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HSFPP Update # 213—Insurance 101

Message from Flashman: You probably have a pretty good idea what is on the minds of your teenagers: homework, sports, music, dating, and the prom, for instance. Few of your teenagers, however, likely give much thought to insurance. Maybe they think insurance isn’t important, or maybe they think their parents have it taken care of. Unfortunately, they or their families could find out too late that they don’t have enough insurance.

You only have to look at the news and at what is going on around you to see that the economy is bad now. Perhaps your teenagers’ families are tightening their belts and they are tempted to drop their insurance. This can be a very bad choice. They shouldn’t rely on insurance to pay for every little need, but they need to have it for those times when they couldn’t possibly pay what they would owe. They might want to raise their deductibles, but they shouldn’t drop their insurance, as Claire’s story below shows.

 

Academic Expectations:

Social Studies

Academic Expectation 2.18
Students understand economic principles and are able to make economic decisions that have consequences in daily living.
Unit 2-6

Academic Expectation 2.33
Students demonstrate the skills to evaluate and use services and Expectation resources available in their community.
Unit 2-7

Practical Living

Academic Expectation 2.29
Students demonstrate skills that promote individual well-being and healthy family relationships.
(Program material addresses risky behavior and its impact on teens)

Academic Expectation 2.30
Students evaluate consumer products and services and make effective consumer decisions.
Unit 5

Academic Expectation 2.31
Students demonstrate the knowledge and skills they need to remain physically healthy and to accept responsibility for their own physical well-being.
(Program material addresses the impact of risky behavior particularly related to automobile driving)

Goal 5

Academic Expectation 1.1
Students use reference tools such as dictionaries, almanacs, encyclopedias, and computer reference programs and research tools such as interviews and surveys to find the information they need to meet specific demands, explore interests, or solve specific problems.
Unit 1-7

 

Web Site Picks of the Week:

“What Kind of Insurance You Need as a Student,” by Marco Angioni.  http://www.helium.com/items/965961-what-kind-of-insurance-you-need-as-a-student

“What Kind of Insurance Do I Need?” CNNMoney.com. http://money.cnn.com/retirement/guide/insurance_basics.moneymag/index.htm

“What Kind of Policy Do You Need?” Bankrate.com. May 1, 2006. http://www.bankrate.com/brm/green/insurance/basics1-3a.asp

 

In the New$... Insurance, Your New Best Friend

by Claire Kimberly, a graduate student in family studies at the University of Kentucky

A study by the Insurance Research Council (IRC) found that 16.1% of all U.S. drivers could be uninsured by 2010. The recent economic crisis could increase this number even more. Not being insured, though, comes with a hefty risk.

I have always been a good driver. For the past seven years, I have not received a speeding ticket nor been in any sort of car accident. On May 26, though, this all quickly changed. I was driving on I-65 North when a car hydroplaned and crossed the median. Going 70 mph, we crashed in a head-on collision. The rest is just a blur, but I later learned that they had to get a tow truck to pull me away from the guard railing, Jaws of Life to break into my car, and a helicopter to fly me to the nearest trauma center. For the next eight months, I went to every doctor imaginable trying to undo what this accident did to me physically. Unfortunately, this was only the beginning of my problems.

Only a few days after I left the hospital, the phone began to ring. Bill collectors from the hospital, health care, air transportation, and rehabilitation wanted their money. The total due was almost triple the amount of money that I had put into my savings account; an account that I began when I was only twelve years old. The helicopter bill alone was more than $15,000. Neither my clean driving record nor being financially smart prevented this predicament.  Luckily, we were both insured.

Insurance could help you in this situation. To begin looking for insurance, you need to understand what kind of coverage you need and choose something you can afford. Since you are a student, it is likely that you would at least need auto and health insurance. However, if you have some special circumstances (e.g., you are an international student) you need to look into other types of insurance that might suit you well. Feel free to browse through the resources provided for more information that is geared toward you personally. Also be sure to check with your parent(s) or guardian(s) to see what kind of coverage you already have. 

Once you have a general idea of what kinds of insurance you want or need, you should proceed cautiously toward obtaining the proper coverage at a cost you can afford. Be sure to look at various insurance companies for the best price. Weiss Rating Service could assist you in your search; you can find their ratings at your local library or at www.weissratings.com. This will help you see which insurance companies have the strongest financial ratings and the best reputations for service. Also, be sure to ask someone you trust before signing any contract. Guidance from a family member or teacher could be a great advantage for you.

Sources: “Economic Downturn Driving More Motorists to Ranks of Uninsured,” Insurance Journal, January 21, 2009. http://www.insurancejournal.com/news/national/2009/01/21/97117.htm

 

Discussion Questions:

1. Are you familiar with any insurance companies? Maybe you’ve seen some advertised on TV? What do you know about these companies? (They all claim to be the best, so which one do you think is best for you, and why?)
   
   
   
2. If you were in a car accident, what would you do? What about if a family member got sick and needed medical care?
   
   
   
3. Do you think the economy could affect the number or percentage of people who are insured? Why or why not?

 

Further Readings:

“Tips to Save Money When Buying Insurance.” http://www.ca.uky.edu/HES/fcs/FACTSHTS/FAM-RHF.115.PDF

 

Follow-up Activity:

Either individually or in small groups—possibly as homework or in class—select an insurance company and research their offerings. (Go to http://en.wikipedia.org/wiki/List_of_United_States_insurance_companies for a list of companies.) What affects the costs of the insurance? For example, does it cost you more or less if you have had a car accident? As a class, discuss the pros and cons of each company.

(Keep in mind whenever you are doing research that Wikipedia can be a good place to begin your research on a wide variety of topics, especially to locate other sources, but you should always use more reliable sources to verify information you find on Wikipedia. You can ask your teachers and librarians what are reliable sources. Generally speaking, Americana and Britannica are the encyclopedias you will most likely want to use. We would not want to disparage Wikipedia because we use it sometimes ourselves, but carefully. Because anyone can contribute to Wikipedia, you probably shouldn’t note it as a source on papers. Some of their articles are excellent, but it can be difficult for you to know for sure; and an article that is accurate today could be less accurate tomorrow.)

 

Kentucky High School Financial Planning Program

http://www.ca.uky.edu/HES/fcs/hsfp

The purpose of the HSFPP financial updates, video lessons, and Web site is to assist county Extension agents, credit union educators, high school teachers, and parents who home school their teenagers so that they may improve the economic well-being of our teenagers; and also to show educators how the HSFPP, updates, and video lessons meet Kentucky core concepts. The Web site, updates, and video lessons are provided by the University of Kentucky Cooperative Extension Service, and are free to all educators. The list of core concepts and order form for free program materials including the student guide and instructors manual can be found on the Kentucky HSFPP home page.

If you are not already on our listserv:

The video lessons are available only to members of our listserv and will not be posted to the HSFPP Web site because of the timeliness of the information. If you would like to receive our video lessons, which are sent to our listserv biweekly, on alternate weeks from these updates, please sign up at the following page of our Web site: http://www.ca.uky.edu/fcs/HES/HSFP/response.htm.

The use of any trade names or products does in no way constitute a recommendation for this product.