Financial Risks

pdf

School

George Mason University *

*We aren’t endorsed by this school

Course

831

Subject

Finance

Date

Feb 20, 2024

Type

pdf

Pages

Uploaded by CountKnowledge28406

In this module, you learned ways to manage financial risks with insurance policies. For this assignment, you are going to make a specific plan for handling your future financial risks. Follow the steps listed in each section to complete the assignment. Section 1: Envisioning Your Future Life Create a vision of your future life. Fill in the following statistics to guide this scenario. 1. Age: 24 2. Profession: Clothing Business Owner 3. Living situation (i.e., renter or owner of an apartment, condo, house, etc.): House Owner 4. Type of vehicle: Mercedes Benz C Class 5. Marital status: Single 6. Number of children: 0 Section 2: Selecting Your Insurance Policies Now that you have created a scenario for your future, you need to select insurance for each risk covered. For each type of insurance, be sure to answer all the related questions. Keep in mind that you have the option to decline insurance. If you choose to decline, write six-to-eight sentences explaining why you made this selection. Automobile Insurance ● What deductible did you select ($200, $500, or $1,000)? How will that a±ect your premium? ■ I selected the $500 deductible because I did not want to pay a higher premium if I chose the $200 deductible, but I also did not want the insurance compnay to pay less for each claim. Therefore, I chose the middle option allowing me to have a median amount for my premium, however, also having the insurance company provide more financial coverage. ● Indicate how much coverage you will select for each of the following. Then explain why you selected these amounts and how you made these decisions.

● collision coverage: ● I will select $10,000 in collision coverage. I chose this amount because my car is new, and I want to ensure that I have enough coverage to repair any potential damages in case of an accident. ● comprehensive coverage: ● For comprehensive coverage, I will choose $15,000 in coverage. This decision was based on the value of my car and the potential risks it may face, such as theft, vandalism, or damage from natural disasters. By selecting $15,000 in comprehensive coverage, I can protect my car from a wide range of non-collision related incidents. ● personal injury protection coverage: ● I will go with $20,000 in personal injury protection coverage. Safety is my top priority, and in the event of an accident, I want to make sure that I have enough coverage to take care of my medical expenses and those of my passengers. ● bodily injury coverage: ● I have chosen $50,000 in bodily injury coverage per person and $100,000 per accident. These limits should provide enough coverage for potential injuries to others in an accident for which I am at fault. ● liability property damage coverage: ● I will select $30,000 in liability property damage coverage. This amount should be enough to cover damages to other people's property in case I cause an accident. ● underinsured motorist coverage: ● I will choose $15,000 in underinsured motorist coverage. This coverage can protect me if I am in an accident with a driver who has insu±cient insurance to cover my medical expenses and property damage. Health Insurance

● What type of policy did you select (EPO, PPO, HMO, POS, HSA, FSA)? Why did you select this policy? I selected the HMO policy because HMO policies have lower monthly payment premiums. The HMO plans are often straightforward processes and rules making them easier to understand. They also focus on preventative care. My policy o²ers free preventive care for over 74 services. ● Do you have a primary care physician? Yes, I have a primary care physician. ● Can you see out-of-network providers? How much does your policy cover? No, I can not see out-of-network because I selected the HMO policy. My policy does not cover anything if I seek out network providers. ● Do you have coinsurance? If so, what percentage are you responsible for? I do not have co-insurance. ● What is your co-pay? I have a $0 co-pay. ● Did you select dental insurance, vision insurance, major medical insurance, long-term care insurance, or disability insurance? Be sure to answer yes or no to each type. Then, explain why you made that selection. I have selected dental, vision, and primary medical insurance because those are the main insurances I am currently looking for in my health insurance. Life Insurance ● Are you considering more than one life insurance policy? Why or why not? ○ No, I am not considering getting more than one life insurance policy because I have no spouse or dependents.

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● Did you select temporary or permanent life insurance? Why? ○ I chose permanent life insurance because it is lifetime coverage. Permanent life insurance builds cash over time and grows on a tax-deferred basis. ● If you selected temporary/term life insurance, which type did you choose (i.e., level term, decreasing term, or renewable term)? ○ I did not choose temporary/term life insurance. ● Would you benefit from a credit life insurance policy? ○ No, I would not benefit from credit life insurance because I have no debts to pay o². ● If you selected permanent life insurance, which type of policy would you choose (straight/whole life insurance life, universal life, variable life, or limited pay)? Why? ○ I chose universal life insurance because it allows more ﬂexibility than whole life insurance. It allows me to adjust the death benefit and premium payments. ● What did you select as your death benefit? Why? ○ My future kids because they will have something to support them when needed. ● Are you using your life insurance policy as a tool for future finances? What are your related goals? How might your policy help you meet your goals? ○ No, I am not using my life insurance policy as a tool for future finances. Property Insurance ● What type of property insurance do you need for your living situation? ○ I need a homeowners insurance policy for my living situation. ● What level of coverage did you select? ○ I selected comprehensive coverage because of the extensive coverage it o²ers. ● How did you manage the process of determining how much insurance you needed? ○ It was a quick decision to choose the comprehensive coverage because I would like the maximum coverage I can get to protect my property. ● How much property damage coverage did you select?

○ For property insurance, I selected $100,000 in property damage coverage. This amount provides ample protection for potential damages to my property due to covered perils like fire, theft, or natural disasters. ● How much liability insurance did you select? ○ In terms of liability insurance, I chose $300,000 in liability coverage. I wanted to have ample protection in case someone gets injured on my property and decides to sue me for medical expenses and other damages. With $300,000 in liability coverage, I feel more secure knowing that I have substantial financial support in the event of a liability claim. ● What level of coverage did you select? What is and is not covered at this level? ○ I selected Personal Property coverage. It covers my personal belonging and a percentage of the dwelling coverage which covers the structure of my home. ● Did you select any endorsements or riders? Why or why not? ○ I did not select any endorsements or riders because I do not need them. ● Did you add a ﬂoater policy? If so, for what? ○ Yes, I added a ﬂoater policy because I own expensive jewelry and would like protection just in case it gets stolen. Professional Liability Insurance ● Did you select professional liability insurance? Why or why not? ○ I did select a professional liability insurance policy primarily due to the fact it may not be necessary for this profession. Moreover, this type of insurance is focused more on jobs that provide advice or services to their clients, such as medical and legal professionals. ● What are the associated risks involved in your profession? ○ Some risks associated with a the job of a clothing business owner are financial risk, such as not being able to pay for inventory or rent of the shop if I do not earn a certain amount of revenue. Additionally, supply chain risks are associated with this job mainly because if disruptions occur involving manufacturing or distributors, it could delay the production process and lead to late deliveries for customers. ● What type of professional liability insurance did you select?

○ The type of professional liability insurance I selected was the Errors and Omissions Insurance because it is the broader range type of insurance that covers a variety of di²erent professions.

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