what is personal risk management?. what is risk? risk is the chance of loss from some type of...

What is Personal What is Personal Risk Management?Risk Management?What is Personal What is Personal

Risk Management?Risk Management?What is Personal What is Personal



Risk Management?Risk Management?

What is Risk?What is Risk?

Risk Risk is the chance of loss from some type of is the chance of loss from some type of danger.danger.

What are some types of “risky behaviors” that What are some types of “risky behaviors” that you or someone you know have been guilty you or someone you know have been guilty of?of?

What is What is “Risk Management?”“Risk Management?”

Risk ManagementRisk Management refers to how you deal refers to how you deal with the chance of a potential personal or with the chance of a potential personal or financial loss.financial loss.

Four options:Four options: Avoid the riskAvoid the risk Reduce the riskReduce the risk Accept the riskAccept the risk Share the riskShare the risk

So what is “insurance?”So what is “insurance?”

Insurance Insurance is a means of is a means of guaranteeing your financial guaranteeing your financial protection against various risks.protection against various risks.

An An insurance policyinsurance policy is a written is a written contract detailing what an contract detailing what an insurance company will cover, insurance company will cover, how much it will pay, and how how much it will pay, and how much much YOU will pay.YOU will pay.

A A premium premium is the amount you pay for an insurance is the amount you pay for an insurance policy. It can be paid monthly, quarterly, semi-policy. It can be paid monthly, quarterly, semi-annually, or annually.annually, or annually.

The premium is based on the type and amount of The premium is based on the type and amount of coverage you choose and varies from one insurance coverage you choose and varies from one insurance company to another.company to another.

Factors that affect your premiumFactors that affect your premium

AgeAge Marital statusMarital status Urban vs rural areaUrban vs rural area Others (depending on the type of insurance, Others (depending on the type of insurance,

ex: automobile, life/health, property/home)ex: automobile, life/health, property/home)

In the United States, having insurance is In the United States, having insurance is considered a privilege NOT a right. considered a privilege NOT a right. Companies cannot reject your insurance Companies cannot reject your insurance application based on ethnicity or marital application based on ethnicity or marital status, but they can reject your application for status, but they can reject your application for a variety of other reasons.a variety of other reasons.

The The coverage limitcoverage limit is the maximum amount is the maximum amount the insurance company will pay if you file a the insurance company will pay if you file a claim. It can be just a few thousand dollars, or claim. It can be just a few thousand dollars, or a few million!a few million!

Amounts that exceed the coverage limit Amounts that exceed the coverage limit become become youryour responsibility. responsibility.

A A deductibledeductible is the amount of loss you must is the amount of loss you must pay before the insurance company will pay the pay before the insurance company will pay the rest.rest.

Vehicle InsuranceVehicle Insurance


Why is it important to get an insurance policy Why is it important to get an insurance policy estimate before purchasing a vehicle?estimate before purchasing a vehicle?


Vehicle insuranceVehicle insurance is paid protection against is paid protection against losses due to injury or property damage.losses due to injury or property damage.

To get insurance, you have to purchase a To get insurance, you have to purchase a contract called a contract called a policypolicy from an insurance from an insurance company. The policy explains how much and company. The policy explains how much and what kinds of protection you have.what kinds of protection you have.

Types of Vehicle InsuranceTypes of Vehicle Insurance

Bodily Injury LiabilityBodily Injury Liability – covers injuries to – covers injuries to someone else.someone else. Example: 100/300 Example: 100/300

bodily injury coverage.bodily injury coverage. Stated in thousandsStated in thousands $100,000 for 1 injured $100,000 for 1 injured

personperson $300,000 for total $300,000 for total

accidentaccident


Property Damage LiabilityProperty Damage Liability – covers damage – covers damage to another person’s vehicle or other property.to another person’s vehicle or other property. Example: 100/300/50 property damage liabilityExample: 100/300/50 property damage liability

$100,000 and $300,000 for bodily injury and $50,000 $100,000 and $300,000 for bodily injury and $50,000 from property damagefrom property damage


Collision InsuranceCollision Insurance – covers – covers damages to your damages to your ownown vehicle. vehicle. The maximum amount covered is The maximum amount covered is based on the based on the actual cash value actual cash value (ACV)(ACV) of your vehicle, which is of your vehicle, which is the value of the care when its new the value of the care when its new minus depreciation. minus depreciation. DepreciationDepreciation is the decline in value of a vehicle is the decline in value of a vehicle because of use.because of use.


