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Trevor is a hypothetical 11-year-old. If he’s like 11-year-olds in my area, he’s gotten a whiff of financial literacy from school and computer games.

The school has given him a chance to spend his money to buy lunch, bake sale items and books. It’s also given him a job running an in-school post office.

(Related: ‘Cha-Ching’ Is a Fun Sound, Insurer Tells Kids)

Computer games have given him additional experience in simulations that let him work as a baker, a farmer, a tailgunner and a spy. So far, though, he doesn’t seem to have picked up any insurance literacy.

When he dies in a game, he comes back to life because that’s how the game worked, not because of insurance.

When he plays farmer games, he has to worry about planting the seeds and harvesting the crops, but not about paying the crop insurance premiums.

His parents have tried to explain what insurance is and how it works, but why should a kid believe anything that comes only from his parents? Why would a kid trust those boring old people to know how the world works?

One result is that many Americans reach adulthood, or even seats on congressional committees that oversee federal health programs, with only a hazy idea about the difference between a pre-existing condition exclusion in a health insurance policy and medical underwriting.

About 7.5% of consumers are so utterly lost they think a health plan deductible is the total amount of medical expenses the plan will cover each year. 

I think the solution is that states should require that every child in a public school in America should get at least one hour of classroom instruction explaining what insurance is, how it’s supposed to work, how it’s regulated, what insurance agents and brokers are, and where consumers should go when they have problems with insurance policies or insurance agents.

Good high schools should build student-run pencil and notebook insurance plans into the math or social studies curriculum.

All students should get $2 in nickels and be required to contribute some of the nickels to pay for pencil and notebook insurance for a month. They should get to choose whether to use the rest to self-insure or use the rest to buy voluntary insurance.

At least one day during insurance unit month, each kid should get to help serve on the pencil and notebook money insurance administration team, and work on processing and adjudicating claims from students who lost or forgot their pencils or notebooks. They could then sell replacement pencils and notebooks to the students who received plan benefits.

Spending a day or two administering the claims filed by chronic pencil and notebook forgetters might give the students some idea of how the people at the insurance companies see the world.

— Read Health Market Needs Medical Underwriting, Analyst Says on ThinkAdvisor.