Risk Management


Introduction | Auto Insurance | Health Insurance | Life Insurance | Home & Renters Insurance | Unemployment Insurance | Review


Introduction

In 2008, Dutch winemaker Ilja Gort, owner of Château de la Garde in Bordeaux, France, insured his nose for $8 million. Gort claims his nose can distinguish millions of different scents. As a condition of his policy, Gort is prohibited from participating in winter sports, boxing or fire breathing. Yes, fire breathing. (Bank Rate, 2017) The first written insurance policy appeared in ancient times on a Babylonian obelisk monument with the code of King Hammurabi carved into it. The "Hammurabi Code" was one of the first forms of written laws. These ancient laws were extreme in most respects, but it offered basic insurance in that a debtor didn't have to pay back his loans if some personal catastrophe made it impossible (disability, death, flooding, etc.) (Investopedia)

insurance

An important area of your financial plan is risk management. Insurance protects against threats to your financial future and can provide protection for many things such as your car, your home, and your health. It is a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company.

If Rolling Stones guitarist Keith Richards jams a finger and can't perform the opening riff to "Start Me Up," he has a $1.5 million Lloyd's of London disability income insurance policy to back him up. (Fox Business, 2011)

A bizarre insurance policy was issued in 2006, and covered an English soccer fan from any "severe trauma" suffered if England was eliminated from an early round of the World Cup. (Forbes, 2011)

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Assignment: Insuring Your Prized Possessions discussion board

Directions: For most of us insurance is about protecting our cars and home, but it also has a stranger, more interesting side. We’re talking about insurance for bits of celebrity bodies, Santa’s beard, alien abduction, and even the discovery of mythical creatures. Consider your life and identify other things (aside from your health and car) that you might want to receive insurance for. List as many as you can and explain why it may be important to get insurance for them in the Insuring Your Prized Possessions discussion board. Respond to at least two classmates to continue the collaborative discussion.


Auto Insurance

There are many different types of insurances for different types of needs. Automobile insurance will probably be the first type of insurance that you encounter as a consumer. When you purchase your first vehicle, whether it is new or just new to you, in Georgia, you are required to purchase and maintain automobile insurance. There are several types of auto insurance — which kind covers which situations?

According to the National Safety Council, there are more than 12 million motor vehicle accidents annually. The US Department of Transportation estimates that the typical driver will have a near automobile accident one or two times per month and will be in a collision of some type on average of every 6 years. The National Center for Statistics and Analysis reports crashes are the leading cause of death for ages 3-33.

Assignment: Auto Accident Report

Directions: Read the scenario and analyze the accident report diagram. Complete the accident report form using the information from the accident scenario and report diagram. Submit the complete accident report form to itsLearning.

Assignment: Factors Affecting Your Auto Insurance Review Questions

Directions: Not everyone pays the same amount for automobile insurance. Many factors go into your individual auto insurance premium – but some have a much bigger influence than others on what you pay. Watch the video on 5 factors that affect what you pay for auto insurance and then answer the review questions in itsLearning.

Assignment: Fender Bender Frenzy! Case Study

Directions: Car accidents themselves can't be anticipated, but you can be prepared. Knowing the correct steps to follow immediately after an accident and being prepared to handle a variety of (sometimes difficult) situations will go a long way to improving the likelihood that your insurance claim will be successful. Put yourself in an auto insurance claims rep's shoes who helps various clients deal with different aspects of using their auto insurance. Complete the Fender Bender Frenzy! case study. Download the case study from itsLearning, complete the packet, and then upload to itsLearning.


Health Insurance

According to the United States Census Bureau, between 2016 and 2017, the number of people with health insurance increased by 2.3 million. CNBS reported that in 2017, 9.1^% of the population was uninsured while the American healthcare industry which was worth $24.7 billion in 1960 is now worth more than $3,504 trillion.

Even if you're young and healthy, it's a good idea to have health insurance. Health insurance is meant to protect us financially when we are sick or injured. It's estimated that 18.4 million Americans had an overnight hospital stay last year, with the average hospital stay five days.

Non-profit hospitals often make more profit than for-profit hospitals. As much as doctors and hospitals complain about Medicare, they don't avail themselves of the opportunity to not accept patients (in non-emergency situations) with Medicare as their primary insurance plan. (The Week, 2013) The Padres have signed the same handicapped ball player 20 years in row so he doesn’t lose his health insurance. San Diego has signed former left-hander Matt LaChappa to a minor league deal each year since 1996, when LaChappa suffered a heart attack while warming up in the bullpen for a Class-A game. (Susman Insurance)

Currently, if you're under age 26, you have the option of staying on your parent's health insurance plan. A lot of young people do not think that health insurance is really necessary. You rarely go to the doctor and healthcare insurance is expensive. It's typically a great idea to enroll in an employer-sponsored plan if available.

