Objectives To identify risk management strategies, including avoiding, reducing, retaining - PowerPoint Presentation

Slide1
Slide2

Objectives

To identify risk management strategies, including avoiding, reducing, retaining and transferring.

To evaluate various types of insurance, such as auto, health, life and property insurance.

To examine types of identity theft situations and scams.

To develop a plan to protect oneself from identity theft.Slide3

Main Menu

Understanding Risk

Insurance

Identity Theft ProtectionSlide4

Understanding Risk Slide5

Risk

Is the potential of losing something of value

Is a consequence of action taken in spite of uncertainty

uncertainty is a potential, unpredictable and uncontrollable outcome Can be categorized into several types, such as: safety risk health risk

financial risk Slide6

Safety Risk

Is a hazard which has a potential source of harm or adverse health effect on a person or persons

Can be limited by using self-protection tactics, such as:

wearing seat beltswearing helmets and padsinstalling smoke alarmsimplementing work safety policies Slide7

Health Risk

Is something which could cause harm to people’s health

Can be affected by:

agechildren and older adults have higher tendency to get sickoverall health conditionsindividual has a condition such as diabetes, cancer or heart disease

habits and lifestylesuch as eating and exercise habits, smoking, alcohol consumption or drug use Slide8

Financial Risk

Is the possibility of loss

either assets or earning potential or both

May cause major personal financial hardship Cannot be eliminated, but can be avoided or minimized Slide9

Four Ways to Manage Risk

Includes:

risk avoidance

risk transferrisk reductionrisk retention Each is applicable under different circumstancemultiple ways of managing risk are often utilized simultaneously Slide10

Risk Avoidance

Refers to completely avoiding an activity which poses a potential risk

Is elimination of risk

Is not always practicalby avoiding risk, people forfeit potential gains in investments Slide11

Risk Reduction

Is the idea of reducing the extent or possibility of a loss

Is mitigating risk

Can be done by increasing precautions or limiting the amount of risky activity installing a security alarm and smoke detectors are ways of employing risk deductiondiversification of assets and hedging are forms of risk limitation with investments Slide12

Risk Retention

Simply involves accepting the risk

Is effective for small risks which do not pose any significant financial threat

Acceptability is determined by the financial status of the family or individual for example:a billionaire may not have to worry about insuring his car, because he is able to accept the consequences Slide13

Risk Transfer

Is to transfer the risk to a third-party entity, in most cases an insurance company

Is insuring against risk

for example:a homeowner’s insurance policy transfers the financial risk of a house fire to the insurance company Can also be risk sharing

for example:in a group, each member undertakes a small amount of risk and shares the remainder of risk with the group Slide14

Insurance Slide15

Insurance

Is a social device providing financial compensation for the effects of misfortune

Protects individuals against possible financial losses

Spreads the loss caused by a particular risk over people who agree to insure themselves against the risk Slide16

Insurance

Protects people from risks

risk is uncertain, therefore the loss from the risk is also uncertain; when risk takes place, those who are not insured have to carry the financial burden caused by the risk

Helps preserve and build wealth insurance eliminates the worries and miseries of losses; a person can be encouraged to better achieve financial goals Slide17

Insurance Company

Is a financial institution which provides a range of insurance policies to protect individuals and businesses against the risk of financial losses

Receives regular payment of premiums in return Slide18

Premium

Is the periodical bill a policy holder pays to keep coverage in effect

Is the income for insurance companies

Price for a given insurance policy can vary and depends on variety factors, such as:type of insurance coveragelikelihood of a claim being madeamount of competition the insurance company faces Slide19

Deductible

Is the fixed amount of costs a policy holder is responsible for paying before insurance coverage starts picking up the bill

for example:

if the total bill for a checkup was $5,000 and the deductible was 10 percent, the policy holder might have to pay $500 before the insurance company pays the remaining $4,500Slide20

Premiums & Deductibles

Are directly related

a plan with a low deductible will have higher premiums

many people choose a plan with high deductibles in order to keep the monthly premium as low as possible Slide21

Common Insurance Policies

Include:

auto insurance

health insurance life insuranceproperty insurance Slide22

Auto Insurance

Is the type of insurance which covers the costs associated with an auto accident or other vehicle damage

