Lesson 4.1: Insurance & Managing Life's Risks

Key ideas from the lesson

• Insurance pools a lot of people's premiums so that one person's disaster doesn't wipe them out: you pay a small, certain cost — the premium — to avoid a large, uncertain one.
• There are four ways to handle any risk: avoid it, reduce it, retain it (pay small losses yourself), or transfer it (buy insurance for losses you couldn't survive).
• New York auto minimums, required to register a car: no-fault (PIP) $50,000 per person; bodily injury liability $25,000 per person / $50,000 per accident; property damage liability $10,000; uninsured motorist $25,000 / $50,000.
• New York is a no-fault state: each injured person's own PIP pays their medical bills first. Covering your own car's repairs — collision — is optional, with a deductible. Minimum limits are low; a serious crash can blow past them, and the rest can be owed by the at-fault driver personally.
• Health plans run on four cost words: you pay the deductible first, then coinsurance on the rest; copays are flat fees for visits; past the out-of-pocket maximum, the plan pays everything else that year.
• Coverage comes from a job, a parent's plan (you can stay on it until age 26), NY State of Health, the Essential Plan, or Medicaid. Disability insurance replaces part of your pay if you can't work; life insurance pays the people you name.

Why this helps

Coverage Clinic ends with two shopping trips: a health plan and a car policy. These are the two official counters where those trips happen in New York — the state marketplace for health coverage, and the DMV's statement of the auto coverage the state requires before it will register your car.