Insurance Key Terms. Policy. Policyholder Definition: Premium

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1 A5 Worksheet Insurance Key Terms Total Points Earned 36 Total Points Possible Percentage Name Date Class Directions: 1. Using your Types of Insurance information sheet F1, write the definition of each vocabulary word in your own words. 2. Create a sentence in the third column using both words from that row. The sentence should provide enough information to give the reader a clear idea of what each word means by describing how the words relate to one another or explaining a real-life scenario. Vocabulary Word Vocabulary Word Sentence Using Both Words Insurance Risk Automobile Insurance Policy Health Insurance Policyholder Life Insurance Premium Family Economics & Financial Education Revised April 2010 Insurance Unit Types of Insurance Page 8

2 A5 Worksheet Disability Insurance Contract Homeowner Insurance Beneficiary Property Insurance Deductable Liability Insurance Peril Life Insurance Dependent Family Economics & Financial Education Revised April 2010 Insurance Unit Types of Insurance Page 9

3 A1 KWL Chart K What do I already KNOW about insurance? W What do I WANT to know about insurance? L What did I LEARN about insurance? Family Economics & Financial Education Revised April 2010 Insurance Unit Types of Insurance Page 10

4 L1 Note taking guide How Does Insurance Work? Total Points Earned 38 Total Points Possible Percentage Name Date Class Insurance is an arrangement between an individual (consumer) and an insurer (insurance company) to protect the individual against risk. Individual Policyholder Deductible Policy Insurance company Premium Amount varies depending upon the type of insurance and policy AUTOMOBILE INSURANCE Liability Medical payment Uninsured/under insured Physical damage Types Collision Comprehensive Required by law Who/ what is covered Family Economics & Financial Education Revised April 2010 Insurance Unit Types of Insurance Page 11

5 L1 Note taking guide HEALTH INSURANCE Provides protection against: Types may include: Can be purchased by: Coverage amount Why is health insurance an important part of a financial plan and at what point in an individuals life should it be purchased? What benefit does having a job that provides health care benefits provide to the employee? LIFE INSURANCE Insurance company Life insurance Policy holder Dependent Beneficiary Why is it an important part of a financial plan? When should an individual purchase life insurance? Family Economics & Financial Education Revised April 2010 Insurance Unit Types of Insurance Page 12

6 L1 Note taking guide DISABILITY INSURANCE HOMEOWNER S AND RENTERS INSURANCE Homeowners Renters Peril Liability Property How much insurance should be purchased? When should an individual have renter s insurance? Family Economics & Financial Education Revised April 2010 Insurance Unit Types of Insurance Page 13

7 A2 Worksheet Types of Insurance Total Points Earned 25 Total Points Possible Percentage Name Date Class Directions: Match the correct term with the correct definition by placing the letter on the appropriate blank. (Each worth one point.) 1. An arrangement between an individual (consumer) and an insurer (insurance company) to protect the individual against risk. 2. A fee paid to the insurer to be covered under specific terms. 3. The uncertainty about a situation s outcome. 4. The amount paid out of pocket by the policy holder for the initial portion of a loss before the insurance coverage begins. A. Premium B. Policy Holder C. Insurance D. Risk E. Deductible 5. A consumer who purchases the policy Directions: Please circle the correct type of insurance that would be used in each situation. (Each question is worth one point). 6. Sally is not feeling well so her mother takes her to the doctor. The doctor tells her she has strep throat, gives her medication, and sends her home to recover. What type of insurance would be used in this case? A. Automobile B. Health C. Life D. Disability E. Homeowners/Renters 7. John is driving down the road and a deer runs into the road. He misses the deer but instead hits a small tree on the side of the road. What type of insurance would be used in this case? A. Collision Insurance B. Comprehensive Insurance C. Health D. Life E. Disability Family Economics & Financial Education Revised April 2010 Insurance Unit Types of Insurance Page 14

8 A2 Worksheet 8. David is working on his home and he falls off of a ladder. He is not able to work while he recovers. What type of insurance would be used in this situation? A. Automobile B. Health C. Life D. Disability E. Homeowners/Renters Directions: Answer the following questions by writing a short answer. 9. Explain the difference between collision and comprehensive automobile insurance and give an example when each would be used. (3 points) 10. When is life insurance necessary? (1 point) 11. Explain the difference between homeowner s insurance and renter s insurance and identify when each would be used. (2 points) 12. Is insurance important? Support your answer with at least two reasons. (3 points) 13. What type of insurance would you consider the most important and why? (2 points) Directions: Please indicate if the following statements are true or false by placing a T or F on each line. If the statement is false, rewrite the statement to make it true. (Each question is worth 2 points.) 14. Medical payment insurance covers injuries sustained by the driver or passengers of the insured vehicle if it is only someone else s fault. 15. A beneficiary is the individual who takes out the life insurance policy. 16. A dependent is a person who relies on someone else financially. Family Economics & Financial Education Revised April 2010 Insurance Unit Types of Insurance Page 15

