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Copy+of+Intro+to+Insurance+Student+Activity+Packet

The document is an introductory activity packet on insurance, outlining key concepts such as risk sharing, the relationship between premiums, deductibles, and coverage limits. It includes questions and activities to help students understand how insurance works, the importance of risk pooling, and the financial implications of different insurance plans. Additionally, it emphasizes the role of mathematical models in predicting risks and setting premiums for insurance companies.

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langleyryderm
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12 views

Copy+of+Intro+to+Insurance+Student+Activity+Packet

The document is an introductory activity packet on insurance, outlining key concepts such as risk sharing, the relationship between premiums, deductibles, and coverage limits. It includes questions and activities to help students understand how insurance works, the importance of risk pooling, and the financial implications of different insurance plans. Additionally, it emphasizes the role of mathematical models in predicting risks and setting premiums for insurance companies.

Uploaded by

langleyryderm
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Intro to Insurance

Student Activity Packet


UNIT: INSURANCE

Name:

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. Finally, follow your teacher’s directions on how to answer the follow-
up questions on the last slide.

1. What is the cost to repair an iPhone Screen?


$29 to $379

LEARN IT

EDPUZZLE: Intro to Insurance


Insurance is a way to protect yourself financially in case something unexpected happens, like
damaging your phone, and AppleCare+ is one example of insurance that can greatly reduce the
cost of repairing your iPhone's screen if it breaks. Watch this video and follow your teacher's
directions to answer the questions either in your student activity packet or within the EdPuzzle
itself.

NOTE: EdPuzzle videos shuffle answer choices and do not always match the order provided in
the lesson here.

www.ngpf.org Last updated: 4/15/24


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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
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

INFOGRAPHIC: Insurance Premiums, Deductibles + Limits


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

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.
a. How much money will Jerry have to pay for the accident’s bill?

Jerry will have to pay his $1500 deductible for the accident, and in June, he will pay a total of
$1650, including his regular $150 premium; generally, a higher coverage limit often corresponds to
a higher premium because the insurance company takes on more potential financial risk.

www.ngpf.org Last updated: 4/15/24


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b. How much total money will Jerry have to pay in the month of June?

Jerry will have to pay his $1500 deductible for the accident, and in June, he will pay a total of
$1650, including his regular $150 premium; generally, a higher coverage limit often
corresponds to a higher premium because the insurance company takes on more potential
financial risk.

2. Make an assumption about the relationship between coverage limit and premium.
Explain your thinking.
Jerry will have to pay his $1500 deductible for the accident, and in June, he will pay a total
of $1650, including his regular $150 premium; generally, a higher coverage limit often
corresponds to a higher premium because the insurance company takes on more
potential financial risk.

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:

Source

3. What is Jerry’s auto insurance agent trying to tell him? What will Jerry need to do in
order to pay a lower deductible? Jerry's agent is likely explaining that a lower
deductible typically comes with a higher monthly premium, and to pay a lower
deductible, Jerry would need to switch to a plan with higher premiums; whether Jerry
should opt for a lower deductible depends on his risk tolerance and financial situation,
as it would mean paying more monthly for the security of lower out-of-pocket costs in
case of an accident.

4. Do you think Jerry should go for the lower deductible plan? Why or why not?

www.ngpf.org Last updated: 4/15/24


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Jerry's agent is likely explaining that a lower deductible typically comes with a higher monthly premium,
and to pay a lower deductible, Jerry would need to switch to a plan with higher premiums; whether Jerry
should opt for a lower deductible depends on his risk tolerance and financial situation, as it would mean
paying more monthly for the security of lower out-of-pocket costs in case of an accident.

DO IT

ACTIVITY: MOVE: What Determines Your Insurance Premium?


As you’ve seen, your premium will change based on the size of your deductible and the coverage
limit. But, as the video mentioned, insurance companies also use your risk factors in determining
how much your insurance should cost. That’s why drivers who have been in many accidents pay
higher premiums (or can’t even qualify for insurance) than safer drivers. Follow your teacher's
instructions to complete this activity.

LEARN IT

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?
Insurance companies' mathematical models are complex to accurately predict the
likelihood and cost of various events across large populations, enabling them to set
appropriate premiums and manage financial risk. Poorly predicting risk could lead
to financial instability for the insurer through underpricing or loss of customers
through overpricing. Self-insuring for car or home risks is risky due to the potential
for large, unaffordable losses and the absence of risk pooling.

2. What is at stake if an insurance company’s models aren’t particularly good at


predicting risk?
Insurance companies' mathematical models are complex to accurately predict the
likelihood and cost of various events across large populations, enabling them to set
appropriate premiums and manage financial risk. Poorly predicting risk could lead

www.ngpf.org Last updated: 4/15/24


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to financial instability for the insurer through underpricing or loss of customers
through overpricing. Self-insuring for car or home risks is risky due to the potential
for large, unaffordable losses and the absence of risk pooling.

3. Provide at least two reasons why self-insurance for risks involving your car or home
isn’t feasible for most Americans.

Insurance companies' mathematical models are complex to accurately predict the


likelihood and cost of various events across large populations, enabling them to set
appropriate premiums and manage financial risk. Poorly predicting risk could lead
to financial instability for the insurer through underpricing or loss of customers
through overpricing. Self-insuring for car or home risks is risky due to the potential
for large, unaffordable losses and the absence of risk pooling.

EXIT TICKET

Follow your teacher’s directions to complete the Exit Ticket.

www.ngpf.org Last updated: 4/15/24


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