Basics
What is insurance?
A system where you pay to protect yourself from financial loss.
Covers damage to your car
Auto Insurance
$1,000 damage, $500 deductible. . . insurance pays _______?
You hit another car. . . What insurance pays?
Liability insurance
Insurance eliminates all risk
False
What is a premium?
The amount you pay regularly for coverage.
Covers doctor visits and hospital bills
$3,000 damage, $1,000 deductible. . . you pay ______?
$1,000
You broke your arm. . . What insurance pays?
Health Insurance
Everyone pays the same premium
False
What is a deductible?
The amount you pay out-of-pocket before coverage begins.
Covers your homes and belongings
Homeowners insurance
What is the tradeoff between deductibles & premiums?
Higher deductible = lower premium
lower deductible = high premium
Tornado damages your house. . . what insurance?
Homeowners insurance
Deductible is paid every month (or six months)
False. . . only paid when you file a claim
What are three factors that affect your premium?
Age, driving record, location, risk level, etc.
Protects your assets and protects you from major claims - auto accidents or lawsuits. Coverage extends beyond typical coverage.
Personal Umbrella Policy
Why would someone choose an insurance plan that has a higher deductible?
Lower monthly premium
You cause damage but have no insurance. . . consequence?
Pay out-of-pocket. . . legal consequences & fines
Insurance actuaries used data & statistics to determine premiums for customers
True
What is a claim?
A request for payment from an insurance company.
Liability insurance
Damage less than deductible. . . . What happens?
You pay everything and insurance pays $0
Filing too many claims leads to what?
Higher premiums or policy cancellation
Filing claims helps your rates & premiums
False . . . it can increase your premiums