Is required by law in many states

in these states, drivers have to have basic auto insurance which covers liability if a car is purchased with a loan, the driver may also be required to add collision coverage to the policy

Liability insurance covers damages to other vehicles, while collision covers damages to the policy holders. Slide23

Auto Insurance

Is essential because it covers expenses in the event of vehicle damage or injuries to other drivers, passenger or pedestrians

for example:

if a policy holder is involved in a car accident and is the person at fault, liability insurance will cover the expenses of vehicle damage or injuries to the other driver and collision insurance will cover the expenses of the policy holder’s vehicleSlide24

Types of Auto Insurance

Include:

bodily injury liability

covers physical injuries to others caused by an auto accident for which the policy holder was responsible property damage liabilitycovers the damage the policy holder caused to another persons property while driving

medical payment coveragecovers the medical expenses of anyone who is injured in the policy holder’s car, no matter who was at fault for the accident Slide25

Types of Auto Insurance

Include:

uninsured motorist protection

covers costs if an individual is involved in a car accident with an uninsured drivercollision insurancecovers damage to the policy holder’s car when it is involved in an accident comprehensive insurance

covers physical damage as a result of a non-collision incident, such as fire, flooding, theft or vandalism Slide26

Auto Insurance Prices

Are affected by the following factors:

vehicle type

year, make and model of a vehicleresident locationurban, rural, suburban driver classificationage, gender, marital status, driving record, driving habits, etc.

types and amount of coverageper person limit, per occurrence limit, split limitsSlide27

Per Person Limit

Indicates the maximum amount the insurer will pay for one person’s injuries

for example:

if two people are injured in a car accident and the at-fault driver’s policy has a $50,000 per person limit, the insurer will pay no more than $50,000 to each person for his or her injuries; if one person’s injuries are worth $75,000, he or she will only receive the per person maximum of $50,000 from the insurerSlide28

Per Occurrence Limit

Indicates the maximum amount which will be paid from a single occurrence

for example:

the insurance company will pay the financial loss for one car accident, no matter how many people are injured, how much property is damaged or how many different claimants may make claims Slide29

Split Limits

Combine per person and per occurrence approaches

Apply three separate dollar amount to each accident

the first limit is a per person limitthe second limit is a per occurrence limitthe third limit is a per occurrence limit which applies to property damage claimsthis is the maximum amount the insurer will pay for damage to other cars or property resulting from the accident Slide30

Health Insurance

Is a type of insurance coverage which pays for medical and surgical expenses incurred by the insured

Is often provided by employers to full-time employees

for those whose employer does not offer health insurance or are self-employed, they can explore the federal health care marketplace for insurers offering health insurance Slide31

Health Insurance

Is important because:

it protects individuals financially

for example:a sudden or serious illness (cancer, diabetes, appendicitis) or a traumatic event (ski accident, car crash) can leave an individual with staggering medical billsSlide32

Health Insurance

Is important because:

individuals can have access to preventive and primary care

the law requires insurers to cover annual checkups and preventive care, such as mammograms, vaccinations, colonoscopies and prostate cancer screenings, without a copay Slide33

Types of Health Insurance

Include:

basic health insurance

covers hospital, surgical and physician expenses dental insuranceprovides reimbursement for the expenses of dental services and supplies vision care insurance

covers eye examination, glasses, contact lenses and treatment of eye diseases cancer and heart/stroke insurancecovers surgical and medical expenses for these life-threatening diseasesSlide34

Types of Health Insurance

Include:

long-term care insurance

covers expenses for daily care when an elderly person becomes unable to care for him or herself accident insurancehelps pay for the medical and out-of-pocket expenses which occur after an accidental injury Slide35

Types of Health Insurance

Include:

sh

ort-term disability insurancecovers injuries and illnesses which prevent an individual from working for a short period of timecovers from several months up to one year

long-term disability insurancecovers injuries and illnesses which prevent an individual from working for a longer period of timetypically longer than one yearSlide36

Life Insurance

Is a type of insurance which pays out a sum of money upon the death of the insured person