Collision insurance continued…Collision insurance continued… Example: After an accident, if the repairs to the Example: After an accident, if the repairs to the

vehicle are $3,000 but the ACV is only $2,000 – vehicle are $3,000 but the ACV is only $2,000 – the insurance company will only pay $2,000the insurance company will only pay $2,000

Often, if a vehicle’s ACV is low, people will Often, if a vehicle’s ACV is low, people will not carry collisionnot carry collision

Most financed vehicles must have full Most financed vehicles must have full coveragecoverage


Medical Payments CoverageMedical Payments Coverage – AKA Personal – AKA Personal Injury Protection – covers injuries to you and Injury Protection – covers injuries to you and anyone else in your vehicle. Pays medical anyone else in your vehicle. Pays medical bills.bills.


Comprehensive CoverageComprehensive Coverage – covers damage to – covers damage to a policyholder’s vehicle caused by things a policyholder’s vehicle caused by things other than a car accident.other than a car accident. Example: Falling object, flood, theft, and Example: Falling object, flood, theft, and

vandalism.vandalism. Covers only the ACV.Covers only the ACV.


Uninsured Motorist ProtectionUninsured Motorist Protection – covers you – covers you and your passenger if the other driver is and your passenger if the other driver is uninsured. Also protects you if you are hit by uninsured. Also protects you if you are hit by someone while walking or involved in a hit someone while walking or involved in a hit and run.and run.

Miscellaneous coverageMiscellaneous coverage – can include rental – can include rental cars, towing, etc.cars, towing, etc.

Laws on Vehicle InsuranceLaws on Vehicle Insurance

Financial Responsibility LawFinancial Responsibility Law – says you – says you must pay for any damage or injury you cause must pay for any damage or injury you cause in an accident either with insurance, savings, in an accident either with insurance, savings, or by selling property.or by selling property.

Compulsory Insurance LawCompulsory Insurance Law – legally – legally requires drivers to have a minimum amount requires drivers to have a minimum amount of car insurance.of car insurance.

Laws of Vehicle InsuranceLaws of Vehicle Insurance

No-fault InsuranceNo-fault Insurance – pays damages if the – pays damages if the accident is deemed “no-fault.”accident is deemed “no-fault.”

Cost of InsuranceCost of Insurance

Average $1,200 per yearAverage $1,200 per year Policy amount is directly affected by the Policy amount is directly affected by the

number of number of claimsclaims or requests for payment or requests for payment from an insurer for any damages covered by a from an insurer for any damages covered by a policy.policy.

Insurance premiumsInsurance premiums are the amount an are the amount an insurance company charges a policyholder for insurance company charges a policyholder for the policythe policy

Factors Affecting the Cost of Factors Affecting the Cost of InsuranceInsurance

Amount of coverageAmount of coverage Amount of deductibleAmount of deductible Type of vehicleType of vehicle LocationLocation Driver classification – age, gender, marital status, Driver classification – age, gender, marital status,

how often you use your carhow often you use your car Driving recordDriving record Claim recordClaim record Credit HistoryCredit History

Georgia RequirementsGeorgia Requirements

In the state of Georgia, a driver must have In the state of Georgia, a driver must have continuouscontinuous mandatory liability insurance mandatory liability insurance coverage to:coverage to: Legally drive the vehicleLegally drive the vehicle Register & obtain Georgia platesRegister & obtain Georgia plates Renew, replace, or transfer platesRenew, replace, or transfer plates


Insurers Insurers mustmust be licensed with the Georgia be licensed with the Georgia Insurance & Safety Fire Commissioners Insurance & Safety Fire Commissioners Office (ICO) to be able to issue motor vehicle Office (ICO) to be able to issue motor vehicle liability policies.liability policies.

Must carry insurance card in the vehicle at Must carry insurance card in the vehicle at allall times!times!


Insurance coverage requirements:Insurance coverage requirements: Bodily Injury Liability of $25,000 per injured Bodily Injury Liability of $25,000 per injured

person, $50,000 per accidentperson, $50,000 per accident

ANDAND

Property Damage Liability of $25,000Property Damage Liability of $25,000 AKA 25/50/25 coverageAKA 25/50/25 coverage

Life and Life and HealthHealth

Insurance Insurance

Life InsuranceLife Insurance

Life insuranceLife insurance protects the standard of living protects the standard of living of the survivors. At the policyholder’s death, of the survivors. At the policyholder’s death, the insurance company pays survivors the the insurance company pays survivors the face value of the life insurance policy.face value of the life insurance policy.

