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When it comes to financial literacy, parents know it’s important to give kids the knowledge and skills they need to manage money. In fact, 81 percent say it’s their responsibility as parents to teach children about money and saving, according to a 2012 survey by the website DoughMain. While you’re teaching children about smart spending, saving and credit management, don’t forget to discuss another important aspect of financial health: insurance.
“Parents should explain insurance in terms kids can relate to. They can explain how insurance is like a protective bubble they can put around the things that are important to them, like a beloved pet, their cellphone or their home,” says Robert B. Pollock, president and CEO of Assurant Inc.
The leading provider of specialty insurance recently began sponsoring an “insurance store” at the Junior Achievement Discovery Center in Atlanta, where students learn important financial literacy and entrepreneurial skills. Assurant is a founding partner in the 50,000-square-foot center, which opened in August.
“A key cornerstone of Junior Achievement is to ensure that students can understand and apply basic personal financial concepts. Having a solid understanding of personal finance is a critical factor for success in today’s world, and that’s important not just for our schools, but for parents too,” says Jack Harris, president, Junior Achievement of Georgia.
While parents may be confident about the value of insurance in their own lives, it can be difficult to communicate such complex matters to children. In creating their Junior Achievement “store,” the insurance pros at Assurant focused on ways to connect with kids about how insurance works and why it’s important:
* Put things in terms kids can understand. Assurant likened insurance to a protective bubble, to give kids a cartoon-like visual that helps them comprehend the function of insurance.
* Look for relatable examples, such as recognizable celebrities who have insured themselves. For example, a model’s legs, a basketball player’s hands or a quarterback’s throwing arm.
* Discuss protecting things that matter to them, such as a pet (pet health insurance), their home or the family car that takes them to school, soccer practice and the movies.
* Put insurance’s impact in perspective. Explain that insurance helps pay to replace things that get lost or damaged, and point to an example your child has experienced. Kids may not understand loss from fire damage or theft, but most children have cried over a broken or lost toy. Discuss how much easier it would have been to replace that item if someone had given them money toward the cost.
* Explain how different things require different kinds of insurance because we have different reasons for wanting to protect those things. For example, if something happened to our house or car, we would want to be able to fix or repair it. In the case of our health, we want to make sure we stay healthy and prevent problems.
* Be sure to talk about consequences, and why not having insurance is a bad idea. Revive the lesson of the lost or broken toy. Without insurance, we may not be able to pay to repair or replace important things. And while your child learned to live without the toy, we can’t make do without our home, transportation or health.
Finally, look for hands-on learning opportunities in your area. The Junior Achievement Discovery Center in Atlanta hosts 30,000 students a year, but every day brings opportunities to think about protecting the things that matter to kids.
“Experiential learning is a cornerstone of successful financial education; we use it in our own training programs to help employees gain skills and take on broader responsibilities,” Pollock says. “The JA Discovery Center exemplifies these principles and is a great example of how we can support financial education and help people protect what’s important to them. Students will come away understanding the role insurance plays in everyday life – and have some fun in the process.”