Insurance and Retirement

Essential Question: “How can I protect myself from financial risks?” 

Investigate: Risks

[Time Required: 20 minutes] 

1. What is your reaction to the following scenarios: going bungee jumping, skydiving or climbing a mountain? Are these scenarios exciting? Would you participate in these activities? Why or why not?
2. What do these scenarios have in common? How do you define risk? What other risky activities can you think of? Some responses might include extreme sports, sneaking out at night, riding in the car without a seat belt, disobeying parents, stealing, etc.
3. Next, pick two of the risks you brainstormed and consider how you could protect yourself from these risks. For example, if you suggested rock climbing, you could protect yourself by using safety gear.
4. Protecting yourself by using safety gear while rock climbing is a way to protect your physical wellbeing. How can you protect your financial wellbeing? In the same way that climbing gear provides safety, insurance keeps finances safe, even when the unexpected happens.
5. Understand that an insurance policy is a contract between the consumer and insurance company that outlines coverage plans. For example, you might have health insurance, but that doesn’t mean every medical service is covered. The insurance policy explains what the insurance company will and will not pay for.
6. Next, look at the following three terms and their definitions:
   • Premium:The amount paid to the insurance provider every month in order to maintain an insurance plan.
   • Co-Pay: Primarily for health insurance; the amount owed each time you visit the doctor.
   • Deductible: Measured on a yearly basis; refers to the amount you must pay before your insurance provider begins to cover costs.
7. Why are these terms important to consider when reviewing an insurance policy?
8. Understand that paying a small amount, or premium, each month can save thousands in the long run. For example, if you pay a premium of $50 on auto insurance every month, chances are it will still be less than the total cost of repairs if you were in a collision.
9. Why is it important to consider deductibles and co-payments. For example, if your car insurance deductible is $1,000 and an accident causes $17,000 of damage, $1,000 must be paid before insurance will pay the rest. Similarly, your health visits may be mostly covered by insurance, but you may still have to pay a small fee, or co-pay.

Student Preparation: Types of Insurance

[Time Required: 20 minutes] 

1. There are many different types of insurance that protect us in different situations; including life, car, homeowners, travelers, personal property, and health insurance. Depending on our needs, we seek different insurance types for protection.
2. Download the activity sheet My Perfect Plan and review the definitions of the types of insurance. Understand that various types of insurance protect us from a variety of financial events. For example, life insurance protects you financially in the case of death, while car insurance protects you if you are involved in a car accident. Which types of insurance do you think you will encounter in your life and when?
3. You will now conduct online research to compare insurance policies. Allow 15 minutes to complete the research and activity.
4. What insurance policies did you find? How did you compare plans? How did the deductible, co-pay and premium differ among policies? Understand that selecting the right policy can protect you from financial risks, so it’s important to consider what a policy covers and the associated costs. 

Challenge 1: Perfect Match

[Time Required: 15 minutes]

1. Download the Insurance Matchmaker activity, and match the scenario with the best insurance policy.
2. Understand that priorities, needs, and lifestyle should be considered when purchasing any type of insurance.

Challenge 2: Making a Will

[Time Required: 25 minutes] 

1. What happens to money and property after you or a family member dies? To know where your money goes when you’re gone, you need to have an estate plan that details what you would like done with your money. Have you ever heard this term before and if so, in what context? Estate planning is a process that helps plan for the distribution of belongings and finances in the event of death. An important part of estate planning is creating a living will.
2. Next, download the activity sheet Where There’s a Will, There’s a Way. You will research online to discover the components of a will and complete part one of the activity sheet.
3. Allow 10 minutes to conduct research. What are the important components of a will? Why do you think each component is important? What would happen if you didn’t have a will?
4. Next, allow 10 minutes to complete part two of Where There’s a Will, There’s a Way. Why is creating a will is an important part of financial planning. 

Reflection

[Time Required: 5 minutes]

Write in your notebook about the importance of managing risk and how you will manage risks in your future. What are the steps you will take to fulfill life goals while minimizing financial risk? How will you ensure your assets and family are protected no matter what life brings your way?