8.1 Intro to Insurance Lesson

8.1 Introduction to Insurance

Open Ended

What is the average cost to repair an iPhone Screen?

Average cost to repair an iPhone screen is...

Poll

Have you repaired your phone in the last year?

• Yes

• No

Open Ended

Why would you carry cell phone insurance?

Video: It's a Money Thing


Answer the 3 questions on slides 7 - 10 while the video plays

Multiple Choice

Video Question #1:

The purpose of insurance is to...

• Build Wealth

• Transfer Risk

• Manage Assets

• Build Relationships

Multiple Choice

Video Question #2:

Why is it important for insurance companies to have a large risk pool of people paying premiums?

• If a large pool of people pay premiums, insurance company employees will get more bonuses included in their next paycheck

• The premium payments of all the insured clients will cover the costs for the emergencies of the few who need it

• The more people that pay premiums, the more careful each insured client becomes with their lifestyle choices

• 1. A large pool of people paying premiums allows insurance companies to have a larger social media following

Multiple Choice

Video Question #3:

What role does math play in the insurance industry? 

• 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

• Insurance companies use algebra and geometry to calculate the distance from clients' major emergencies to nearest hospitals

• Insurance companies use statistics to hypothesize how likely clients are to switch over to competitive companies

• 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

In addition to having a fixed premium, most insurance plans also have a deductible and a coverage limit. Use this infographic to answer the next 2 questions on slides 11 and 12.

​Infographic

Match

Infographic Question #1

Jerry has an insurance policy with a premium of $150 per month. In June, he causes an accident and receives a bill with a total cost of $6000. His deductible is $1500, and his coverage limit is $10,000. 

• How much money will Jerry have to pay for the accident’s bill?
• How much total money will Jerry have to pay in the month of June, given he pays for the accident?

• How much will the insurance company pay for the accident?

$1500

$1650

$4500

• $1500

• $1650
• $4500

Match

Infographic Question #2

After the accident, Jerry starts thinking, “Wow, that $1500 deductible is a lot to pay for all at once! Who knows when I’ll get in another accident, but I sure wish my deductible were lower!” He asks his auto insurance agent, who shows him this chart: 

• What is the relationship between low deductibles and high premiums?
• What will Jerry need to do in order to pay a lower deductible?

• Name a benefit of a lower premium.

• Name a benefit of a lower deductible.

High monthly to low out-of-pocket cost

Pay a higher monthly premium

Fits a monthly budget

Lower out of pocket cost for an accident

• High monthly to low out-of-pocket cost

• Pay a higher monthly premium

• Fits a monthly budget

• Lower out of pocket cost for an accident

Video: How Does Insurance Work?

Answer the 5 questions on slides 14 - 18 while the video plays

Multiple Choice

What is the primary purpose of insurance according to the video?

• To create wealth

• To provide protection against risks

• To invest in the stock market

• To increase debt

Multiple Choice

How do insurance companies profit from risks?

• By collecting premiums from policyholders

• By charging higher premiums than necessary

• By investing in real estate

• By providing free services

Multiple Choice

What does the video suggest about the relationship between insurance and risk?

• Insurance eliminates risks completely

• Insurance transfers risks to larger companies

• Insurance increases individual risk

• Insurance has no effect on risk

Multiple Choice

Why is reinsurance important for insurance companies?

• It allows them to pay out more claims

• It helps them avoid financial ruin in case of large losses

• It is a legal requirement

• It increases their customer base

Multiple Choice

What can happen if someone commits insurance fraud?

• They may receive more money

• They can face legal consequences

• They will be rewarded

• Their insurance policy becomes free

Go to
www.thebummergame.com
and
Play Bummer then answer the questions that follow

As you play the game, pay attention to how your insurance choices and the outcomes of the Wheel of Bummers impact Your Total Money.

Bummer! has 4 rounds - pet, rental, auto, and then all 3 combined. 

Multiple Select

How many rounds did you make it through before running out of money? Or, did you win the game? 

• I made it through 1 round

• I made it through 2 rounds

• I made it through 3 rounds

• I won the game!

Reorder

Rank these in order of importance to you as you considered each type of insurance in the game.

• Monthly Premium

• Coverage

• Deductible

1

2

3

• 1
• 2
• 3

Open Ended

If you played again, what would you do differently? Why? 

Open Ended

After buying your basic coverage, the game offered you extra coverage referred to as Add-ons.

In real life, they’re called riders or endorsements.

What strategies did you use to determine if a rider was worth the additional premium cost per month?

Open Ended

In the game, you’re FORCED to buy at least minimal coverage for each of three insurance types -- pet, rental, and auto. 

In real life, if your monthly budget was tight, what insurance type(s) would you cut? Why? 

Multiple Select

What would be any risk(s) of reducing or eliminating coverage?

• House fire - can't purchase replacement items

• Car accident - can't replace car

• Owe full bill for hospital stay

• Doggo gets bit by a snake - vet bill is all yours

• Owe a ton of money to a bunch of companies

Draw

The purpose of insurance is to provide you with financial protection against a possible risk. In Bummer!, risk is generated by the Wheel of Bummers.

Draw how you FELT each time you spun the Wheel of Bummers, both when you had plenty of money and when you were short on cash.