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In this lesson — Lesson 15 — Protect What You’ve Earned, we explore the topic of insurance. Insurance is a fact of life – you can’t get away with living these days without encountering insurance in some form. The basic premise of insurance is that it provides an outside source of funds which protects you against a larger personal monetary loss. That’s why its a topic contained within our Unit Three theme of Protecting and Preserving Wealth.
There’s so much to know about insurance that you could fill a year’s worth of lessons. This lesson is a very basic introduction to the very basics of the types of insurance your students are likely to encounter: auto, healthcare, homeowners and life. We also learn a bit about Identity Restoration coverage. As you’ll recall, we covered renter’s insurance in Lesson 9 Home is Where the Mortgage or Lease is. We covered workers compensation insurance and some disability insurance in Unit One.
This lesson begins on page 272 of the Instructor’s Guide so let’s turn to it now.
First up are the Supplemental Resources. The supplemental resource for this lesson is a little unusual. It is a fitness website. For the past several years healthcare insurance had been in the midst of many changes. At this point we don’t know where it will all go. A couple of things that never change are, however, that healthcare insurance is expensive. Living healthy – eating right, working out, and doing all those important things are actually ways to preserve your wealth. Being proactive about your health — doing things to prevent illness — can actually save you money.
The other resource I wish I had thought to mention in the Instructor’s Guide, but luckily we have these podcasts, so I will tell you about it now, is your state department of insurance website. Every state has an insurance department and an insurance commissioner. The websites aways include educational resources, so if you want to dig deeper, explore more types of insurance or just show your students where they can go if they need answers about insurance, please take a few minutes to explore your states insurance department’s website. It’s also a good place to go for information on the ever-changing world of healthcare insurance — to track the latest developments on ACA the Afordable Care Act — of it will be repealed and replaced, etc.
Another good website with some articles and short animated videos you might want to explore for using in a lesson is the Insurance Information Institute. (www.iii.org)
I also didn’t mention in the Instructor’s Guide that most insurance companies put sample policies online. You can for example, Google “sample homeowner’s policy” or “sample auto policy” and you’ll get plenty of choices. It would be a good exercise to have your students download an auto policy, homeowners policy, or renters policy and actually read it. Note that for medical insurance, the students would download and review a Summary of Coverage.
Moving over to page 273 you will notice that the vocabulary list is rather long. Insurance has a language all its own and the more students learn to speak it the better they will be at understanding insurance. It helps them make sure they have the coverage they need and to take full advantage of their policy coverage when they make a claim. The selected terms are frequently used and are common to many types of policies.
We begin the lesson with the hows and whys of insurance. What we want students to understand is how important insurance is as a means of wealth protection and preservation — which is the goal of an insurance policy. Insurers, for a fee called a premium, assume the risk of loss, reimbursing the insured for financial losses as a result of a particular loss-causing event. Insurance is important for commerce and the economy because if people had to risk their own wealth whenever they operated some kind of business or service, or risked complete loss of their investment whenever used their hard earned money to buy a car or home, they wouldn’t do it. Insurance is a way to shift or manage that risk — for a fee. That frees us up to pursue wealthbuilding.
The first type of insurance we look at is homeowners. I don’t know if your students will ever be homeowners – hopefully they will — but they’ll probably encounter homeowners insurance at some point in their lifetime and they need to have a basic knowledge of what its about. You can read homeowners insurance on pages 275 and 276. Pay attention to the box on page 276. It is a little graphic that diferentiates between property damage and personal liability. Students should understand that a homeowners policy covers more than the home and structure. It covers damage to other people’s property caused by the homeowner. It might be a good point here in the lesson to go back over renter’s insurance, because that type of insurance is in your students‘ more immediate future.
On page 277, students are introduced to auto insurance. An auto policy has many functions. It covers losses in the event you, as a driver, cause injury to another person’s body. That’s called bodily injury coverage. It covers losses in the event you, as driver cause injury to another person’s property. That’s called property damage coverage. It can also provide money to repair your car if you have an accident and that’s called collision coverage. Students should know that if they finance their car purchase — that means if they get a car loan, they will be required by the lender to have collision coverage. If they do not finance the purchase — say they buy their friend’s car for cash, collision coverage is optional. If they want to make sure they would have money to repair their own car in the event of a collision, they should make sure to ask to include collision coverage.
Please take a look at the box on page 278. It is duplicated in the student materials. Take some time to discuss the value of comprehensive coverage. Drivers often assume they’re covered for things like theft or vandalism of their car but find out after the fact — after a break in or vandalism to their car that they don’t have that coverage. When the time comes and students have to shop for car insurance, they should make sure to talk with their agent so all the types of insurance carefully explained to them so they get exactly what they need. For example, if they park on the street and sometimes leave things in their car, they will want that theft and vandalism protection!
