Insurance You Pay for Entirely Yourself

What happens when disaster strikes??

There are three categories of insurance… 1. Insurance that you have to pay for entirely yourself. 2. Insurance that is paid for by your employer. 3. Insurance that can be paid for by you and/or your employer.

Insurance you pay for entirely yourself Car Insurance Car insurance is the most common type of insurance because you are required by law to have car insurance or you cannot get or renew a driver’s license.

Required Car Insurance Liability: This pays to have another person’s car repaired and medical expenses paid if you cause the accident. This insurance will not pay to repair or replace your own car.

Optional Car Insurance Collision: This will pay to have your own car repaired and your medical expenses paid if the accident is your fault, whether anyone else was involved or not. Uninsured Motorist: This pays to have your car repaired if you are in an accident that was caused by another person who does not have insurance. Remember, not having insurance is illegal, but some people drive without it anyway!

Keep in mind… The cost of your insurance (the premium) will go way up if… 1. You cause a serious accident. It’s even worse if you cause multiple accidents.

2. You are caught driving under the influence of alcohol or other drugs (OVI – operating a vehicle while impaired). The average premium increase for one OVI is $1000 per year for five years!!

3. You make too many insurance claims in a short period of time.

4. You get too many moving violations (speeding, running a red light, etc).

The increased premiums will stay in effect for 3-5 years, depending on your policy, your age, and your previous driving and claims records.

Even with insurance, you must pay the deductible, which is the first $500 or so (depending on your policy, before the insurance company pays the rest. Homeowner’s and Renter’s Insurance If you buy a house, the bank will require that you purchase homeowner’s insurance. It will pay for damages to your house and loss of property because of things like fires and theft. For example, during a bad thunderstorm, lightning hit the main electrical box in your back yard. The electrical surge blew out the main circuit box in your basement. Your homeowner’s insurance will help pay for the repairs. You will pay the deductible, and the insurance will pay the rest.

In the case of renter’s insurance, the landlord must have insurance to repair damage to the apartment itself from fire, floods, etc, so you will not have to pay for damages. However, if there is a fire or a burglary, the landlord’s insurance will not pay to replace your property – your TV, computer, clothing, etc. Renter’s insurance is relatively cheap – a bit more than $100 per year.

Whether you rent or own, you should always keep a list of your major pieces of property so that if something happens, you will know what needs to be replaced. An easy way to do this is to take pictures of things and keep the pictures in a fireproof box and/or with your insurance agent. Do not simply keep the pictures on your computer – it could be stolen or damaged in a fire.

Insurance that is paid for by your employer

Workers’ Compensation Workers’ compensation is a type of coverage that provides help with medical expenses and lost wages in case of injury, disease, or death that is work-related. It does not cover anything that is not related to your job. For example, if you get in a car accident on the way home from work, workers’ compensation will not pay anything. However, if you fall off a chair and break your ankle while trying to reach supplies on a high shelf at the office because your employer did not provide a safe ladder or step stool, workers’ compensation will pay the medical expenses. If the employer provided a ladder or step stool for you to use, but you stood on a chair instead, workers’ compensation will NOT pay the bill!

Workers’ compensation coverage is paid for entirely by your employer unless you are self- employed. Not only will workers’ compensation pay for medical expenses if you are injured on the job or become ill because of your job, it will also pay for any income you lose while you are unable to work. Here’s how that works:  You are unable to work for 1-7 days…You do not get any help.  You are unable to work for 8-13 consecutive days…You get money equal to lost income for days 8-13, but not for days 1-7.  You are unable to work for 14 or more consecutive days…You get money equal to lost wages for all of the days you are unable to work. Unemployment Compensation The Social Security Act of 1935 created the Federal-State Unemployment Compensation Program. There were two main goals of this program. The first was to provide temporary income to people who lose their job through no fault of their own. The second was to help keep the United States economy stable during bad economic times. This means that if a company lays you off because they have to cut their costs, and you did nothing wrong, you can collect unemployment compensation (first goal) and you will be able to spend that money while you look for another job (second goal). However, if you lose your job (you’re fired!) because you came in late too often and were rude to customers, you may not collect unemployment compensation. It was your fault you lost your job, so you will have to suffer for it.

Unemployment compensation is funded by taxes your employer pays to the federal and state governments. There is a limit to how long you can receive benefits, as well as the amount of those benefits. In normal times…  You can receive benefits for no more than six months.  Those benefits are equal to only half of your normal income.  You are covered only if, after you lose your job, you are actively looking for another job. If you decide to “just take some time off”, you get no benefits.

