What we consider modern schooling, is a system that is at least two centuries old. Certain ways of teaching need to be updated from time to time, to adapt to the changing realities of our world.

Of course, teaching abstract philosophy and complex math is useful to a certain extent, but not everyone will become a philosopher or a math teacher. Most people just want to learn how to function in society and decide to specialize during higher education.

One area that almost everyone agrees is missing from school is financial education. Most people do not understand how compound interest works, what insurance is, or why the stock market exists.

This article aims to explain how we got here, and what an insurance lesson plan for school should look like.

How we got here, a brief history of schooling

Before the modern era, only aristocrats could afford teachers, and the lessons would be private tutoring.

Nobles and rich people would learn a bit of every subject available, as leaders, in general, need to understand a bit of everything to coordinate and run society.

As universal schooling was starting to be adopted, the actual “lesson plans” were not changed, just copied, and pasted to the general populace.

Sure, learning for learning’s sake is good, but you must have a goal. Most people aren’t going to become politicians and leaders, so this patrician Roman-style Renaissance Man education isn’t adequate for us, common Joes. And, since the point of adopting universal education, schooling has remained unchanged.

Judging by the number of students buying custom papers from essay websites, and just skipping class, the level of engagement in education is low.

Meanwhile, when students graduate high school or college, they find that society is still a mystery to them, even in their 20s.

Money makes the world go round, but financial literacy in school is woefully lacking. Aside from personal relationships, nothing will impact and influence your life more than money.

Thankfully, the internet can help to mitigate some of that unawareness, but in most people’s opinion, learning about insurance is more important than the chemical formula for chalk. This knowledge should be taught in class.

What is insurance, and how does it work?

Insurance, at the end of the day, is a bet that takes the form of a legal contract. A company asks you to pay a monthly or yearly fee. And if something happens to you, your house, your car, or your money, they will pay out a pretty large sum to compensate you for losing that insured thing.

But how do they make a profit if they pay large sums of cash? Not everyone is getting sick all the time, but everyone is paying the smaller monthly fee. So, at any given moment, more people are healthy and paying, than are sick and need to get paid.

That’s why I said it’s a bet. The company is betting that you will be healthy most of the time, while you are betting that someday, you will get sick.

Of course, the monthly premium payment has mitigating circumstances. For example, you may have to pay more for medical insurance, if you are a smoker. Why? Well, smokers are actively and knowingly putting their lives at risk, so the bet that you will not get sick has poorer odds.

Or maybe the land your house is built on, is prone to flooding. Then, payments will increase.

These are the types of topics that should be covered in an “insurance for education” class.

Almost all things in life that are worth having, can be insured. We have homeowners’ insurance, insurance for renting, healthcare, disasters, and so on. You can even insure intellectual property.

Celebrities have policies on certain body parts, such as their vocal cords or hands.

Yet, the most common types of insurance are homeowners, life, and health insurance. Depending on where you live, auto insurance may also be mandated by the state. For example, most people in the US have at least one or two of these categories.

Examples of insurance policies

Day-to-day life has certain risks, and laws are set up to mitigate those risks. For example, many fields in business will expose workers to hazardous materials and situations. Even something as simple as working a fast-food job exposes people to the risks posed by hot oil burns, and the business needs to cover that.

A famous case of profession-related coverage is in the medical field, with malpractice insurance.  Doctors are humans too, and they make mistakes. Unfortunately, in medicine, those mistakes have direct consequences for a patient’s health and well-being.

A lawsuit stemming from a medical mistake can range from hundreds of thousands of dollars to millions. It can ruin not only the individual doctor but the entire hospital or practice. Of course, for a fee, the insurance company offers to cover that damage if it occurs.

We also have the issue of malicious interactions. Anything of value in this world will have people who wish to steal it. People can choose to insure themselves against arson, stealing, kidnapping, and so on. There is even coverage for cancellation fees in case you wish to back out of a deal that has become disadvantageous.

Managing Risk

As previously mentioned, there are things that you can do to worsen your odds. If you have vices such as smoking, or previously existing conditions and diseases, the insurance company will charge you more.

This can be true for things that are outside of your control. For example, inexperienced drivers will have to pay more, because they are less skilled and more likely to crash their car. The same goes for senior citizens, whose vision, cognitive ability, and reflexes are declining.

Overall, if possible, try to avoid risky behavior not only for your general well-being but also for the health of your pocketbook.

Maximum payouts

As a closing note, you should also check for the maximum payout amount per incident. If your house burns down, make sure that you pick a policy that covers the entire value of the house itself, not just a part of it.

If you are going through the trouble of paying, you should at least not have to downgrade your living standards after an incident.

Conclusion

In terms of teaching, you about the most important elements of life, the school system is woefully lacking. It was designed for another type of society, in another age, and has not been updated since.

When it comes to insurance and financial education, every citizen of any country must educate himself.