Economics and Personal Finance/Insurance

It is almost impossible to eliminate all the potential risks that may happen in our lives. This is why we have insurance, an agreement with a financial company in which it lends compensation against any losses to its subscribers. It serves to pool subscribers' risks to make payments more affordable for the insured. You may get paid all or some of the losses. This page will talk about various insurances.

Car Insurance

Car Insurance provides compensation for any damages/losses relating to your car. Many factors, including the mileage, type, age, features, and your own driving record, determine your insurance premium. Five types of car insurance exist below.

Types

1. Liability: Minimum amount of insurance required by the law. This compensates for any damage to a person or their property that you have caused. You have to be careful - sometimes, the state's minimum amount won't be enough to compensate for it.
2. Collision: This coverage pays for any damage to your car if you collide with another car or another object. This is required if you pay off your car in monthly installments.
3. Comprehensive: This coverage protects you from any damage caused by anything else (such as a deer). This is required if you finance your car.
4. PIP (Personal Injury Protection): This pays for medical bills of the insure (a person's family or passengers). This is needed if you do not have health insurance.
5. Uninsured/Underinsured Motorist: This covers damage to the driver, passenger(s), and car caused by a driver without enough insurance. If you have good health insurance/collision coverage, you may opt out of this.

Health Insurance

• Go shopping
• Look for discounts
• Raise your deductibles
• Drop collision/comprehensive coverage when you have officially paid off your car
• Improve your credit score
• Drop other optional insurances

How to buy

Through your employer, you must sign up during the open enrollment period. Private coverage by signing up at the marketplace at healthcare.gov. What is provided by socialsecurity.gov:

• Medicare – 65, or older, no matter the income (with severe disability)
• Medicaid – For those with low income

Pre-Existing Condition

• An illness/injury which happened before you purchased your insurance policy
• Under ObamaCare, insurance companies cannot deny you coverage if you have a pre-existing illness/injury.

Types

• Basic: Covers visits to the doctor and routine-checkups.
• Dental
• Vision
• Disability: Covers part of your salary if you're disabled/miss work.

What you-pay

• Premiums: The amount you pay to be protected (group insurance means the employer will pay half of the premium).
• Deductible: The amount you pay out of your own pocket before the company starts covering expenses.
• Coinsurance: Amount paid after your deductible is met
• Co-pay: Flat fee every time you receive a medical service

Health Plans

PPO (Preferred Provider Organization)

• Higher monthly premiums
• More pocket expenses
• You can choose doctors out of the network
• No referrals needed for specialists.

HMO (Health Maintenance Organization)

• Lower monthly premiums
• Fewer pocket expenses
• Must choose a PCP from the network
• Requires referrals for specialists

Disability Insurance

Consider this insurance to be a sort of "paycheck protection": it replaces a part of your salary. It isn't health insurance since it doesn't pay medical/doctor bills directly. It provides you with 40% (or 2/3) of your income while you can't work. If it provided all of your income, you wouldn't have any desire to return to the workforce.

Types

• Long-term disability insurance (LTD)
• Short-term disability insurance (STDI)
• Social Security disability insurance (SSDI)

Home Insurance

Insurance Underwriter

This evaluates your risks, determines if the company will approve or deny coverage and they can rewrite your policy.

This covers:

• Dwelling: Structure (roof, walls, etc.)
• Other structures not attached to your house: Sheds, detached garage
• Personal Property: Personal items (clothes, furniture, appliances)
• Loss of use: Coverage for when the insured must leave the home while the repairs are being made.
• Liability: Pays for damages that the insured is legally obligated to pay due to any bodily injury.
• Medical payments: Pays for any medical/funeral expenses insured by a person on his/her property.

Premium can be influenced by...

1. Value of property
2. Tools for construction of property
3. Number of perils covered
4. Age of home
5. Credit history
6. Protection devices (such as sprinklers and security)
7. Types of pets
8. Pool/trampoline
9. Distance to the nearest fire department
10. Deductible amount (higher the deductible, lower the premium)

Keep a personal inventory (pictures of the items and receipts)

Property loss

Property loss: proof of loss; what is needed to properly file for property loss is the verification of the purchase of the stolen/destroyed items (keep receipts).

Types of policies

1. Actual Cash Value: Current value of an item... it will reflect depreciation (reduction in value of an item as time passes).
2. Replacement Value: Amount that it would cost you for the insured to go out and buy the same item.

Life Insurance

There are several reasons to have life insurance: to pay off debt, ease the pain of your loved ones when you die and accommodate in your kid's college expenses.

A beneficiary is a person or legal entity (such as charity) designated to receive death benefits.

Premiums of life insurance are determined by:

1. Age
2. Gender
3. Height & weight
4. Medical record
5. Habits/Hobbies
6. Driving record
7. Occupation

You may get either:

• Whole Life: Premiums and benefits do not change; accumulates cash value at a slow rate.
• Universal Life: Flexible premiums (can make changes based on your financial need or lifestyle).

Types

Term Insurance

• Sets the specific period of coverage
• Only valid if the insured dies during the time period of the term insurance
• Positives: less expensive, doesn't earn cash value
• Negatives: once a term is over, the provider can deny coverage if you have developed a major health issue, you will age

Permanent Insurance

• Positives: offers coverage for a lifetime, earns cash value (can be withdrawn/borrowed)
• Negatives: more expensive