NOTE: Because the current economy is so bad, unemployment has been extended in Ohio to a maximum of 79 weeks (about a year and a half). How many weeks you get depends on how long you worked at the job you made and how much money you earned on that job.

Insurance that can be paid for by you and/or your employer

Health Insurance This insurance pays part or most of the bill for doctor’s visits, hospital stays, prescription drugs, etc. Some health insurance helps pay for vision care (glasses and contacts), dental care, or treatment by an orthodontist. Many employers pay for a large part of the cost of health insurance, while the employee has to pay only a portion of the cost. An employee can cover his or her spouse and children on their policy as well. However, children lose their parents’ coverage once they turn 18 unless they are full-time students. In that case they can often remain on their parents’ insurance plan until they are 23-25 years old, depending on the policy.

Some employers do not provide health insurance at all, and most employers will not provide health insurance for part-time workers. There is a huge problem in this country with people having no health insurance. These are mainly the working poor, those who work part-time, and young adults who are no longer covered on their parents’ policy. They cannot afford to pay for individual coverage. Life Insurance If you die, life insurance pays money to the people you leave behind. Many employers provide their employees with a small policy that will give your family enough money to settle your affairs and pay off any small debts you owe (like school loans or credit card bills). If you are single with no children, this insurance may be all you need.

However, if you are a parent, you need to have a much bigger policy so that if you die, your family can have enough money to live on until they get back on their feet.

Disability Insurance This insurance will give you a monthly income if you are disabled and unable to work for a long period of time. If you have a minor illness or injury, you will often be able to get by on the income from sick leave that many employers provide. However, if a major illness or injury prevents you from working for several months or more, you will have no income at all unless you have purchased disability insurance. Some employers provide this insurance for their employees, and some do not.

Summary

All of this can be very confusing!!! Insurance is expensive, but you need to have it. The trick is to try not to become “insurance poor”. This means that you should not buy so much insurance that you do not have enough for your daily living expenses. If you are young and healthy, you need to have four types of insurance:  Car insurance – It is required by law.  Health insurance – You never know what will happen; a broken leg or emergency surgery of appendicitis could ruin your finances if you have no health insurance.  Life insurance – A small policy is all you need if you have no children.  Renter’s insurance – This is inexpensive (barely over $100 per year) and completely worth it if there is a fire in your apartment or it is hit by a burglar.

Sources: www.iii.org/media/glossary/alfa.T/ www.ohiobwc.com/basics/guidedtour www.policyalmanac.org/social_welfare/archive/unemployment_compensation.shtml www.cnnMoney.com Insurance Questions Name______

1. There are seven basic types of insurance. Complete this chart that shows each type and the basics of what it helps you pay for. Use your own words.

Types of Insurance What does this type of insurance help you pay for?

2.a. Which type of car insurance is required by law?

b. What expenses does this type of insurance pay for?

3. What type of car insurance must you have if you want to have your car repaired and the accident was your fault?

4. You have a really old car, so you only carry liability insurance. You have to drive home during a snow storm and you lose control and slide into a tree. You are not hurt, but your car is totaled (it cannot be repaired). Who will pay for a new car? Why?

5.a. What is an OVI?

b. What effect does a single OVI have on your car insurance? 6. Will your insurance go up just because you’ve been caught speeding a few times?

7. Why is it a very good idea to have renter’s insurance?

8. What should you do to keep track of your major pieces of property in case of fire or theft?

9. You work at a steel mill pouring liquid steel into molds. You get a bad burn on your hand because the insulated gloves your employer gave you had a slit in them. Are you likely to get workers’ compensation benefits because of this accident? Why or why not?

10.You lose your job because it was discovered that you refuse to wear the uniform required by your employer, and you are frequently late for work. Are you likely to be eligible for unemployment compensation? Why or why not?

11. Do all employers have to provide health insurance for their employees?

12. Who is most likely to NOT have any health insurance?

13.a. What must happen before the insurance company will pay on a life insurance policy?

b. Who gets the money? 14. You get a really bad case of the flu and have to miss a week of work. Will your company’s disability insurance be needed? Why or why not?

15. You have a job that pays $36,000 per year. The company has to cut back to save money, and since you were the last one hired, you are let go. Your boss tells you that he will be happy to write you a letter of recommendation for a new job. After being really upset about this for a few days, you immediately begin to look for a new job.

a. Are you eligible for unemployment compensation? How do you know?

b. If you are eligible, how much money will you receive per month?

c. Explain how this will impact your budget. Be specific!