Transcript MM--Ch. 6 PPT

Chapter 6
Personal Risk Management
Copyright 2007 Thomson South-Western
What is risk?
• Risk is the chance of injury, damage, or
economic loss
– Personal risk
– Risk of financial loss
– Risk of financial
resources
Snow skiing involves risk
of personal injury.
6-1 Risk Assessment and Strategies
Slide 2
Risk Assessment
• Identify the risks
• Decide how serious they are
RISK EXAMPLES
Risk
Probability of
Occurrence
Seriousness
Rating*
Possible
Consequences
Losing my job
Medium
10
Payments could be
missed.
Credit rating suffers.
Car accident
Unknown
10
Personal injury
Lawsuit
Physical injury from
snowboarding
Medium
3
Missed work time
Medical bills
*1 is a low risk; 5 is a medium risk; 10 is a high risk
6-1 Risk Assessment and Strategies
Slide 3
Risk Strategies
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Reducing risks
Avoiding risks
Transferring risks
Assuming risks
Having a home security alarm system
may reduce premiums on homeowner’s
insurance.
6-1 Risk Assessment and Strategies
Slide 4
Building Communications Skills
Reading Speed
• Affects how much material you can read in a
given time
• Affects how well you remember what you read
• Can be improved with practice
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Preview material before reading
Read everything in order
Use a pacer to focus your eyes on the page
Read in a quiet place
6-1 Risk Assessment and Strategies
Slide 5
Health Insurance
• Is a plan for sharing the risk of medical
costs from injury or illness
• Three basic types of health insurance
plans are available
– Fee-for-service plans
– Preferred provider organization plans
– Health maintenance organization plans
6-2 Income Protection
Slide 6
Focus on...
Being Uninsured in America
• Millions of Americans do not have health
insurance
• People who are not insured often have
problems paying medical bills
• Uninsured patients often pay higher fees than
patients who have insurance
• Having health insurance should be an
important goal in your financial plan
6-2 Income Protection
Slide 7
Types of Health Coverage
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Basic health care
Major medical
Dental care
Vision care
Catastrophic illness
Health insurance plans often
include vision care.
6-2 Income Protection
Slide 8
Managing Costs
• Deductibles and co-pays
• Stop-loss provisions
• Health savings accounts
Medical emergencies can
be very expensive.
6-2 Income Protection
Slide 9
Disability Insurance
• Provides money to replace a portion of
normal earnings
• Pays when the insured is unable to
work
• Covers an injury or illness that is not
job-related
• May be short-term or long-term
6-2 Income Protection
Slide 10
Life Insurance
• Term insurance
– Renewable term insurance
– Decreasing term insurance
– Level term insurance
• Permanent insurance
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Whole life insurance
Limited-pay life insurance
Universal life insurance
Variable life insurance
6-2 Income Protection
Slide 11
Group Life Insurance
• Is purchased through an employer or
an organization
• Has much lower premiums than
individual policies
Life insurance can provide benefits
for children when a parent dies.
6-2 Income Protection
Slide 12
Success Skills
Dealing With People in Difficult Situations
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Focus on the person causing the problem
Listen to what the person is saying
Talk to others affected by the behavior
Try to resolve the situation and keep the
goodwill of others
6-2 Income Protection
Slide 13
Homeowner’s Insurance
• Protects from risk of loss in the home
• Covers the building and its contents
• Types of coverage
– Fire and other hazards
– Criminal activity
– Personal liability
– Acts of nature
6-3 Property Protection
Slide 14
Home Inventory
• Lists all the items of value in your home
• Should include receipts for expensive
items when possible
• Is useful when filing an insurance claim
6-3 Property Protection
Slide 15
Sample Home Inventory
6-3 Property Protection
Slide 16
Renter’s Insurance
• Protects renters from the risk of losing
personal property in their homes or cars
• Covers the cost of repairing or replacing
personal property
• Is a low-cost way
to manage risk
Renter’s insurance protects you
from losses as a result of fire.
6-3 Property Protection
Slide 17
Automobile Insurance
• Protects the owner of a car from losses as a
result of accidents
• Types of coverage
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Liability
Collision
Comprehensive
Personal injury
Uninsured/underinsured motorist
Towing/rental car
6-3 Property Protection
Slide 18
Reducing Costs
• Choosing higher deductibles can save
you money on insurance
• To lower costs for car insurance
– Take driver training classes
– Maintain a good driving record
– Buy more than one insurance policy from
the same company
– Own a car with a high safety rating
6-3 Property Protection
Slide 19
Umbrella Insurance
• Provides coverage in addition to car and
home insurance
• Protects you from catastrophic losses
• Requires that you have liability
coverage on your home and car
6-3 Property Protection
Slide 20
Technology Corner
Buying Insurance Online
• Many insurance companies have Web sites
• Consumers can apply for insurance online
• With some companies, claims can be filed
online
• Premiums may be lower with online
companies
• Be sure that the company is reputable before
buying online
6-3 Property Protection
Slide 21
Ethics
Driving Accidents
• Most states have financial responsibility
laws that require drivers to be insured
• Many people drive without insurance in
violation of laws
• Driving without being able to pay for
damages you cause to others is unethical
6-3 Property Protection
Slide 22