Insurance

Basics

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Insurance Basics

Learning the Language of Insurance

The Insurance Policy

A legal contract between a person buying insurance and an insurance company.

Explains… Who is covered What is covered What the company will pay Cost of the policy Deductibles

Insurance Coverage

Refers to losses that an insurance company will cover.

Translates into an actual dollar amount. Exclusions

Losses that are not covered under the policy

Premiums

The amount a policyholder pays an insurance company for coverage.

Can be paid in installments. Usually paid once a month on a six-month or

yearly policy. If paying on installments, the company may

charge an additional handling fee

Deductibles

The portion of a loss that you pay. The insurance company then pays the

remaining costs. The higher your deductible, the lower the

premium (usually).

Claims

An oral or written notification of a loss filed with the insurance company.

Report a claim as soon as possible. If your losses are less than your deductible, it

is not necessary to report a claim.

Kinds of Insurance

You can purchase insurance for almost anything including… Marine insurance Space Flight insurance Disease insurance Dancers can insure their legs Pianists can insure their hands And so on…

Government Insurance Programs

Unemployment Insurance Provides coverage if you lose your job

Workers’ Compensation Provides coverage if you are injured on the job

Medicare/Medicaid Provides health coverage for those who qualify

due to low income.

Homeowner’s and Renter’s Insurance

Renter’s Insurance

Necessary for persons who rent a home or apartment

Covers personal belongings up to a given amount (minus deductible)

Does not cover the cost of repairs to the home or apartment

Homeowner’s Insurance

Protects your house and its contents against losses due to fire, theft, and accidents.

Generally does not cover floods or earthquakes.

Supplemental insurance policies are available for these and additional risks.

Types of Automobile Insurance

Liability

Collision

Comprehensive

Uninsured Motorists

Liability Insurance

Required in the state of Louisiana Covers damage or injuries for which you are

responsible. Includes injuries to any passengers in your vehicle. Also includes injuries to driver and/or passengers of

the other vehicles involved. Also covers property damage to the other vehicle DOES NOT cover injuries to you or damage to your

car.

Collision Insurance

Not required if you own your car (no car note) Covers costs to repair your vehicle if

damaged in a collision. Also covers costs of damage to your vehicle

if the accident was caused by a driver without insurance.

Comprehensive Insurance

Not required if you own your car (no car note) Covers your car for reasons other than a

collision, such as Theft Fire Vandalism Stupidity

Uninsured Motorist Insurance

Optional Covers you against drivers who do not have

liability insurance.

In Case of an accident…

1. Stay Calm Move your car to the side of the road if possible.

2. Check for Injuries

3. Call the police Have your driver’s license, registration, and proof of insurance available

when police arrive.

4. Get Information Exchange insurance information with the driver of the other vehicle.

5. Report the Accident Call your insurance company as soon as possible to file a claim.

Buying Automobile Insurance

Shop Around Try to get prices from at least 3 different companies

Drive Carefully Most companies offer safe-driver discounts

Take Driver’s Education Most companies offer discounts for this too

Buy only what you need Don’t buy collision if you have a $1000 deductible and your car is only

worth $1500.

Consider a higher deductible Look for discounts

There are many additional discounts for which you may qualify.

Health and Life Insurance

Major Medical

Term Life

Whole Life

Health Insurance

Major Medical Hospital & Surgical expenses Doctor Visits Prescription Drugs Medical Tests/Diagnosis

Out of Pocket Expenses

Premium The amount you pay the insurance company for

coverage Copay

The amount you pay for a doctor visit or prescription

Deductible The amount you pay toward your medical

expenses before the insurance company pays

HMO

Health Maintenance organization Advantages

No deductibles Low out of pocket Many things covered 100%

Disadvantages Limited choice of doctors

PPO

Preferred Provider Organization Advantages

Wider choice of doctors No deductibles

Disadvantages Higher premiums Higher copayments

Standard Coverage

Advantages Lower Premiums Your choice of doctors

Disadvantages Higher out-of-pocket expenses

Higher Deductibles Insurance only pays a percentage of medical expenses

Percentages can vary 80/20 70/30 60/40

Types of Health Plans

Group Offered through employer Lower premiums due to larger participation Employer sometimes pays a portion

Individual Not part of a group Premiums can be expensive Can be more customized Typically students, self-employed, retirees or

employees of very small companies

Disability Coverage

Pays a percentage of your salary should you become unable to work for an extended period of time. Short-term Disability Insurance

Lower premium Pays for only a few months

Long-term Disability Insurance Higher premium Pays up to a lifetime of missed work

Life Insurance

Provides money to loved ones in the event of your unfortunate death.

Can assist in the cost of burial arrangements.

Term Life Insurance

Less costly Protects your dependents if you die No cash value Provides coverage for a set number of years Beneficiary receives an amount of money

known as the face value of the policy.

Whole Life Insurance

Premiums are based on age, health, and policy type They may increase as you grow older

Generally higher premiums than term life Pays a set amount to beneficiary if you die. Also works as a savings account

You can borrow against the money you have actually invested

You can close the policy and collect any money invested upon retirement.

Things to Consider

When should you buy life insurance? If you have someone who depends on you. Some companies offer low “lock-in” rates at an earlier age.

How much should you buy? Depends on how many dependents you have, your age

and their age Also depends on how much will be required to pay off your

debts if you die What are some important tips?

Shop around Talk to others who have shopped and purchased Read up!