10/12/2007 Mil Grauer Prepared by: Brian Alvin Life’s Greatest Risks An Introduction to Insurance...
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Transcript of 10/12/2007 Mil Grauer Prepared by: Brian Alvin Life’s Greatest Risks An Introduction to Insurance...
Mil Grauer Prepared by: Brian Alvin10/12/2007
Life’s Greatest Risks
An Introduction to Insurance
Mil Grauer
Mil Grauer Prepared by: Brian Alvin10/12/2007
Why Purchase Insurance?
In the next hour: 194 people will be injured in car accidents 57 homes will catch fire 230 people will die 1,027 people will become disabled
How can you as an individual plan ahead in order to protect yourself against these things that you potentially have no control over?
Mil Grauer Prepared by: Brian Alvin10/12/2007
Life Insurance
Provides financial assistance in your absence
Helps pay for funeral costs
Provides an income for your family
Cause of Death Probability
Motor Vehicle Accident 1 in 100
Homicide 1 in 300
Fire 1 in 800
Firearms Accident 1 in 2,500
Electrocution 1 in 5,000
Asteroid/Comet Impact 1 in 20,000
Passenger Aircraft Crash 1 in 20,000
Flood 1 in 30,000
Tornado 1 in 60,000
Venomous bite or sting 1 in 100,000
Fireworks Accident 1 in 1 million
Mil Grauer Prepared by: Brian Alvin10/12/2007
Cumulative Death Table *numbers are out of 1000 people per year at the specified age.
Age in 1990 Total U.S. White Male White Female Black Male Black Female
25 11.52 11.39 7.62 26.85 17.57
35 14.71 15.38 9.08 35.97 21.5
45 20.02 21.57 12.09 50.82 28.75
55 31.03 34.21 19.73 74.7 42.91
65 55.52 63.37 38.37 111.67 69.53
Cumulative Death Chart Out of 1,000
0
20
40
60
80
100
120
Total U.S. White Male WhiteFemale
Black Male BlackFemale
# D
eath
s
25
35
45
55
65
Mil Grauer Prepared by: Brian Alvin10/12/2007
Disability Insurance
Ensures that when a working person is ill or disabled and unable to work, he or she will still receive a monthly income
Savings are often insufficient
Age (year) Probability (%)
25 45
30 42
35 41
40 39
45 36
50 33
55 27
Age at Onset of Disability
Recovered (%)
Died (%)
Still Disabled (%)
25 44.1 9.7 46.2
35 34.0 12.3 53.7
45 21.5 19.9 58.6
55 11.8 28.5 59.7
Mil Grauer Prepared by: Brian Alvin10/12/2007
Fire Insurance
Fire is a very real threat that can destroy your home and possessions
Fire is the largest single cause of property loss in the United States In the last decade, fires have caused direct losses
of more than $120 billion and countless billions more in related costs.
12 out of every 100,000 homes burn down every year
Mil Grauer Prepared by: Brian Alvin10/12/2007
Automobile Insurance
Automobile accidents are common due to the number of vehicles on the road
Even if you are careful, drivers around you may not be as safe 1,163 out of 100,000 vehicles are involved in
Bodily Injury Claims annually 3,846 out of 100,000 vehicles are involved in
Property Damage Claims annually
Mil Grauer Prepared by: Brian Alvin10/12/2007
Auto Insurance Rates
The average cost of car insurance nation wide is $1368.18
Most Expensive Cites for Auto Insurance
Ranking City Average Auto Premium
1 Detroit, MI $5,162
2 Philadelphia, PA $4,142
3 Newark, NJ $3,482
4 Los Angeles, CA $3,225
5 New York City, NY $3,127
Least Expensive Cities for Auto Insurance
Ranking City Average Auto Premium
1 Roanoke, VA $758
2 Wapakoneta, OH $871
3 Chattanooga, TN $911
4 Green Bay, WI $948
5 Raleigh, NC $949
Mil Grauer Prepared by: Brian Alvin10/12/2007
Liability Insurance
A liability lawsuit can completely deplete all of your wealth
Especially important for companies since a loss could cause bankruptcy
Also known as “third party insurance” It is not uncommon for liability claims to be in
the ballpark of $1-10 million!
Mil Grauer Prepared by: Brian Alvin10/12/2007
Long Term Care Insurance
To protect against the high costs a family can incur from placing a family member in a LTC facility
On average, LTC costs $7,000 a month, or about $84,000 a year For a person 65 years old, there is a 44% chance
that they will be disabled for 90 days or longer and require LTC
Over 5 million individuals between the ages of 18 and 64 needed LTC last year
Mil Grauer Prepared by: Brian Alvin10/12/2007
Risk of Living Too Long
Compared to earlier generations, our population as a whole is starting to live longer
Life expectancy for a person who reaches the age of 65: Female 19.5 years left Male 16.6 years left
By saving early though you can avoid this risk by maximizing the benefit of compounding interest.
Mil Grauer Prepared by: Brian Alvin10/12/2007
Health Insurance
People get sick -- It’s just a fact of life $1.7 trillion was spent in 2003 on health care
costs – that is $5,671 per person The average annual growth rate in inpatient
expenditures per health plan member is 5.9% Cost of hospital stay varies greatly from 52%
above the national average in New Jersey to -38% below the national average in Maryland.
Mil Grauer Prepared by: Brian Alvin10/12/2007
Homeowner Insurance
The typical homeowner policies covers property damage as well as liability issues that may arise as a result of owning property
7,330 out of 100,000 homeowner policies file claims each year
$5,082 is the average severity of a homeowner’s claim
Mil Grauer Prepared by: Brian Alvin10/12/2007
Percent of Losses Incurred on Homeowners Policies Type of Damage/Year 2000 2001 2002 2003 2004
Property Damage
Fire, Lightning, Debris Removal 32.82% 31.03% 32.72% 32.92% 22.49%
Wind and Hail 20.45% 21.69% 20.81% 25.56% 48.61%
Water Damage, Freezing, Mold 22.6% 22.14% 21.71% 22.01% 16.62%
Theft 4.91% 4.65% 4.53% 3.29% 2.35%
Other Property Damage, (Vandalism and Mischief)
11.63% 13.11% 12.23% 10.62% 6.01%
Liability
Bodily Injury and Property Damage 6.43% 6.47% 7.00% 5.29% 3.17%
Medical Payments 1.13% 0.88% 0.98% 0.94% 0.74%
Credit Card Fraud (forgery and counterfeit currency)
0.03% 0.03% 0.01% 0.00% 0.00%
84% of claim costs are from property damage, only 4% are from liability suits, and remaining 12% are from settling costs.
Mil Grauer Prepared by: Brian Alvin10/12/2007
Questions?