Educators and Insurance

This chapter shows how insurance decisions can have a major effect on teachers’ financial fitness. Jayden and Alyssa, the subjects of the opening case study, did everything right concerning insurance – or so they thought. In fact, by over-insuring and failing to shop around for coverage they paid too much. Their biggest mistake was buying costly whole-life insurance when term insurance would have been far better for them. This chapter shows how there is risk in everything, so that the challenge is to manage it by assuming, reducing, or sharing risk. Insurance is then explained as a formal risk-sharing mechanism. These principles apply to car insurance, home coverage, life insurance, and health insurance. Teachers are especially vulnerable to bad life insurance decisions because of their exposure to less favorable insurance products informally (or even formally) sponsored by school systems. By insuring against large uncertain losses but managing smaller and more certain losses, teachers can manage risks at a reasonable cost on the way to a financially fit future.