INSURANCE PART 2.pptx

INSURANCE – PART 2 INSURANCE  It is a contract where an individual or entity pays an insurance company in exchange for financial protection or reimbursement of losses resulting from a covered event. The key role of insurance is to help people financially protect themselves against life’s uncertaint...

INSURANCE – PART 2 INSURANCE  It is a contract where an individual or entity pays an insurance company in exchange for financial protection or reimbursement of losses resulting from a covered event. The key role of insurance is to help people financially protect themselves against life’s uncertainties, such as natural disasters, a car accident or an illness while on holidays.  Most people have some kind of insurance: for their car, their house, or even their life. Yet most of us don’t stop to think too much about what insurance is or how it works. LIFE INSURANCE PLANNING  Put simply, insurance is a contract, represented by a policy, in which a policyholder receives financial protection or reimbursement against losses from an insurance company. The company pools clients’ risks to make payments more affordable for the insured.  Insurance policies are used to hedge against the risk of financial losses, both big and small, that may result from damage to the insured or their property, or from liability for damage or injury caused to a third party. KEY TAKEAWAYS  Insurance is a contract (policy) in which an insurer indemnifies another against losses from specific contingencies or perils.  There are many types of insurance policies. Life, health, homeowners, commercial building, and auto are the most common forms of insurance.  The core components that make up most insurance policies are the deductible, policy limit, and premium. HOW INSURANCE WORKS  A multitude of different types of insurance policies is available, and virtually any individual or business can find an insurance company willing to insure them—for a price. The most common types of personal insurance policies are auto, health, homeowners, and life.  To select the best policy for you or your family, it is important to pay attention to the three critical components of most insurance policies: deductible, premium, and policy limit. INSURANCE POLICY COMPONENTS When choosing a policy, it is important to understand how insurance works. A firm understanding of these concepts goes a long way in helping you choose the policy that best suits your needs. The three components of any type of insurance are crucial: premium, policy limit, and deductible. INSURANCE POLICY COMPONENTS  PREMIUM - A policy’s premium is its price, typically expressed as a monthly cost. The premium is determined by the insurer based on your or your business’s risk profile, which may include creditworthiness.  POLICY LIMIT - The policy limit is the maximum amount that an insurer will pay under a policy for a covered loss. Maximums may be set per period (e.g., annual or policy term), per loss or injury, or over the life of the policy, also known as the lifetime maximum. Typically, higher limits carry higher premiums. For a general life insurance policy, the maximum amount that the insurer will pay is referred to as the face value, which is the amount paid to a beneficiary upon the death of the insured. INSURANCE POLICY COMPONENTS  DEDUCTIBLE – The deductible is a specific amount that the policyholder must pay out of pocket before the insurer pays a claim. Deductibles can apply per policy or per claim, depending on the insurer and the type of policy. Policies with very high deductibles are typically less expensive because the high out-of-pocket expense generally results in fewer small claims. TYPES OF INSURANCE The most important types of insurance that you can use as part of your investment are as follows:  Health Insurance - people who have chronic health issues or need regular medical attention should look for policies with lower deductibles. Though the annual premium is higher than a comparable policy with a higher deductible, less expensive access to medical care throughout the year may be worth the tradeoff.  Home Insurance - protects your home and possessions against damage or theft. Virtually all mortgage companies require borrowers to have insurance coverage for the full or fair value of a property (usually the purchase price) and won’t make a loan or finance a residential real estate transaction without proof of it. TYPES OF INSURANCE  Auto Insurance - when you buy or lease a car, it’s important to protect that investment. Getting auto insurance can offer reassurance in case you’re involved in an accident or the vehicle is stolen, vandalized, or damaged by a natural disaster. Instead of paying out of pocket for auto accidents, people pay annual premiums an auto insurance company; the company then pays all or most of the costs associated with an auto accident or other vehicle damage.  Life Insurance - is a contract between an insurer and a policy owner. A life insurance policy guarantees that the insurer pays a sum of money to named beneficiaries when the insured dies in exchange for the premiums paid by the policyholder during their lifetime. TYPES OF INSURANCE  HOWEVER, for many years now insurance companies offer not only life insurance plan but also insurance plan that has other features (including the option to choose between the Philippine Peso or US Dollar currency). Some of these are as follows:  Endowment plan with educational benefits payable.  Whole Life Insurance Plan that provides cash benefit equal to a percentage of the Face Amount starting at the end of the 6th policy year and every 2 years afterwards until the age of 100.  Insurance plan for women that provides cash benefit that is equal to the face amount upon diagnosis of any covered female-specific critical illnesses and surgeries. TYPES OF INSURANCE  Hospital income plan that provides coverage for 10 years and offers 50% or 75% return of premium if the insured outlives the coverage period.  Single pay, front-end load, investment-linked insurance plan that provides protection until age 88.  Single pay, back-end load, investment-linked insurance plan that provides protection until age 88.  Travel insurance is a type of insurance that covers the costs and losses associated with traveling. It is useful protection for those traveling domestically or abroad. CONCLUSION  Insurance is a contract (policy) in which an insurer indemnifies another against losses from specific contingencies or perils.  There are many types of insurance policies. Life, health, homeowners, and auto are the most common forms of insurance.  The core components that make up most insurance policies are the deductible, policy limit, and premium. CONCLUSION  The younger you get an insurance, the better as the premium is lower.  It is advisable that the insurance you will get is the one with cash benefits in order for you to enjoy the face amount when it matures, while you are still alive.  PLEASE DO NOT FORGET: When you get an insurance, be sure that you religiously pay the premium (annual, semi, quarterly, or monthly payment) to avoid any default or lapse that will affect the benefit of your insurance plan in case something happens to you.