Unit 8: INSURANCE

1. According to the Unit 8 reading: Risk is defined as …..

• Chance of loss from some type of danger.

2. Define Risk Management

• How you deal with the chance of a potential personal or financial loss

3. Identify the four options for managing your risk

• Avoid risk - • walk • Reduce risk – • slow down • Accept risk – • Don’t buy the warranty• Share risk –• Insurance

• 4. Identify three potential risks that teens face. For each one, explain how a teen can reduce the risk of that specific situation or avoid the risk all together.

5. Define Insurance -

• Guaranteeing your financial protection against various risks

6. Define Insurance policy –

• Written contract detailing what an insurance company will cover, how much it will pay, and how much you will pay

7. Define Premium -

• Amount you pay for an insurance policy • #8. How can premiums be paid?• Monthly, quarterly, semi-annually, annually

9. Explain why Insurance is considered “sharing the risk”?

• If you take the risk of driving and do not have insurance, then you own all the risk take all of the responsibility to pay

• If you take the risk of driving and you do buy insurance, then you own a % of the risk and share a % of the risk with the insurance company. You take some responsibility to pay and the insurance company shares some of the responsibility to pay

10. List 4 factors that affect your insurance premium:

• Type of …and Amount of…Insurance you choose.

• Size of deductible • Various companies • Age• Marital status • Where you live • Credit History

11. In the US, insurance is a … and not a …..

• PRIVILEGE • RIGHT

12. Define coverage limit –

Max amount the insurance co. will pay

13. Define deductible

• The amount of a loss you must pay “out of pocket” before the insurance co. will pay the rest.

14. If you have health insurance and need a minor surgery that costs $2000. Your deductible is $500. How much will you pay and how much will your insurance pay?

Bill $2000 Pay your deductible $500Balance = $1500 – paid by insurance co.

15. If your deductible is higher, your premiums are usually …

• Lower• Why do You think?

16. What’s the benefit if you have multiple insurance policies from the same agent/company? • Discounts • Lower premiumsName some Insurance co’s.

17. Make a list of at least three personal belongings that you would hate to lose. Estimate and write the approximate cost to replace them. House Car Wedding

Ring $200,000

$10,000 My life

18. Factors affecting Auto Ins.

• Age• Older = lower • Gender • Female = lower • Marital Status• Married = lower • Type of Car • Family car = lower• How often you use car • Less = lower

• Location • Rural = lower • Driving Record • Clean = lower • Claim Record • Less = lower • Credit History • Higher = lower

19. Is it cheaper to be on your parent’s insurance, or to buy your own?

• Parents

20. Types of Coverage

• General Liability• Covers damage you cause to others property

and/or bodily injury outside of your car • Medical Payment • Bodily injury expenses to you and people

inside of your car • Also covers you in accident with car if you are

on foot or bike or in a friend’s car

• Collision • covers damages you cause to your car

(accident with another car or object) • Comprehensive• Fire, vandalism, break in, theft, natural

disasters (anything except actual collision) • Uninsured Motorist • Lost wages and medical expenses if you are in

accident with driver with no insurance

• Underinsured Motorist • Covers you when the cost of repairs (accident

caused by another driver) exceeds his coverage limits