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The purpose of insurance is to protect against the loss of something of value. Designed to restore you to your financial position to where it was before the loss. NOT to allow you to profit from the loss!.

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The purpose of insurance is to protect against the loss of something of value

Designed to restore you to your financial position to where it was before the loss

NOT to allow you to profit from the loss!Slide2

Insurable Interest

To insure something, you must have insurable interest on the item

It must be something of value that, if lost, would cause you financial harm.Slide3

Determining the Value of Insurable Interest

Before you can insure your property, its value must be measured in financial terms.

The insurance company can then compensate you based on its value.Slide4


When the value of property is not clear, you or the insurance company may have it appraised

An appraisal is an expert’s determination of the value of a piece of property.

EX: if you want to insure your diamond ring, you might have it appraised to make sure you buy enough insurance to cover it’s loss.Slide5


Home insurance does not automatically cover some particularly valuable items, such as a diamond ring.

To insure it, you must purchase a RIDER

A rider is a special addition to an insurance policy that covers a specific type of loss.Slide6

Determining the Amount of Life and Health Insurance

Your life and health don’t carry a price tag like property does.

Health and Life insurance are sold in different amounts.

The greater the amount of coverage you choose, the higher the premiums. Slide7

Life Expectancy

You life insurance premiums will depend on your life expectancy

Do you smoke? Do you drink? Do you have history of cancer?

Life expectancy is an estimate of the average number of years remaining in people’s lives based on their


Current age

And healthSlide8

The Insurance Trade Off

Your goal in buying insurance should be to protect yourself from a loss that could put you in financial difficulty. It should not be to protect from


loss. The more insurance coverage you buy, the higher the premiums. At some point, the premiums themselves could put you in financial difficulty.

**You should only buy enough insurance to cover the losses you would have trouble paying for yourself.**Slide9

The Role of Insurance in the Economy

Insurance benefits you indirectly

Business activities wouldn’t be possible without insurance

Banks wouldn’t lend you money to buy a home or car

If your home burned down without insurance, the bank might not recover the loaned funds

Physicians usually don’t practice without insurance to protect them from lawsuits

One lawsuit could ruin them financiallySlide10


Property Insurance

Insurance that protects you from financial loss when things you own are stolen, damaged, or destroyed

Typically for homes, cars, and valuables

MARKET VALUE: the amount an item is worth now.

REPLACEMENT VALUE: the cost of replacing the item, regardless of its market


alue at the time of the loss.Slide12

Liability Insurance

Sometimes your actions cause losses to other people

You can damage someone else’s car

Protects you from losses that you cause to others

AKA Casualty Insurance

Up to a stated maximum, it will pay the cost of damage, medical expenses, and legal fees if you are suedSlide13

Personal Insurance

Insurance that protects you, your spouse, and your children against financial loss due to illness, disability, or death

Health and Life insurance are two examples of personal insurance

Often, employers pay part of the cost of health insurance for their employees.