthcomine.-

15

Paul Schattenberg. Corporate CommunicationsUSAA. San Antonio, Texas

What should be one of the greatestareas of concern to parents is thepotential hazard to their children due tothe deployment of air bags. Few wouldargue that air bags are one of thegreatest auto safety inventions since theadvent of the automobile. However,some air bag deployments have causedserious injuries and even some deaths,depending on the circumstances underwhich they have deployed. Accordingto the IIHS, this occurs most frequentlywhen someone gets in the path of the airbag early in its inflation. With children,this usually occurs with infants in rear-facing restraints and unbelted childrenin the front seats of vehicles withpassenger-side air bags.

A recent survey showed that 52percent of drivers are unaware of thehazards of placing a rear-facing childsafety seat in the front seat of a vehiclewith the passenger-side air bag. TheNational Transportation Safety Boardissued a warning: "Any child who ridesunrestrained or incorrectly restrained inthe front seat of a vehicle with apassenger -side air bag is at risk for

continued on now, 6


serious injury or death if the air bagdeploys."

Under investigation is what happensto an unrestrained child in the front seatof a vehicle with a passenger-side airbag during the side crash. The currenttheory is that during the side impact,children may be shifted into an irregularposition in the front seat. When the airbag deploys, it hits them while in thisposition, causing serious neck, head orbrain injuries and possibly death.

Here are suggestions by autoresearch, safety and information organi-zations on how to reduceand possiblyeliminatethe potential for injury tochildren and adults from improper use ofpassive and active safety devices:

Place children in the back seatand use the appropriate restraintfor the youngster's sizeIf possible, avoid traveling alonewith babies or small childrenrequiring constant attentionDo not lean or sit unnecessarily

close to the air bagKeep all items outof the pathbetween the airbag and theperson behind it.

As for the drivers ofair bag-equipped vehicles,the American Automobile Associationhas modified the time-honored traditionof placing the hands at the 10 and 2o'clock position on the steering wheelin favor of the 3 and 9 o'clock position.The AAA recommendation comes as aresult of the addition of driver-side airbags as standard equipment on newcars. Changing the position of thehands helps reduce the possibility ofdrivers' hands being flung back into theface at high speeds when an air bagdeploys.

For general driver or passengersafety in riding in a motor vehicle, whatis good for children is good for adults.Properly used restraints keep people in

the occupant compartment in crashesand help minimize injuries from theforce of impact. An air bag-and-seatbeltor applicable child safety re-straintcombination is the mosteffective means of occupant protection.

As long as there are mothers andfathers who sit children in their lapswhile riding in vehicles, as long aschildren use their Houdini-like skills toescape the bonds of safety restraints,and as long as adults ignore the need towear their seat belts, there will be autosafety problems. But with moreinformation available on the potentialdangers of safety restraints and what todo to protect ourselves and our children,the chances are better that more seriousinjuries or deaths can be avoided.Adults must be made aware of thepotential hazards of safety devices sothey may better protect themselves andthe next generation of drivers who willbe traveling the highways and bywaysof this country.

Insurance. CareersA Success Tale in Two Cities

Reprinted from the Jan./Feb. 1996 issue of Today's Insurance Womanwith permission of the National Association of Insurance Women

Teachers may want to copy and distribute this article to students and share it with the school library or careers resource center. Insuranceterminology found in this article is listed below.

jennifer Day may not walk onwater for her job. but she fliesover it regularly, covering twosales territories literally thousands

of miles apart. Day is assistant vicepresident and business developmentofficer in the San Francisco office ofImperial Premium Finance, a rapid-growth 24-year-old company with some16 sales offices in four regions. Daycovers both the northern California andHawaii territories, presenting thecompany's financing programs toagents and brokers. Because she has

been in the industry some 27 years, mostof it in premium finance, Day describesher book of business as large. "Someof my relationships go back 25 years."she explained.

Premium finance is proof of thecomplex nature of the insurance indus-try. Basically, it involves providingshort-term financing programs, withyearly renewals, on premiums rangingfrom $500 to multi-millions. There issignificant involvement in the excessand surplus lines of business, sincemany of those premiums are financed.

BEST COPY AVAILABLE ; 1 6

Broadly described, Day's primaryjob responsibility is networking. In atypical day that may mean meeting withexisting or potential clients to discussImperial's programs and services, or totroubleshoot for problems. She alsoregularly calls on company marketingprofessionals to enhance her workingknowledge of what markets are in place(what products and services are beingsold by a company). She considersinterfacing with Imperial employees,including loan processors, CSRs and

continued on page 7


collection staff, equally important. "IfI sell services to a new agent, it'simperative that I come back to theoffice to make sure the program isworkable for Imperial Premium, sointernal communications are veryimportant," she said.

When possible, Day is away fromthe office on calls. Due to geographicand other considerations, she also "livesby phone and fax." When in the SanFrancisco office, she schedules anumber of appointments in one area ofthe city at a time, to make her worktime as efficient as possible. Sheusually makes at least four trips a yearto Hawaii, where she operates on a verystrict schedule. "I always make ap-pointments; I rarely just drop in onsomeone, she explained. "But I have tostart early to squeeze everyone in.When I'm in Hawaii, I usually startwith breakfast meetings and go rightthrough with dinner meetings." shesaid.