9 A3 Worksheet Insurance Terminology Scramble Total Points Earned 12 Total Points Possible Percentage Name Date Class Directions: Write the word which is described by the following statements in the spaces provided. The number of blanks corresponds to the number of letters each word contains. 1. Amount paid out of pocket by policyholder for the initial portion of a loss before the insurance company pays. 2. Protection for a dwelling against perils like fire and lightning. 3. Accident, theft, damage, destroyed, unexpected. 4. Fee paid to the insurer to be covered under the specified terms. _ 5. Many high school participants are covered under their parents for this type of insurance. 6. Consumer who purchased the policy. 7. People must have this type of insurance to drive their vehicle. 8. Contract between the individual and an insurer specifying the terms of the insurance. 9. Title of people receiving money from a life insurance policy after the insured person dies. _ 10. Arrangement between an individual and an insurer for protection against risk. _ 11. Insurance which helps to provide income during an illness or injury. 12. Unnecessary insurance for high school participants with no financial dependents. Family Economics & Financial Education Revised April 2010 Insurance Unit Types of Insurance Page 16

10 A4 Worksheet Insurance Investigation Total Points Earned 36 Total Points Possible Percentage Name Date Class Directions: Each participant will draw one Insurance Investigation Scenario Card H2. Their answers for the following questions will be based upon the scenario card that was drawn. 1) You will not be able to take the scenario card with you. Please record the scenario in the space below. 2) After class, talk with an adult. This can be a parent or guardian, another teacher, or family friend about the scenario card that you drew. Ask this individual to answer the following questions. Take notes about their responses on this sheet to help you write your essay. A. Who is the person you interviewed and what is their relationship with you? B. What type of coverage would be needed if this situation really did occur? C. What are some things that might happen if the individual did not have insurance coverage to protect against this situation? D. What specific steps would be taken to file a claim? E. What is one situation they have observed where insurance was needed? A. What type of insurance would have been most helpful? B. What did or would happen if insurance was not available? 3) Write a ½ page essay using complete sentences to describe the situation card you drew, the conversation with an adult and what you learned about preparing for risk. The Insurance Investigation Rubric B1 will be used to grade this assignment. 4) Turn in your essay, the Insurance Investigation Rubric B1, and this worksheet. Family Economics & Financial Education Revised April 2010 Insurance Unit Types of Insurance Page 25

11 Insurance Investigation Rubric Name: Date: Directions: 1. Student must write a 1/2 typed, double-spaced, 12-font with 1-inch margins essay on insurance scenario card that they selected. 2. The must incorporate the answers that were provided while speaking to an adult outside of class. 3. You will be graded based upon the following rubric. Exemplary 3 Satisfactory 2 Organization Information is Information is very organized either not well with well organized or constructed paragraphs are paragraphs and not well subheadings. constructed. Amount of Information Quality of Information Mechanics Paragraph Construction All topics are addressed and all questions are answered with at least two sentences each. Information clearly relates to the main topic. It includes several supporting details and or examples. No grammatical, spelling, or punctuation errors. All paragraphs include introductory explanations or details and a concluding sentence. Two or less questions were answered with two sentences each. Information clearly relates to the main topic however few examples and details were provided. A few grammatical, spelling, or punctuation errors. Most paragraphs include introductory sentence, explanations or details and concluding sentence. Unsatisfactory 1 Information is not well organized and paragraphs are not well constructed. One or less questions were answered or questions did not have an adequate amount of sentences. Information does not relate to the main topic, or no examples or details were provided Many grammatical, spelling or punctuation errors. Paragraphs included related information but were typically not constructed well. Rating Weight Score Total Points Earned Total Points Available 36 Percentage B1 Rubric Family Economics & Financial Education Revised April 2010 Insurance Unit Types of Insurance Page 29