Benefits the beneficiary of the policy holder

a beneficiary is the person who will receive the benefits from an insurer Types include:term life insurance whole life insurance

universal life insuranceSlide37

Life Insurance

Is important because it can protect a policy holder’s family and loved ones

life insurance can provide income to cover everyday living expenses for family members and loved ones

an inheritance can be left to family members by buying a life insurance policyfamily could use the insurance payout to cover any outstanding debts, like mortgage, credit cards and car loans Slide38

Term Life Insurance

Is for a given period of time, anywhere from 10 to 30 years, with a 20 year term being the most common

Only pays benefits if an individual dies during the period in which the policy is covered

Examples include:renewable termsmultiyear level termsconversion termsSlide39

Whole Life Insurance

Is a permanent policy in which the policy holder pays a specified premium each year for the duration of his or her entire life

Pays the beneficiary the entire total of the policy

Examples include:limited payment policyvariable life policy adjustable life policy Slide40

Property Insurance

Is a policy which provides financial reimbursement to the owner or renter of a structure and its contents in the event of damage or theft

Can include:

homeowner’s insurancerenter’s insurancemortgage insurance etc. Slide41

Property Insurance

Is important because it covers the expenses for property to be fixed or replaced

for example:

if a giant tree in the back yard falls on the house causing severe damage, the insurance company will help pay the expenses for the repairs in addition to covering the value of a home, many insurance policies also include an important provision for liability coverage

covers the cost of damages to someone else’s property after an accident cause by the policy holderSlide42

Homeowner’s Insurance

Is a type of property insurance which covers losses and damages to a privately-owned residence and to the assets within it

Is also called home insurance

Is required when a mortgage is requested on a property the lending bank will request the buyer to provide proof of insurance on the property before issuing a mortgageSlide43

Renter’s Insurance

Is a property insurance policy which provides some of the benefits of homeowner’s insurance, but does not include coverage for the dwelling or structure

Is often called tenant’s insurance

Covers the tenant’s personal property against named perils such as fire, theft and vandalismIs required by many landlords Slide44

Mortgage Insurance

Is an insurance policy which compensates lenders or investors for losses due to default of a mortgage loan

Is also known as mortgage guarantee and home-loan insurance Slide45

Mortgage Insurance

Lowers the risks to the lender of a making a loan to an individual, so the individual can qualify for a loan which he or she might not otherwise be able to get

typically, buyers making a down payment of less than 20 percent of the purchase price of the home will need to pay for mortgage insuranceSlide46

Insurance Rider

Is an optional add-on to an insurance policy

Allows the insured to add coverage above and beyond the standard insurance policy coverage

Is also referred to as a floater or an endorsement Is recommended for people who have high valued items and collectibles Slide47

Property Insurance Riders

Include:

replacement cost coverage

covers the differences between actual cash value and replacement value for belongingsscheduled personal propertyadditional insurance for high value items or special collections, such as jewelry, coin collections, specialized electronics and other valuables

additional coverage for disastersprovides extra coverage for natural disasters such as flood, earthquake, wind or hail Slide48

Identity Theft ProtectionSlide49

Identity Theft

Refers to unauthorized use of someone’s personal identifying information to commit fraud or other crimes

personal identifying information can include name, social security number, credit card number, etc.

Is the fastest growing form of fraud in the United States Slide50

Possible Frauds

Include:

making purchases

obtaining credit cardsrenting an apartmentobtaining utilities without permission receiving medical services in the victim’s name impersonating the victim during contact with law enforcement Slide51

Identity Theft

Has many ways to negatively affect an individual’s credit, most importantly:

high balance on existing account

credit card balances which are close to the limits can have a significant impact on the credit scores new accountsany new account added to a credit report can cause a drop in score

late paymentsthief will crash the consumer’s credit score by not making payments on the fraudulent account Slide52

Types of Identity Theft

Include but are not limited to:

commercial identity theft

new account fraud account takeover fraud Slide53

Commercial Identity Theft

Entails using a business’s name to obtain credit or billing a business’s clients for products and services

Are often committed by insiders or employees with direct access to operational documentation

Creates significant lossesbusinesses lose vast amounts of money because of the hidden nature of the transactions

Can go on for years undetectedSlide54

New Account Fraud

Means using another’s personal identifying information to obtain products and services using the person’s good credit standing

