Insurance and Risk Management

• Gather information about the risks you are exposed to that would result in a loss.
• Estimate how frequently a loss might occur and the severity of the loss.
• Decide how you will handle the risk.
• Implement your risk management plan.

What is Insurance, and How Does It Work?

Types of Insurance

Health Insurance. Health insurance offers protection from financial losses that could result from injury, illness, or disability.

The two most common types of managed care plans are health maintenance organizations (HMOs) and preferred provider organizations (PPOs). An HMO is an organization of health care professionals that provides health care services to members on a prepaid basis. A PPO is made up of a group of medical care providers (doctors, hospitals, etc.) who contract with a health insurance company to provide services at an agreed upon discount.

Life Insurance. The primary purpose of life insurance is to make sure that anyone who is financially dependent on you will not lose that support if you die. Dependents can include spouse, children, parents, and siblings. The amount of life insurance you need will depend on a number of factors, including how much you have in savings, the value of your assets, and the amount and type of other benefits your survivors might be eligible for (like Social Security.

Automobile Insurance. Automobile insurance is actually a fairly complicated form of protection, requiring decisions in the following areas: Collision Protection, Comprehensive Coverage, Liability Coverage, Medical Payments Coverage, Uninsured Motorist Coverage, and Underinsured Motorist Coverage.

Homeowner’s/Renter’s Insurance.

Homeowner’s and renter’s insurance are a combination of property and liability insurance. Homeowners’ policies cover against loss or damage to the house and other structures on the property, and your personal possessions. Renter’s insurance provides protection for your possessions.

Disability Insurance. Disability insurance provides a weekly or monthly income benefit if you are disabled due to a covered injury or sickness. This type of insurance can provide an income to partially replace the wages lost when you are unable to work for an extended time.

Long-Term Care (LTC) Insurance. The purpose of this insurance is to provide for your “long-term care” if you become unable to take care of yourself because of loss of functional capacity or cognitive impairment.. You can find links to your state at the National Association of Insurance Commissioners website, http://www.naic.org/state_contacts/sid_websites.htm.

1. Locate your insurance policies, and determine the amount of coverage you are currently carrying.
2. Evaluate whether or not you have adequate coverage based on your needs.
3. Identify areas where you may need additional coverage.
4. Visit the following websites to assist you in your evaluation:

Insurance as an Employee Benefit

Most employers offer a wide range of insurance as a benefit of employment. The most common forms of insurance offered as an employee benefit include life insurance, health insurance, and disability insurance.

Determine what types of insurance your employer offers its employees. Ask for additional information and assistance from the Human Resource Department or your employer’s website.