Managing Risk UNIT VII Personal Financial Literacy Managing

Managing Risk UNIT VII – Personal Financial Literacy

Managing Risk • Every decision we make involves some type of risk • Driving can result in an accident • A house can burn down after you purchase it • Playing a sport can lead to injuries • These threats to your safety can happen at any time and are often unexpected • The best way to prepare is to purchase

Auto Insurance • Provides financial protection against losses caused by an auto accident or other damage to a car • Examples of Coverage • Collision – provides for repair/replacement of policy owner’s car damage • Liability – covers cost of property damage or injuries to others caused by policy owner • Comprehensive – covers damage that is a result of fire, flood, and theft

Health Insurance • Provides payment for certain health-care costs including coverage for dental and vision care • Examples of Coverage • Traditional – provides reimbursement for medical expenses; plans included deductibles and copays • HMOs – cover medical services through a specific group of physicians; monthly fee regardless of whether services are used or not • HSA (Health Savings Accounts) – provide pre-tax

Renter’s Insurance • Provides financial protection in case of loss of personal possessions in a rental unit, as well as injury to others on the property Homeowner’s Insurance • Protection against financial loss from damage to your home or its contents, as well as injury to others on the property

Life Insurance • Provides financial protection to dependents of policy owner when policy owner dies (to cover such expenses as income replacement, debt repayment, funeral expenses, and education expenses) Disability Insurance • Provides income over a specified period when a person is ill and unable to work; most disability policies end at retirement age (65 -70)