Has many forms

opening of new utility, cell phone or credit account is the most prevalent forms of new account fraudSlide55

New Account Fraud

Often is discovered when the victims receive calls from bill collectors

because the thief is likely to have use a different mailing address, the victim never sees the bill for the new account Slide56

Account Takeover Fraud

Means using another person’s account information, such as credit card number, to obtain products or services using the person’s existing accounts

Can also mean extracting funds from a person’s bank account

account numbers are often found in trash, hacked online, stolen out of the mail or from lifted wallets or purses

victims often detect account takeover when discovering charges on monthly statements they did not authorize Slide57

Common Methods of Identity Theft

Include:

stealing wallets or purses in order to obtain identification, credit and bank cards

digging through mail and trash in search of bank and credit card statements, preapproved credit card offers, tax information and other documents which contains personal details filling out change-of-address forms to forward mail, which generally contain personal and financial information Slide58

Common Methods of Identity Theft

Include:

buying personal information from an inside, third party source, such as a company employee who has access to applications for credit

obtaining personal records from a victim’s place of employment “skimming”stealing information stored on a credit or debit card’s magnetic strip through an ATM machine

swiping personal information shared on unsecured websites or public Wi-Fi Slide59

Common Methods of Identity Theft

Include:

stealing electronic recodes through a data breach

“phishing” for electronic information with phony e-mails, text messages and websites solely designed to steal sensitive information posing as a home buyer during an open house in order to gain access sensitive information stored casually Slide60

Strategies

To protect oneself from identity theft include:

shredding documents

do not toss bank statements and credit card receipts in the trash; dispose of them using a cross-cut shredder or shredding service strengthening passwordsuse random combinations of letters, numbers and special characters; change passwords frequently Slide61

Strategies

To protect oneself from identity theft include:

checking credit reports

consumers are entitled to one free credit report every year from each of the three major credit reporting bureausguarding Social Security numberavoid sharing SSN when it is not absolutely necessary; do not keep the SSN card in a wallet Slide62

Strategies

To protect oneself from identity theft include:

securing cell phone

lock device with a password; turn off Bluetooth when it is not being usedknowing the signs of phishingwatch out for e-mails, links or unsolicited phone calls asking for personal informationmonitoring financial situation

report any suspicious activity in bank and credit card accounts as soon as it is noticed Slide63

Strategies

To protect oneself from identity theft include:

keeping mail safe

swiping mail is one of the easiest ways for a thief to steal someone's identity; consider using a locked mailbox or P.O. box and have the post office hold mail if planning to go out of town being smart about social medialeave sensitive personal details, such as birthdays and addresses, off profiles; strengthen privacy settings Slide64

Federal Laws on Identity Theft

Include:

the Identity Theft and Assumption Deterrence Act of 1998

made identity theft a crime against individuals, where it had previously been seen mainly as a crime against creditorsmade the Federal Trade Commission (FTC) the official place to report identity theft raised penalties for identity theft and fraud

explicitly made stealing personal information a crime, where previously it was only illegal to produce or possess fake identity documents Slide65

Federal Laws on Identity Theft

Include:

Identity Theft Penalty Enhancement Act of 2004

defined “aggravated” identity theft as identity theft used to commit felony crimes such as immigration violations, theft of Social Security benefits and domestic terrorism Slide66

Federal Laws on Identity Theft

Include:

Identity Theft Enforcement and Restitution Act of 2008

allowed federal courts to prosecute, even when, the criminal and victim live in the same state and also said restitution for the crime could include money for the time spent fixing problems caused by the identity theft Slide67

Recovery from Identity Theft

Can be a long process before everything is back to normal

Involves taking a series of actions

Commonly involves six steps Slide68

Step One

Involves calling the companies where know fraud occurred

call the fraud department and explain identity was stolen

request them to close or freeze the account so no one can add new chargeschange logins, passwords and PINs for the account Slide69

Step Two

Involves placing a fraud alert and getting credit reports

place a free, 90-day fraud alert by contacting one of three credit bureaus

Experian, TransUnion or Equifaxthe company selected must inform the other two get free credit reports from the three bureaus, review reports, make notes of any account or transaction not recognizedSlide70