12 F1 FAMILY ECONOMICS & FINANCIAL EDUCATION Types of Insurance What is Insurance? Life is full of risks and accidents. People are at risk for getting injured while playing sports, riding in a car, or living in a house. Risk is uncertainty about a situation s outcome. Risk can be unpredictable events that lead to loss or damage. Insurance is an arrangement between an individual (consumer) and an insurer (insurance company) to protect the individual against risk. Insurance plays a large role in most individual s financial management plans. In 2007, the United States spend $7,421 on health care for each man, woman, and child in the population 1. The purpose of insurance is to help individuals limit their financial losses when an accident occurs. It helps the individual to be prepared for the unexpected. When people buy insurance, they transfer part of the risk of financial loss to the insurance company. Types of Insurance: Automobile Health Life Disability Homeowner s/renter s What is an Insurance Policy? To purchase insurance, consumers purchase a policy: Policy a contract between the individual and the insurer specifying the terms of the insurance arrangements. The policy will state the premium and deductible amounts, which will vary depending on the type of insurance and the terms of the policy. Premium the fee paid to the insurer to be covered under the specified terms. Deductible the amount paid out of pocket by the policy holder for the initial portion of a loss before the insurance coverage begins. Policyholder the consumer who purchased the policy. Automobile Insurance According to the United States Census Bureau, there were 10.6 million motor vehicle accidents in Auto insurance is an arrangement between an individual (consumer) and an insurer (insurance company) to protect the individual against risk from automobile accidents. The purpose of auto insurance is to help individuals limit their financial losses when an automobile accident occurs. Four types of coverage are available for automobile insurance. 1. Liability insurance covers the insured if injuries or damages are caused to other people or their property; it is the minimum amount of insurance required by law for automobiles. 2. Medical payment insurance covers injuries sustained by the driver of the insured vehicle or any passenger regardless of fault; also covers insured family members injured as passengers in any car or if they are injured while on foot as a pedestrian or while riding a bicycle. 3. Uninsured or underinsured motorists insurance covers injury or damage to the driver, passengers, or the vehicle caused by a driver with insufficient insurance. 4. Physical damage insurance covers damages caused to the vehicle; two optional forms of coverage are available: - Collision covers a collision with another object, car, or from a rollover. - Comprehensive covers all physical damage losses except collision and other specified losses. Family Economics & Financial Education Revised April 2010 Insurance Unit Types of Insurance 1

13 Types of Insurance F1 Health Insurance Health care costs are extremely high and it can be hard for the average person to afford health care. Large medical expenses could wipe out an individual s savings. To protect individuals from this risk, health insurance can be purchased. Health insurance provides protection against financial losses resulting from injury, illness, and disability. The purpose is to provide coverage for medical expenses, emergency and routine. Health insurance may cover hospital, surgical, dental, vision, long-term care, prescription, and other major expenditures. The coverage depends upon the terms of the insurance policy. Health insurance may be purchased for an individual, a family, or through an employer. Some children may be covered under their parent s health insurance until they are 19 or while they are in college. According to the National Coalition on Health Care, 59% of Americans have employer-based health insurance 3. Life Insurance 68% American adults have life insurance 4. Life insurance is a contract specifying a sum to be paid to a beneficiary upon the insured s death. The contract is a policy which states the amount to be paid to the beneficiary upon the insured person s death. A beneficiary is the recipient of any policy proceeds if the insured person dies. The purpose is to provide money for family members or dependents when a wage earner dies. A dependent is a person who relies on someone else financially. Life insurance is not necessary if a person is single with no dependents. Life insurance is necessary for people who have a dependent spouse, dependent children, an aging or disabled dependent relative, or business owners. Disability Insurance One out of ten people will become disabled before age To prevent the risk of losing income from a disability, insurance is available. Disability insurance replaces a portion of one s income if they become unable to work due to illness or injury. The insurance typically pays between 60% 70% of one s full time wage. It never pays 100% of the wages because there is no incentive to go back to work. Factors such as the length or severity of a disability influence the percentage of income a person will receive. Many employers offer disability insurance as part of the benefits package. Homeowner s/renter s Insurance According to the Insurance Education Foundation, a fire occurs in someone s home in the US every 74 seconds 2. Homeowner s and renter s insurance can protect against this risk. Homeowner s insurance combines property and liability insurance into one policy to protect a home from damage costs due to perils. A peril is an event that can cause a financial loss from fire, falling trees, lightning, and others. Property insurance protects the insured from financial losses due to destruction or damage to the property or possessions. Liability insurance protects the insured from financial losses due to being held liable for other s losses. The homeowner s insurance should cover the replacement cost which will pay to rebuild the home if it is completely destroyed. Renter s insurance protects the insured from loss to the contents of the dwelling rather than the dwelling itself. It covers major perils, provides liability protection, and provides for additional living expenses if the dwelling is rendered uninhabitable by one of the covered perils. Renter s insurance is necessary because the landlord s insurance policy on the dwelling does not cover the renter s personal possessions. Family Economics & Financial Education Revised April 2010 Insurance Unit Types of Insurance 2