Alexa Campbell - Insurance 101

docx

School

Lone Star College System, Woodlands *

*We aren’t endorsed by this school

Course

1307

Subject

Finance

Date

Jan 9, 2024

Type

docx

Pages

Uploaded by ProfFlowerWolverine28

Students will be able to: ● Illustrate how everyone risks financial loss and how insurance shares that risk ● Identify factors that impact insurance premiums and the relationship between premiums, deductibles, and coverage limits ● Explain how the insurance industry uses risk pooling and math to provide insurance coverage and make a profit INTRO QUESTION OF THE DAY: What is the cost to repair an iPhone screen? Answer the question on the first slide in the space below. Then, compare your answer to the answer on the second slide. 1. What is the cost to repair an iPhone Screen? $250 LEARN IT EDPUZZLE: Intro to Insurance AppleCare+ is basically an insurance plan, and like any insurance, before you can decide if it’s a good plan to purchase, you need to understand how it works. NOTE: EdPuzzle videos shuffle answer choices and do not always match the order provided in the lesson here. 1. The purpose of insurance is to… a. build wealth b. transfer risk c. manage assets d. build relationships 2. Why is it important for insurance companies to have a large risk pool of people paying premiums? a. If a large pool of people pay premiums, insurance company employees will get more bonuses included in their next paycheck b. The premium payments of all the insured clients will cover the costs for the emergencies of the few who need it c. The more people that pay premiums, the more careful each insured client becomes with their lifestyle choices 1

d. A large pool of people paying premiums allows insurance companies to have a larger social media following 3. What role does math play in the insurance industry? a. Insurance companies use statistics to find how likely a client will need to use the insurance so they can set premiums in order to have the highest chance of making a profit b. Insurance companies use algebra and geometry to calculate the distance from clients' major emergencies to nearest hospitals c. Insurance companies use statistics to hypothesize how likely clients are to switch over to competitive companies d. Insurance companies use calculus to find out how likely a client will need to use the insurance so they can set premiums in order to have the highest chance of making a profit VIDEO: How Does Insurance Work? This final video will explain how insurance companies manage to make money, when it seems they might be stuck paying out huge claims for ruined houses, wrecked cars, and stolen laptops. Watch the video and answer the questions. 1. Why do you think the mathematical models used by insurance companies are so complex? Many uncertainties and need several solutions to several issues a client may have 2. What is at stake if an insurance company’s models aren’t particularly good at predicting risk? They could become bankru[t and not be able to pay for clients coverage 3. Provide at least two reasons why self-insurance for risks involving your car or home isn’t feasible for most Americans. Not total coverage and not always legal to be self- insured DO IT 2

ACTIVITY: INTERACTIVE: Bummer! Every day is filled with risks, and insurance companies exist to sell you insurance to help alleviate the financial damage of those possible risks. In this game, you’ll spin the Wheel of Bummers to find out which risks are coming your way. Follow the directions on the worksheet to complete this activity. 3

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