Suggested Target Age: Grades 9-12
Suggested Target Age: High School
Sources: Unit 6 of the NEFE’s High School Financial Planning Program; State Farm’s Common Cent$ site
Topics Covered: risk management and transfer, insurance
Time Required: Two 45-60 minute sessions (NOTE: We recommend you divide the lesson into a first session covering steps 1-6 and a second session covering steps 7-12.)
What Will the Students Learn?
- The different types of risks they should be aware of as teenagers and what risks they will need to prepare for as they become adults.
- What insurance and investments are and how they enable people to successfully manage risks.
- The different types of insurance and investments
- How to determine which risk management products are appropriate in different situations
State Content Standards Key
California: Career Technical Education Model: C2.2, C4.1, C4.2
Florida: Math: MA.F.4.6, MA.4.4.7
Indiana: PF.2.1.1, PF.2.1.2, PF.2.1.3, PF.2.1.4, PF.2.1.5, PF.2.2.3, PF.2.2.6
Virginia: Economics and Financial Literacy Objective 7
NOTE: This lesson does not require computers.
Materials Needed:
Lesson Plan:
1. Ask the students what risk is (the chance of loss from some type of disaster). Have them brainstorm about the different types of risks they face as teenagers. Examples might include getting hurt in a car wreck or while riding their bike; having their bike, phone, backpack, etc. stolen; or getting jumped by a gang.
2. Next have them think about the sorts of risks they may face as adults. Examples might include getting cancer; getting laid off from a job; having a fire or flood ruin their home; having a spouse die or get very ill.
3. Explain to the students the four ways of dealing with risk:
- Avoid the risk. For example, don’t ride in a car if the driver has been drinking.
- Reduce the risk. Since many risks cannot be avoided altogether, the more practical choice is trying to reduce the risk. Risk-reducing behaviors could include always wearing your seatbelt, locking up your bike, or avoiding walking around dangerous parts of the neighborhood after midnight.
- Accept the risk. This is good if the likelihood of danger or loss is very small or the loss itself will not have major consequences in your life. For example, it might be very inconvenient to go without a backpack, so you use one even though there is some chance of it being stolen.
- Share the risk. This is what insurance and investments do, especially insurance. You pay the insurance companies a sum of money a little, and if disaster occurs, they help you handle the loss.
4. Have them prepare to play the Hand of Fate game. Go here for the Game Overview, which also includes links to the downloadable components of the game.
In this game, students will read about the different types of risk management products available, and take a quiz on how to use them appropriately. Depending on the ability of your class, you may want to go over the different products with them as a class. The products are health insurance, homeowner insurance/ condominium insurance, renters insurance, supplemental insurance, auto insurance, life insurance, and "rainy day savings."
5. Students will then go on to play the game. In this game, they are given a short profile of different people and they must choose five products they think will best control the risk of financial loss for that hypothetical person. The game then generates different calamities or disasters, and the students must choose a product from the five they’ve chosen to deal with the issue. If they can deal successfully with four losses and be unsuccessful at less than three, they win the game.
6. Allow the students to keep playing for as long as they need to understand the different products.
7. Next you will talk to the students about some basics of insurance and how it works. (NOTE: We suggest you start here on step 7 for the second session of this lesson.)
8. Pass out copies of the “Handout on Insurance Basics” to your students and give them a chance to read it through. You might put them in groups so they can read it together and discuss it among themselves.
9. When they have had time to get familiar with the basics, bring them back together as a class. Ask them some comprehension questions about insurance and give them an opportunity to clarify anything they didn’t understand. Ask if any of them have already bought insurance or are familiar with any insurance policies in their family.
10. When they have a handle on the basics, have them practice “buying” car insurance. If they can all get on the Internet, have them check out an insurance website such as Progressive.com or Geico. Get them to walk through the steps of getting an insurance quote (stopping before they have to actually buy it, of course!). Have them fill in reasonable but fake information for a car if they do not have one. The idea is to get them to understand all that is involved in applying for car insurance, all the factors that affect their premium, etc.
11. If you do not have computer/Internet access for each student, find an auto insurance application from a local company or agent and make copies for each student. Have them fill it out--again, to get an idea of what all is involved.
12. Have them discuss the experience afterwards.
OPTIONAL ACTIVITIES:
To take this a bit further, you could have the students research insurance and insurance quotes on their own time. Put them into groups of 3 or 4, decide whether to buy online or through an agent, find the most appropriate coverage at the best price, and present their findings to the class. You could also combine this activity an activity on purchasing a car. Have the students decide what sort of car to buy and where and then figure out what it will take to have it insured.
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