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How many adults who are not in the insurance industry can explain the risks of financial loss and how insurance shares that risk, or identify factors that affect insurance premiums and understand the relationship between premiums, deductibles and coverage limits?
How many can identify how insurers use risk pooling and mathematics to provide coverage and make profits?
There are no concrete answers to these questions – industry experts may have rightly assumed “too few”. However, half of all high school students in the US may soon be able to grapple with these questions.
A new law introduced in California would add a one-semester course in personal finance to high school graduation requirements, starting with students graduating in the 2028-29 school year.
Assembly Bill 984, introduced last week by Kevin McCarty, D-Sacramento, would require local education agencies as well as charter schools to offer a personal finance course beginning in the 2025-26 school year, essentially imposing a state-mandated local program.
The state is the latest attempt to get all states to accept such a mandate, a push that is having great success.
AB 984 would bring California into line with 17 other states that now require a personal finance course. The number of states where a personal finance course is part of the mandatory high school curriculum has nearly doubled in two years, according to the group supporting the bill.
Currently, one in four US high school students is required to take a personal finance course. If you add California’s more than 1.7 million students to the number of students in states that require a personal finance course, nearly half of the country’s high school students would take the course.
Some schools already include personal finance as part of other courses, often in economics. But the importance and breath of personal finance — managing or avoiding debt, saving for the future, risk management, insurance — weighs too heavily to be stuffed with broader issues, says the leader of a group behind the bill.
“We believe that a semester course is the minimum that students need,” said Tim Ranzetta, co-founder of Next Gen Personal Finance, a nonprofit organization based in Palo Alto, California that provides free curriculum and professional development for personal finance teachers in offers to all states.
According to the group, which is pushing for a guaranteed, year-round, self-contained personal finance course for every US high schooler, there are similar bills in 21 other states.
The group created a detailed curriculum that breaks down the units and includes interactive resources.
A significant part of the curriculum is dedicated to insurance classes. These units include an introduction to insurance, lessons in risk management and risk protection strategies, and an auto insurance segment that describes deductibles, factors that determine premiums, and how to choose appropriate auto insurance.
An insurance segment for renters and homeowners includes reading a rental insurance contract, the value of property insurance, and understanding what perils are covered and excluded in a policy.
Long-term disability, health insurance and life insurance are other insurance-related segments in the policy course.
The course also covers types of credit and credit management, saving and budgeting, investing, consumer literacy and taxes.
Next Gen Personal Finance reports that around 15,000 teachers have been trained to teach the course over the past three years.
According to Ranzetta, there is broad support among Californians for making personal finance a compulsory subject. A survey by the group shows that 85% of California adults approve of the course as a requirement.
The bill would also put the state on the right track to catch up with other states.
According to Next Gen Personal Finance, 70% of high school students in other states attend a school that offers a personal finance course as an elective or compulsory subject. Only 25% of California high school students attend a school that offers a personal finance course, the group says.
The bill was introduced on February 15 and is expected to be discussed in committee on March 18.
Topics training development in California
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