As an aside here, you might also want to expand on the car insurance topic by delving with students a little deeper into the notion that being a careless driver, getting speeding tickets, and getting into accidents — even minor fender benders, causes your insurance to be more expensive. Bad driving can result in wasted wealth. It would be great if you could invite an insurance agent into your classroom to talk about car insurance or actually, any insurance, and how it works and practical things students can do to keep their auto insurance costs down. I’m sure there are plenty of insurance agents who’d be more than willing to talk to your class. The Insurance Information Institute (III) website, has articles and videos about car insurance.
Let’s move over to healthcare insurance, on page 278. Healthcare insurance is a bit of a moving target for your students because of the debate about the ACA repeal and how they will get afordable coverage and I’ll talk about that in a minute. But there are some things about healthcare that students should understand which probably won’t change: One is that everyone is personally responsible for some portion of their own healthcare costs. You can read about on pages 278 and 279. You can also ensure that students understand the diferences between an HMO and a PPO since the basic model of the managed healthcare plan probably won’t change much in the future. Urge them that when they have healthcare insurance to know what’s in their Summary of Coverage. Knowing how your benefits work enable you to play them to your financial advantage. For example, stay within the plan’s network of approved care providers. Also understand the timing on their benefit year. Healthcare coverage is expensive enough so don’t make a blunder that’s going to make you pay even more.
Most students will, hopefully, eventually, get healthcare insurance as an employee benefit. If not — or if they freelance, there are other options. Currently, however, they are very expensive and they will probably continue to be very expensive. As a financial literacy teacher, there’s not much you can do to help students with the cost, but you can try to prepare them for the reality they will face when that are no longer on their parent’s policy. They should know that, at this point, 26 is the magic age they are booted of their parents coverage. Getting sick without healthcare insurance is a potentially catastrophic wealthkiller. They will have to arrange for insurance at that time. Whether that is through the Afordable Care Act — I don’t know. They are going to have to be very diligent about finding and maintaining coverage. If the ACA still exists they can enroll through the ACA website in their state. If they happen to still be in college or in grad school coverage may be available through their school.
Moving over to page 281, we have life insurance. This is pretty straightforward but students should know the diferences between term life insurance and whole life insurance. It’s quite possible that, as an employee, one of their benefits will be a term life insurance policy through their employer. It’s a pretty common benefit. As they get older, and they make more money, and maybe have some kids, build a family life, and acquire some assets, financially literate people understand that they should have life insurance and that they should increase the amount of their life insurance as their wealth grows or they have more kids — because they have more to protect.
On page 282, we learn about making an insurance claim. Insurance claims are one of those things where it may be best not to go it alone. If you have a substantial claim, a large loss, not something like a fender bender, you may need to consult an attorney or an insurance or claims expert to make sure the settlement you’re being paid is fair.
On page 283, we have the Big Picture with key ideas are repeated. It would be great if students can walk away from this lesson with some level of an insurance vocabulary, an understanding of the importance and value of the forms of insurance we have discussed as a means of protecting and preserving wealth. One thing you could have them do is price out the cost of, say, an appendectomy or rebuilding a part of a home that has been destroyed by a falling tree. They can get an idea of how much those rather common things cost and how they would wipe most people out financially.
As a practical matter, they should learn that it’s important to carefully read and understand their coverage details no matter what type of insurance they’re dealing with, so reading couple of policies would be a good activity. There are always insurance representative 800 numbers — so students should know to take advantage of that if they have any questions about a policy.
Students also might be interested in knowing that there are a lot of good career options within the insurance field such as an insurance appraiser, claims adjuster, claims examiner, insurance investigator, or an insurance agent. It’s an industry that is sometimes overlooked by career advisors, but a career in insurance can pay well and be pretty interesting.
Under Let’s Practice, on page 284, we have Activity A: Franklin and Fiona are Frustrated. This is a good whole class review of insurance basics with our friend Franklin from Lesson One.
Activity B is How to Speak Insurance. This has students translating some of the insurance terms.
The Debate, Persuade, Inform activity is all about Identity Theft, which is getting more and more common. Even though students are young and have no assets, they can still be the victims of IT so this is an activity I encourage you to have them do. I provide two good websites where students can learn all about identity theft. For this activity, I suggest focusing on students learning the warning signs, how to protect against it, and how to create a recovery plan if they are a victim of identity theft.
The curated technology for this activity is StudyBlue at StudyBlue.com. This is a digital flashcard site but students can also create and share quizzes. It’s a good college readiness site and the identity theft topic might be a good way to introduce students to the site. They could make identity theft scenarios and then create quizzes about the strategies to resolve them.
Our next lesson’s Ponder and Predict asks students to consider when a particular virtue they’ve long been encouraged to pursue can become a financial liability.
Our Blog Q has students weighing in on their personal fitness routine.
So that’s it for Lesson 15. I’ll see you on our next podcast when we learn how to Share with Care.