Day is particularly proud of herbusiness success in Hawaii. Sheaccepted the territory nine years ago,

when Imperial Premium went nation-wide. At that point, the company had nobusiness in the state. Now it's thelargest premium finance company there.Part of the reason has been Hawaii'svolatile insurance market. After thedestruction wrought by Hurricane Iniki,for example, Day said many standardmarkets left the state. And rates wentthrough the roof. "Despite the terriblesituation, it was a silver lining in a veryblack cloud for us," Day added.

Another reason has been her NAIWaffiliation. When she first came to thestate, Day said Honolulu members were"wonderful. They introduced me toeveryone and opened many doors forme. I attribute a lot of my success to myfriends there."

If the Hawaii market has been oneof her best success stories, Day said hergreatest professional challenge remainscompetition, even though she's wellestablished in the business. "It's alwaysa factor, and many of my counterpartsare very good. My clients get visited bythe competition. And as for newbusiness, my top 20 prospect list is

probably the same as everyone else's.So I need to stay on top of thingscontinually, keeping the lines ofcommunication open between myselfand clients, and making sure ourprograms are solid and in the bestinterests of both the client and Impe-rial," Day explained.

Day does believe she has an"absolute advantage" over manycompetitors because she's spent most ofher career in various areas of premiumfinance. So there aren't many questionsshe can't answer, in some way, on thespot.

To make sure she stays on theinformation edge, Day attends a varietyof classes, seminars and conventions.She also "absolutely" makes time onand off the job to read trade andbusiness journals, and closely followsfinancial and banking news.

"Keeping up with insurance andbusiness developments allows me totalk intelligently and to sympathize withclients and other insurance profession-als," Day said. "It also helps me to lookfor new opportunities."

Insurance Terms Found in this ArticleBook of businessthe number, size and type of accounts (policyholders) that an agent "owns."

Brokeran insurance agent for the insurance applicant (buyer). Brokers find appropriate insurancecompanies that are willing and able to handle the risk

of their client, frequently a very large organization or event (such as the Olympics, spacecraft, rock concerts, airlines, etc.).

Business development officeran employee who finds new opportunities to sell the company's services or products by understanding what companies or

individuals need and working with potential customers to fill their needs.

Collection staff a group of employees who work with customers who need assistance in making premium payments.

CSRCustomer Service Representatives support the work of insurance agents with a variety of tasks that mustbe done within a company or agency to

deliver services to and handle requests from clients.Loan Processorsemployees who handle procedures involved in making loans to clients.

NAIWNational Association of Insurance Women, a professional organization dedicated to insurance education, industry loyalty, and fellowship among

members. National headquarters are in Tulsa, Oklahoma.Networkingan exchange of information between people who often refer new contacts or potential clients to each other; a mutually beneficial two-way

communication.Premium financeallows the insured (policyholder) to pay part of the premium when coverage takes effect and pay the rest during the policy period.

Prospect listnames of companies or individuals who might purchase a company's services; these are potential new clients.

Standard marketsin this instance, standard markets are companies that sell homeowners policies or flood insurance.

Trade journalsmagazines published by professional organizations (trade associations) to whichinsurance professionals (or any industry or profession)

belong. Trade journals contain news about what is happening in one's profession, what competing companies are doing, what new products are being

developed, etc.Volatile insurance marketoccurs when certain conditions (insurance company experiences excessive losses such as tornadoes, earthquakes or

hurricanes) cause insurers to decide what actions they must take (raise premiums. offer fewer policies, etc.) to be able to continue offering policies to

consumers.

17

Don't Let Up! (video) explains what Anti-Lock Braking Systems are, when to

use them, etc. Produced for high school audiences by AAA and General Motors,

this free video is available by writing to: AAA Foundation for Traffic Safety,

1440 New York Avenue, NW, Suite 201, Washington, DC 20005.

Actuaries Make A Difference (booklet). Actuaries give advice to students and

explain what they do and what they enjoy about their jobs. Published in 1994 by

the Society of Actuaries and The Casualty Actuarial Society. Free copies are

available. Contact Pat Garrity, Society of Actuaries, 475 North Martingale Road,

Suite 800, Schaumburg, IL 60173 or call 708-706-3500.

What You Should Know About BuyingLife Insurance (23-page booklet).

Explains life insurance policies and their

pros and cons, the right questions to ask,

tips, etc. Free copies available. Request on

a post card to the American Council of Life

Insurance, Attention: Member Services,

1001 Pennsylvania Avenue, NW, Washing-

ton, DC 20004-2599.

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18

Insurance Education Foundation3601 Vincennes Road

P.O. Box 68700Indianapolis, IN 46268

(317) 876-6046http://connectyou.com/ins/iefhtm

Insurance Education FoundationStaff

Robert L. Nancy M.Harrison ColemanPresident Executive Director

Mary S. VerschooreExecutive Assistant

The Insurance EducatorEditorial Advisory Board

Jim Stahly Cynthia LyleState Farm Mutual

AutomobileInsurance Co.

Bloomington, IL

USAASan Antonio, TX

89Z917 NI `sHodumPuI00L89 XOg 'CYcl

pP011 samaouA 109E

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U.S. Department of EducationOffice of Educational Research and Improvement (OER1)

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