The money paid to survivors is called the The money paid to survivors is called the proceeds.proceeds.

Each person who receives part of the Each person who receives part of the proceeds is called a proceeds is called a beneficiary.beneficiary.

Life InsuranceLife Insurance

Cash value insuranceCash value insurance provides both savings provides both savings and death benefits.and death benefits.

Part of the premium pays for death benefits Part of the premium pays for death benefits and the rest builds up cash value like a and the rest builds up cash value like a savings account.savings account.

If you cancel the policy, you collect the cash If you cancel the policy, you collect the cash value.value.

You can borrow against it.You can borrow against it.

Types of Cash Value InsuranceTypes of Cash Value Insurance

Whole life insuranceWhole life insurance – the policyholder pays – the policyholder pays a premium that stays the same throughout his a premium that stays the same throughout his or her entire lifetime. Provides savings or her entire lifetime. Provides savings during life and pays benefits after death.during life and pays benefits after death.

Example: Gerber life insuranceExample: Gerber life insurance

Types of Cash Value InsuranceTypes of Cash Value Insurance

Limited-payment life insuranceLimited-payment life insurance – – policyholder only pays for so many years – policyholder only pays for so many years – like up to age 65.like up to age 65.

Variable life insuranceVariable life insurance – cash value part of – cash value part of insurance invested in stocks, bonds, and insurance invested in stocks, bonds, and mutual funds rather than in savings. Also mutual funds rather than in savings. Also guaranteed death benefits.guaranteed death benefits.

Term Life InsuranceTerm Life Insurance

Term insuranceTerm insurance covers a person for a specific covers a person for a specific period of time.period of time.

Pays benefits only if the insured dies during Pays benefits only if the insured dies during the term of the policy.the term of the policy.

If insured lives beyond the policy – no cash If insured lives beyond the policy – no cash value but policy can be renewed.value but policy can be renewed.

Term Life InsuranceTerm Life Insurance

Advantage:Advantage: LOW COST! LOW COST!

Disadvantage:Disadvantage: Premiums increase as insured Premiums increase as insured gets older.gets older.

Employers usually provide term life Employers usually provide term life insurance.insurance.

Cost of Life InsuranceCost of Life Insurance

The cost of life insurance depends on the type The cost of life insurance depends on the type of coverage and the amount of the coverage of coverage and the amount of the coverage and:and: AgeAge HealthHealth OccupationOccupation

Physicals are sometimes required!Physicals are sometimes required!

Health InsuranceHealth Insurance

Average cost of a stay in the hospital is Average cost of a stay in the hospital is $5,000 per day.$5,000 per day.

Major medical insuranceMajor medical insurance pays for most kinds pays for most kinds of care in and out of the hospital. It covers of care in and out of the hospital. It covers hospital care, doctor’s bills, tests and x-rays, hospital care, doctor’s bills, tests and x-rays, and nursing care.and nursing care.

Most policies have a deductible.Most policies have a deductible.


Most also require you to pay Most also require you to pay coinsurancecoinsurance (sometimes called “copay”) or a percentage of (sometimes called “copay”) or a percentage of medical expenses in addition to the medical expenses in addition to the deductible.deductible.

Insurance companies usually pay 75-80 Insurance companies usually pay 75-80 percent and the insured pays the rest.percent and the insured pays the rest.


Hospital Expense InsuranceHospital Expense Insurance pays for pays for hospital care for a given period of time. It hospital care for a given period of time. It covers room and board, tests and x-rays, covers room and board, tests and x-rays, operating room costs, nursing care, and fees operating room costs, nursing care, and fees for drugs and treatments.for drugs and treatments.

Most popular type of health insurance.Most popular type of health insurance.


Surgical Expense InsuranceSurgical Expense Insurance pays part of a pays part of a surgeon’s entire fee for an operation.surgeon’s entire fee for an operation.

Medical Expense InsuranceMedical Expense Insurance covers the cost covers the cost of a doctor’s care of a doctor’s care notnot involving surgery. involving surgery.


Group Health InsuranceGroup Health Insurance is the least is the least expensive form of health insurance for most expensive form of health insurance for most people.people.

Usually provided by an employer for Usually provided by an employer for employees.employees.

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