Questions My 7-Year-Old has about Insurance

My 7-year-old wanted to know about my work, and had some questions about the insurance CCW Global offers.

In the spirit of education, that conversation is presented here.

An Insurance Conversation with a 7-Year-Old

7-Year-Old: What is insurance?

Author: Okay, so insurance is the idea that bad things happen all the time. And we don't like it when bad things happen to us.

So, because of bad things that might happen to us, we take some money and we say “hi, insurance company (or person who deals with this type of bad thing). I think that this might happen to me and I'm afraid because, if it does, I might get hurt, or I might lose money, or I might lose my stuff."

7-Year-Old: Okay

Author: You following me so far? All right, so I say to the insurance company “I'm going to give you money so that if the bad thing does happen to me, you can take care of it for me.” 

I’m asking the insurance to pay any money I may lose because a bad thing happens to me. The bad thing is still going to happen, but its not going to be as bad, because I'm getting help (from the insurance company, or the person I'm paying for insurance) when it does happen. 

7 Year Old: Why do you need an insurance… How do you... Why do you use it?

Author: So, different types of insurance are used in different types of ways.

With car insurance for example; the bad thing that's happening in car insurance is... that I might get into an accident that I'm responsible for. And that accident may be hurting someone else or breaking their car, and now I need to pay them money.

7-Year-Old: Okay

Author: My car insurance doesn't really protect me... it does protect me, but it only really protects me if I'm responsible for someone else's injury or damage in an accident.

If I if I get into an accident, and I caused the accident… After the police have looked what happened, and my insurance company has looked over everything, if I'm at fault, well then that means I probably owe money to the people that I've hurt.

So, my car insurance, (that the law needs me to have if I drive on the road) will pay that money for me.

7-Year-Old: So... when you had an accident and broke your shoulder, the other person gave you money?

Author: Yes! Or actually, their insurance did!

I have to have insurance on my car, because that’s the law in case I hurt someone else. But everyone driving has to have that exact same insurance in case they hurt someone - if they don't they are breaking the law. 

When I got into an accident, and the other driver hit me and I broke my shoulder, it was their insurance that took care of me –  it was their fault. 

Because they're responsible for my injury, they have to pay for that - my doctor and physiotherapy cost money. Never mind that our car was broken!

So, their insurance gave me money for my car and my injury. My insurance didn't do anything except help get me money from the other person to pay for my stuff.

7-Year-Old: That's cool!

Author: It is cool! It's called Third Party Liability Insurance.

And it doesn't only apply to car insurance, there's a couple other types of insurance that it applies to.

Third Party Liability insurance means that if I cause any sort of accident and I'm responsible (or liable, which is the fancy insurance word for "responsible") for someone else's injury, or I was responsible for breaking their stuff, my insurance will take care of the money that I need to pay them.

7-Year-Old: How many types of insurance are there?

Author: Great question! Great question!

there are as many different types of insurance as there are bad things that can happen to you

A Construction Site and a Grocery Store... They both have liability insurance. If you get hurt at one of them, they would normally have insurance that would have to pay you.

A construction site would usually have liability insurance against construction materials (like a wooden pallet, or a hammer, or something) falling and hitting someone on their head. And a grocery store would normally have liability insurance against someone walking in and falling over and hurting themselves.

But there are other types of insurance that both those places would need as well.

For example, they might both have fire insurance.

7-Year-Old: What is Fire Insurance?

Author: Fire Insurance gives them money if they need to rebuild something because it's burned down, because there's been a fire.

So, if the construction site people are working on their building project, and someone drops let's say a cigarette (don’t smoke because cigarettes are bad for your health, and cause fires) because they're smoking, and the construction site goes up in flames, well then, the Fire Insurance would normally pay to repair and replace that project and that construction site.

7-Year-Old: how many… do you know... how many do you work with?

Author: So, CCW works with a lot of different types of insurance

• Health Insurance: if you get sick then the insurance pays for your medical costs
• Life Insurance: if someone dies then the insurance gives money to their family so that they can continue living a good life
• Personal Accident Insurance: if I really hurt myself and I can't use one of my arms ever again then the insurance would give me money for my hurt arm
• Critical Illness Insurance: if I get really sick and I can't work then the insurance would give me money 
• Disability Income Insurance: if I can't work for pretty much any reason that's covered under the policy then the insurance is going to help pay what my boss would pay me
• Car Insurance: if I get into a car accident or have my car stolen then the insurance is going to pay me
• Travel Insurance: when we go on a trip if my plane gets delayed or my bags don't turn up then insurance is going to pay me
• Home Insurance: If our stuff gets stolen, or our home gets broken, insurance gives us money to get our things back
  
• Worker's Compensation: If workers get hurt while at their job, then this insurance helps them get better. It also makes sure bosses take care of their workers.
  
• Third Party Liability Insurance: If you hurt someone else or break their stuff, then this type of insurance will help you pay what you owe them.
• Cargo Insurance: Protects stuff going from place to place - like all the amazon orders, they have insurance in case they get lost or broken, so we can get replacements.

7-Year-Old: uhhh... That's enough. 

Author: There are even more....

7-Year-Old: O.K..... But there are a lot of different things you work with in insurance, right? There could be a million different things?

Author: Yes, you can insure basically anything that involves a risk and my company, CCW, only deals with risks.

We don't do anything that involves Investments, or getting more money than you pay, or more money that you may lose, because a bad thing happened. 

It has to be a risk, and as long as it's a risk (as long as something bad might happen) and you just want to protect yourself from that bad thing, there's probably an insurance company somewhere in the world that will help you protect against that

7-Year-Old: Its pretty cool how insurance can do all of these things.

Author: It absolutely is!

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