A Personal Look at Insurance
Julie's School Project & My Bad Driving!
When my daughter Julia came home from school and told me she'd drawn the topic of insurance for her school project, I told her I'd be happy to help her work on her report. My wife agreed that I would be the very best person to help with the assignment, since, as she always jokes, I'm the one who ends up needing all our insurance policies.
I first told Julia that insurance companies require their policyholders to pay premiums, an amount of money paid on a regular basis to the insurance company to maintain the policy. Julia asked why they called it a premium and if that was the same as the deductible. I explained that the amount was called a premium, because it was far less than the amount of a potential claim and that the deductible was an amount of money that the insurance company required the policyholder to pay before the coverage on a claim would begin. To illustrate the point, I reminded her of the time her big brother Sam had broken his collarbone and we'd had to pay $50 of his medical bills before the insurance company paid for the remainder.
We talked about homeowner's insurance, auto insurance, medical insurance, supplemental insurance, even flexible spending accounts and health savings accounts. I was surprised by how much Julia already knew, and I was happy to fill her in on the rest.
She asked me what the difference was between a co-payment and co-insurance when it came to medical insurance. I told her that while a co-pay was usually a specific dollar amount such as $10, $20 or $50, co-insurance was figured in percentages, such as 20% of the cost for a procedure, and was just as likely to come out to an odd amount like $32.61, depending on the full cost of the procedure.
Next, Julia wanted to know what liability coverage was. I explained that liability coverage most often came into the picture with auto insurance, and sometimes homeowner's insurance as well. To help her understand, I told her about a time when I was in high school and accidentally backed my parents' car over a neighbor's bicycle. My parents' auto insurance liability coverage had paid the neighbors the cash value of the bike.
Julia said she thought she had enough information to start on her project, so I left her alone to work on it. Throughout the next several days, she came to me with lots of questions, some of which we researched together, because I wasn't entirely sure about the answers. Whenever I had a personal story on the subject, though, I would always relate it to her to help her understand how it applied to a real-life situation.
When we went to Julia's school the next week for the project fair, I couldn't wait to see how well her project had turned out. We were more than impressed with how much work all the fourth graders had done for their assigned topics. When we came to Julia's display, though, we were all silent for a minute. My wife started laughing first and even Sammy joined in after a second. At first I was too surprised to do anything, but even I had to chuckle.
Julia had produced an extremely thorough project with different sections for home, health, auto and other types of insurance, and in each section she had illustrations of the real-life examples I'd given her, including a very detailed illustration of me backing my parents' car over the neighbor's bike. There was no mistake, either, because Julia had carefully labeled the picture, "My Dad as a Teenager," and listed below it how the liability coverage had paid the replacement cost, just as I had explained it to her.
None of us in the family had escaped representation in her thorough study of insurance, and to be fair, she'd even included an example of herself receiving her allergy shot, and how Mom had to make a co-payment each time. Underneath that picture, she explained that insurance could also cover regular expenses, and that a flexible spending account could even reimburse her mother for the co-pay amount.
The best was a quote at the top of the project that said, "Insurance makes my dad sleep well at night. "
Julia's teacher came over to us with a tentative smile on her face. She said she had wanted to tell us what Julia was planning to do, but Julia had wanted it to be a surprise, and had assured her we wouldn't mind.
"Actually, I think it's good to see how valuable our insurance really is to us," I laughed.
When we helped Julia take the display apart and put it in a box in the attic, I imagined finding it years from now, mailing it to Julia at her college dorm for another good laugh and, of course, paying the few extra dollars at the post office for shipping insurance.