InsuringYourFuture
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Consolidated Omnibus Budget Reconciliation Act (COBRA)

Employers in the U.S. are required to provide health insurance to their qualifying employees by paying a part of insurance premiums. In case the employee becomes ineligible to receive an employer's health insurance benefits due to a variety of reasons (like getting laid off or falling below a minimum threshold number of hours worked per week), the employer may stop paying its share of employee’s health insurance premiums. A 1986 federal law called the Consolidated Omnibus Budget Reconciliation Act allows the employee and their dependents to retain the same health insurance coverage if they are willing to pay for it on their own. COBRA plans may cover costs toward prescription drugs, dental treatments, and vision care. Read more about COBRA in Nathan Reiff's article All About COBRA Health Insurance.

Health Savings Account vs. Flexible Spending Account

If you choose to have a high-deductible plan, such as a catastrophic plan, you may qualify for a Health Savings Account (HSA). For any other type of insurance plan, you can have a Flexible Spending Account (FSA).

A Health Savings Account (HSA) allows you to use pre-tax dollars to pay for out-of-pocket healthcare expenses like medical, dental, vision and other health expenses you would normally have to pay for with post tax money. The HSA also comes with interest and investment benefits - you will earn interest each month and have the option to invest in nationally recognized mutual fund families.

A flexible spending arrangement, an FSA can be used for medical expenses, dental care and vision care. The amount you decide to contribute to the account for the year is deducted from your salary before income taxes.

Watch the videos comparing a Health Saving Account and a Flexible Spending Account. After watching the video, reflect on why someone might want to open up an HSA or FSA. Can you identify the differences and similarities between HSA and FSA?

Assignment: The Cost of Health Insurance

Directions: No matter which type of plan you choose, you'll have to pay a monthly premium as a member. Read the article How Insurance Companies Set Health Premium to learn more about what factors can impact the cost of your premium. Then, skim through the data charts in How Much Does Health Insurance Cost Without a Subsidy? to learn more about the average costs of monthly premiums. Answer the review questions in itsLearning.


Medicaid & Chidlren's Health Insurance Program (CHIP)

You may be thinking at this point that health insurance is expensive - and it is! There's good news though! Millions of Americans qualify for Medicaid, which can help lower your costs. If children need health coverage, they may be eligible for the Children's Health Insurance Program (CHIP). CHIP provides low-cost health coverage to children in families that earn too much money to qualify for Medicaid. In some states, CHIP covers pregnant women. Each state offers CHIP coverage, and works closely with its state Medicaid program.

Even if you don’t qualify for Medicaid, there are steps you can still take to lower your medical costs. Skim through the article Money Saving Tips If You Can't Afford Health Care by Miriam Caldwell to review things you can do to help afford Healthcare.

Assignment: Employer-Sponsored Health Insurance Vs. Affordable Care Act Compare/Contrast

Directions: You can get health insurance through Medicaid, your employer, or an independent policy. The Affordable Care Act (aka Obamacare) is a federal statute signed into law in March, 2010, as a part of the healthcare reform agenda of the Obama administration. Signed under the title of The Patient Protection and Affordable Care Act, the law included multiple provisions that would take effect over a matter of years, including the expansion of Medicaid eligibility, the establishment of health insurance exchanges and prohibiting health insurers from denying coverage due to pre-existing conditions.

Read the article Employer Based Coverage or Obamacare Plan? Which is better? by Carolyn McClanahan. Create a compare/contrast between healthcare available as a part of Ombamacare versus employer sponsored healthcare. You could create a Venn diagram or a comparison chart. Include a title, a picture, and at least three things that the two have in common, and at least two things that each has that the other does not provide. Submit your compare/contrast to itsLearning.


Life Insurance

Nobody knows what life has in store for them from one day to the next. It’s not something that we like to dwell on, but the fact of the matter is that a sudden and fatal accident or illness could result in our family being left to fend for themselves. There is a way that you can provide peace of mind for yourself and security for your family, and that’s by taking out life insurance coverage. Life is full of unexpected twists and turns, some good and some bad. Life insurance coverage offers financial protection for your family in the worst-case scenario. You have a number of options when it comes to taking out life insurance coverage, and it is important to assess your needs before you commit to a policy.

