insurance Flashcards
The amount the insured pays before the insurance company pays a claim
a. Coinsurance
b. Collision insurance
c. Deductible
d. Beneficiary
Deductible
Coverage that provides protection against the high costs of serious illnesses or injuries.
a. Major medical
b. Regular medical
c. Surgical
d. Hospital
Major medical
One of the benefits of buying whole-life insurance is that over time
a. It builds up cash value
b. The deductible increases
c. It pays high interest
d. The face value increases
It builds up cash value
The purpose of filing an insurance claim is to obtain
a. Discounts on the deductible
b. Compensation for the loss
c. Dividends on the investment
d. Profit from the premium
Compensation for the loss
Arden’s roof was damaged during a thunderstorm. What type of insurance claim should she file?
a. Life
b. Weather
c. Homeowners
d. Liability
Homeowners
The premium of a person’s life insurance policy is likely to be more expensive as a result of
a. Traveling
b. Smoking
c. Where the person lives
d. The person’s net worth
Smoking
Which of the following is likely to decrease the auto insurance premium on a policy?
a. Taking a drivers education course
b. Having a car accident
c. Adding a drive to an existing policy
d. Getting a parking ticket
Adding a drive to an existing policy
When should you obtain life insurance?
a. When you reach a certain age
b. When you have people who are dependent on you
c. When you purchase your own property
d. When you have no debts
When you have people who are dependent on you
- William’s car is damaged. To fix the car, the repairs will cost $1,789. If William’s insurance deductible is $740, how much will the insurance company pay for the repairs?
a. $750
b. $1,789
c. $1,039
d. $789
1,039
Money that a person pays to an insurance company for a policy is called a
a. Debt
b. Premium
c. Deductible
d. Liability
premium
Auto coverage for almost all damage losses except those caused from a collision.
a. Collision
b. Property damage coverage
c. Comprehensive coverage
d. Medical payments coverage
comprehensive
If a driver receives several traffic tickets, the cost of the car insurance will probably
a. Increase
b. Decrease
c. Stay the same
d. Be billed monthly
Increase
Two types of life insurance policies are
a. General and fixed-rate
b. Valuable and indemnified
c. Term and whole-life (permanent)
d. Annual and tax exempt
Term and whole life
When shopping for life insurance, the best strategy is to
a. Do what the insurance salesperson recommends, since he/she is an expert
b. Buy coverage at work if possible
c. Figure out how much is needed, then get prices from different companies
d. Buy insurance coverage after age 40 so the risk will be lower
Figure out how much is needed then get prices from different companies
8 Renters insurance includes coverage for all the following items except
a. the building
b. personal property
c. additional living expenses
d. personal liability
The building
Medical expense insurance covers all the following costs of being ill except
a. hospital stays
b. lost income
c. doctors’ visits
d. medications
lost income
Which of the following statements is TRUE about auto insurance premiums?
a. If you have an auto insurance policy and don’t get into a car accident or file any claims for the year, you get your premiums back from the insurance company.
b. If you have an auto insurance policy and get into multiple accidents within one year, your premium amount will decrease.
c. Auto insurance premiums are a fixed price across all insurance companies.
d. Auto insurance premiums can vary from company to company, therefore, it is important to comparison shop for the best price and coverage.
Auto insurance premiums can vary from company to company, therefore, it is important to comparison shop for the best price and coverage.
Your renter’s insurance policy costs $20/month and has a $1,000 deductible. A thief breaks into your apartment and steals your $800 TV set. How much would your insurance company pay?
a. $0
b. $200
c. $800
d. $1,000
0
Which person will probably have the LEAST expensive health insurance payments?
a. Julian, age 57, who has been healthy most of his life
b. Samantha, age 32, who is a smoker but hasn’t shown any signs of health problems
c. Patty, age 26, who works as an administrative assistant at a marketing firm
d. Robin, age 72, who jogs 50 miles per week to stay fit
Patty, age 26, who works as an administrative assistant at a marketing firm
2 Bruce has just graduated and decides that instead of paying for insurance, he’ll work on building up his emergency fund. This way, if something goes wrong, he can just pay for it using cash from his emergency fund. Why is this a bad idea?
a. It is mandatory to have auto, health, life, disability, and renters/home insurance, so he’ll have to pay 5 penalties per year for not enrolling in these insurance types.
b. An accident or illness can strike at any time and be quite expensive, so it’s possible he’d need a big sum of money well before his emergency fund was large enough.
c. Having insurance not only protects you financially, but also physically, so he’ll be less likely to experience illness or accident if he has insurance.
d. The sooner he starts paying for insurance, the sooner he will reach his maximum lifetime requirement and can stop paying altogether for coverage.
An accident or illness can strike at any time and be quite expensive, so it’s possible he’d need a big sum of money well before his emergency fund was large enough.
Insurance companies operate by charging individuals different prices for coverage depending on their risk levels. Then, they collect everyone’s monthly premiums together and use the money to make payments when people file a claim (for example, someone is in an auto accident or needs to see a doctor). This concept is known as…
a. