Financial literacy activity
Insurance Umbrella
Pool coins into a Help Jar with your family — when someone rolls 'bad luck' on a die, the jar pays to fix their toy. That's how insurance works!
Materials and setup
- play money
- dice
- cards
- paper for tracking
How this changes by age
Pre-K (ages 3–4)
Pool coins into a Help Jar with your family — when someone rolls 'bad luck' on a die, the jar pays to fix their toy. That's how insurance works!
Steps
- Give each player 5 coins. Say: 'We are all going to put 1 coin in the Help Jar.'
- Roll a die. If someone rolls a 1, they had 'bad luck' — their toy broke!
- Use the coins from the Help Jar to fix the toy (give them coins from the jar).
- Play 5 rounds. Discuss: 'By sharing a little, we can help anyone who has bad luck.'
- Ask: 'What if nobody had bad luck? The coins are still there to help next time!'
Learning objectives
- Understand the basic concept of pooling resources to help others
- Experience that small contributions from many can help one person in need
- Connect the concept of protection to everyday experiences
Kindergarten (ages 5–6)
Play the Insurance Game! Everyone pays a small amount into a protection pool. When bad luck strikes (rolled on dice), the pool pays for the damage. Discover how sharing risk keeps everyone safer.
Steps
- Give each of 4 players 10 coins. Each pays 2 coins into the Insurance Pool.
- Each round, roll a die for each player. Rolling a 1 means 'accident' — they lose 5 coins.
- If a player has insurance (paid into the pool), the pool pays their 5-coin loss instead.
- Play 6 rounds. Track who had accidents and how the pool helped.
- Count final coins. Discuss: 'Is it worth paying 2 coins to protect against losing 5?'
Learning objectives
- Understand that insurance means paying a small amount to protect against big losses
- Experience risk pooling through a dice-based probability game
- Evaluate whether the cost of insurance is worth the protection it provides
Early elementary (ages 6–8)
Design and run an insurance company! Set premiums, pay out claims, and figure out if your company made or lost money. Learn about probability, risk assessment, and why insurance costs what it does.
Steps
- Set up an insurance company. You have 5 customers, each paying a premium of 3 coins per round.
- Each round, draw a card for each customer: 80% chance of 'no accident,' 20% chance of 'accident costs 10 coins.'
- If accident: insurance pays 10 coins. Track income (premiums) vs payouts (claims).
- After 8 rounds, calculate: total premiums collected versus total claims paid. Did the company make a profit?
- Experiment: what if you raise premiums to 4 coins? What if accidents happen 30% of the time?
- Discuss: 'Insurance companies must charge enough to cover all claims plus have money left to run the business.'
Learning objectives
- Calculate whether an insurance company is profitable based on premiums and claims
- Understand how probability of events affects the cost of insurance
- Experiment with pricing to find a sustainable balance between affordability and coverage
Upper elementary (ages 8–10)
Explore real-world insurance concepts including types of coverage, deductibles, risk assessment, and actuarial thinking. Run a simulation with different risk profiles and analyze how insurance companies calculate premiums.
Steps
- Research the main types of insurance: health, auto, home, life. What does each protect against? Why is each important?
- Create 5 customer profiles with different risk levels: safe driver, new driver, homeowner in a flood zone, healthy adult, extreme sports enthusiast.
- Set insurance premiums for each customer. Higher risk = higher premium. Justify your pricing.
- Simulate 12 months using dice/cards for each customer. Track claims paid out versus premiums collected.
- Introduce deductibles: customer pays the first $5 of any claim. How does this change the company's costs? The customer's behavior?
- Analyze: How do insurance companies stay profitable? What happens when a massive disaster hits many customers at once? Write a summary of your findings.
Learning objectives
- Differentiate between types of insurance and explain what each covers
- Apply risk assessment principles to set fair premiums for different profiles
- Analyze how deductibles and risk pooling affect the economics of insurance
Safety and evidence note
Read the full activity before beginning. An adult should supervise tools, heat, food, outdoor work, movement, and experiments as appropriate. Completion records that the activity was done; the child’s explanation, work sample, photo, or demonstration is stronger evidence of learning than a completion check alone.
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