Whole Life Insurance

A whole life policy is slightly different in that it covers you for life. Providing premiums have been kept up to date on the policy, your family will receive a payout whenever you die (subject to terms) and therefore many people see this as more of an investment type life insurance policy. Because of the benefits, this is a more expensive form of coverage with higher premiums, but can also provide additional peace of mind and security.

Sometimes also known as "universal" life insurance, whole life insurance is probably the most common of the life insurances policies that you'll come across. The policy is fairly simple - it works on the basis of a basic permanent insurance plan into which you pay periodic payments, most commonly monthly, and provides protection to your beneficiaries over the course of your life. The downside of whole life insurance policies is that the lump-sum payment paid out on your death is calculated at the outset of the policy, and premiums are then calculated on this.

As you may be able to see, it fails to factor in the increased wealth factor of the insured and their loved ones as they get older and earn more money. Nor does it include the additional expenditure they’ll be making as they buy bigger and bigger (and more costly) housing and cars. This is certainly one factor you need to consider at the time of taking out the life insurance policy, or else you'll be forever "topping up" the policy with additional policies. The upside of whole life insurance policies is that your premiums are fixed over the term of the policy, and so it does make it much simpler to budget for this. Money Instructor

Term Life Insurance

The significant difference between term life and whole life insurance policies is that term life insurance policies factor in continued risk assessments. In other words, as the risks in your life change, so does your policy. To account for this, the premiums on term life insurance policies are also variable - so that if you are considered a high risk, you pay a higher premium than if you are considered a low risk. Money Instructor

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Home & Renters Insurance

Renters Insurance

Though less than half of renters, approximately 41%, currently purchase renters insurance, the proportion that do purchase it is on the rise. The average cost for a renters insurance policy is about $15 a month. You may be wondering what renters insurance is and how it works. Home is where the heart is, and maybe all of your stuff too! If you're among the third of all U.S. households that rents, your stuff may not be protected should you suffer a fire or theft.

Now that you understand the fundamentals of how renters insurance works, watch this video that provides 8 tips for obtaining and maintaining renters insurance wisely. You can often get renters insurance from the same company as your automobile insurance and even save money on both policies by bundling.

Assignment: What is My Stuff Worth?

Directions: One reason people give for skipping renters insurance is, "I don't have that much stuff. And none of it's very nice." Use this interactive to “customize” your hypothetical first apartment. Then answer the questions in itsLearning.

Homeowners Insurance

What if instead of renting, you own your own home? You’ll need a different type of policy -- homeowners insurance! About one in 20 insured homes has a claim each year (Insurance Information Institute, 2017) while 64.8% of the United States has home insurance Statista, 2018).

As you saw in the previous video, homeowners insurance contains varying amounts of coverage for your property as well as for liability, which makes it extremely important to understand the declarations page of your policy.

Assignment: Sample of Homeowners Declaraction Page Questions

Directions: Study the Sample of Homeowners Declarations page for Joseph and Sally Jones. Answer the questions in itsLearning related to the declaration page.<

Sample Declaraction Page
Ryan Everet Insurance

Assignment: Paul & Kim Green Insurance Dilemma Activity

Directions: Paul and Kim Green are thanking about some major changes to their insurance coverage. They want to make sure they are protected for possible losses. They also want to find a new insurance agent. Help with these decisions by answering the questions in itsLearning.


Unemployment Insurance

Unemployment Insurance is a joint state-federal program that provides cash benefits to eligible workers. Each state administers a separate unemployment insurance program, but all states follow the same guidelines established by federal law. Unemployment insurance payments (benefits) are intended to provide temporary financial assistance to unemployed workers who are unemployed through no fault of their own. Each state sets its own additional requirements for eligibility, benefit amounts, and length of time benefits can be paid.

In general, benefits are based on a percentage of your earnings over a recent 52-week period, and each state sets a maximum amount. Benefits are subject to federal and most state income taxes and must be reported on your income tax return. You may choose to have the tax withheld from your payment. U.S. Department of Labor

Assignment: Like a Good Neighbor, Narwhal Is There

Directions: NoRisk Insurance Co is trying to increase their business, so they’ve adopted a lovable talking cartoon narwhal as their new mascot, and they’ve launched a call-in web series called “Insurance Talk with the NoRisk Narwhal!” Download from itsLearning and complete the Like a Good Neighbor, Narwhal Is There. Upload the completed case study to itsLearning.


Review

Interactive Review Quiz

reveiw game

Resources

If you are having problems viewing this page, opening videos, or accessing the URLs, the direct links are posted below. All assignments are submitted in itsLearning. If you have having problems, contact Mrs. Rush through the itsLearning email client.


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