Step Three

Involves reporting identity theft to the Federal Trade Commission (FTC)

complete the online form and include as many details as possible

FTC will create an identity theft report and recovery plan identity theft report proves to businesses identity was stolen and guarantees certain rights Slide71

Step Four

Involves closing new accounts opened in your name

call the fraud department of each business where an account was opened

explain identity was stolenask the business to close the accountask the business to send a letter confirming:the fraudulent account is not yours

you are not liable for itit was removed from your credit report Slide72

Step Five

Involves removing

bogus charges

from accountscall the fraud department of each businessexplain someone stole your identitylet them know which charges are fraudulent and ask the business to remove themrequest a letter confirming the fraudulent charges were removedSlide73

Step Six

Involves correcting credit reports

write to each of the three credit bureaus

include a copy of the FTC identity theft report and proof of identity, such as name, address and social security number ask them to block the information which came from identity theft blocking refers to removing fraudulent information from their credit reports; once the information is blocked, it will not show up on the credit report and companies cannot collect the debt Slide74

Identity Protection Services

Are services which help monitor and recover credit and identity; are often sold together

Can be divided into:

credit monitoringtracks activities on credit reports through major credit bureaus identity monitoring

watches for signs an identity thief may be using personal information identity recoveringhelps deal with the effects of identity theft after it happens Slide75

Credit Monitoring

Tracks activities on credit reports through the major credit reporting agencies

Equifax

ExperianTransUnion Allows individuals to take steps before the problem growsSlide76

Credit Monitoring

Alerts when:

a company checks credit history

a new loan or credit card account is opened in your namea creditor or debt collector says payment is latepublic records show you have filed for bankruptcy credit limits changeSlide77

Identity Monitoring

Alerts individuals when personal information is being used in ways which do not generally show up on credit reports

Tells when information shows up in:

change of address requestscourt or arrest recordsorders for new utility, cable or wireless servicespayday loan applications

check cashing requests Slide78

Identity Recovering

Is designed to help regain good financial standing after identity theft occurs

Services may involve:

helping write letters to creditors and debt collectorsplacing a freeze on credit reports to prevent an identity thief from opening new accounts in your name

guiding you through documents which need to be reviewedrepresenting you in dealing with creditors or other institutions, if granted the authoritySlide79

References

https://maysfinancial.com/articles/ways-managing-risk/

https://sol.du.ac.in/mod/book/view.php?id=1226

http://www.gohealthinsurance.com/health-insurance-information/premiums-and-deductibles.htmlhttps://www.irmi.com/online/insurance-glossary/terms/s/split-limits.aspxhttps://www.trustedchoice.com/health-insurance/coverage-types/short-long-term-disability/

https://www.geico.com/information/aboutinsurance/renters/insights/endorsements/Slide80

References

https://www.investopedia.com/terms/h/homeowners-insurance.asp

https://www.thebalance.com/adding-to-your-homeowners-insurance-do-you-need-a-rider-2645704

https://www.personalcapital.com/blog/financial-planning-2/difference-between-term-whole-life-universal-life-insurance/https://www.consumer.ftc.gov/articles/pdf-0009_identitytheft_a_recovery_plan.pdfhttp://www.ci.antioch.ca.us/CityGov/Police/ID-theft-scam.pdf

http://blog.credit.com/2012/09/four-ways-identity-theft-can-affect-your-credit/Slide81

References

https://www.equifax.com/personal/education/identity-theft/how-does-identity-theft-happen/

https://www.thebalance.com/the-first-3-types-of-identity-theft-1947465

https://www.thebalance.com/the-8-types-of-identity-theft-1947176https://www.nerdwallet.com/blog/finance/9-ways-protect-identity-theft/https://www.identitytheft.gov/steps

https://health.usnews.com/health-care/health-insurance/articles/2016-11-01/why-do-you-need-health-insurancehttps://www.consumer.ftc.gov/articles/0235-identity-theft-protection-servicesSlide82

Acknowledgements

Assistant Brand Manager

Caroline Huang-Loggains

Director of Brand ManagementMegan O’Quinn

Quality Control DirectorAngela Dehls

V.P. of Brand Management

Clayton Franklin

Executive Producer

Gordon W. Davis, Ph.D.

CEV Multimedia, Ltd.

© MMXVIII