Relevant Knowledge That Should Be Taught in Schools: Financial Security and Insurance
Modern schooling, as we know it, has a history spanning at least two centuries. Over time, it’s important to update teaching methods to align with the changing realities of our world. While subjects like abstract philosophy and complex math have their merits, not everyone will pursue careers in these areas. Many individuals simply seek the knowledge needed to navigate society and later specialize in higher education.
One glaring omission from most school curricula is financial education. Many people lack an understanding of basic financial concepts such as compound interest, insurance, and the stock market. This article seeks to explore the historical context of modern schooling and advocate for the inclusion of financial education, particularly insurance, in school lesson plans.
Historical Background of Schooling
Before the modern era, only aristocrats could afford private tutors, resulting in a broad education that covered various subjects. As universal schooling began to take shape, the curriculum remained largely unchanged, offering a general education model that aimed to create well-rounded individuals capable of leadership.
However, not everyone aspires to be a leader or politician, so this broad education model may not be sufficient for everyone. Despite the intention of universal education to democratize knowledge, the schooling system has remained largely unchanged.
Today, many students seem disengaged, evident in the number of students buying custom papers or skipping classes. Upon graduation, many individuals find themselves ill-prepared to navigate the complexities of society, including financial matters.
The Importance of Financial Literacy
Financial literacy is a crucial life skill that is often overlooked in traditional schooling. Besides personal relationships, few things have a greater impact on an individual’s life than financial decisions. While the internet provides some resources for learning, many believe that understanding insurance, for example, is more practical than memorizing chemical formulas.
What Is Insurance, and How Does It Work?
At its core, insurance is a form of risk management that takes the form of a legal contract. Individuals pay a monthly or yearly fee to an insurance company, and in return, the company agrees to pay a substantial sum if the insured individual experiences a covered loss, such as damage to property or illness.
Insurance companies profit by collecting more in premiums than they pay out in claims. This is possible because not all insured individuals will experience a loss simultaneously. Insurance premiums can vary based on factors such as lifestyle choices (e.g., smoking) or environmental factors (e.g., flood-prone areas).
Types of Insurance
Insurance can cover a wide range of risks, including homeowners’ insurance, life insurance, health insurance, and auto insurance (mandated in many states). Even intellectual property and specific body parts of celebrities can be insured.
Examples of Insurance Policies
Various professions require specific insurance coverage. For example, medical professionals carry malpractice insurance to protect against lawsuits stemming from medical errors. Additionally, insurance can protect against theft, arson, kidnapping, and other malicious acts.
Managing Risk
Insurance premiums can be affected by factors within and outside an individual’s control. For example, smokers and individuals with pre-existing conditions may pay higher premiums. Similarly, inexperienced drivers and senior citizens may face higher premiums due to increased risk factors.
It is advisable to avoid risky behavior not only for personal well-being but also to maintain affordable insurance rates.
Maximum Payouts
When choosing an insurance policy, it’s important to consider the maximum payout per incident. For instance, in the event of a house fire, ensure that your policy covers the full value of your home to avoid a significant financial burden.
Conclusion
The current education system is lacking in teaching crucial life skills, particularly in the realms of financial literacy and insurance. It’s essential for individuals to educate themselves about these topics to navigate the complexities of modern society effectively.
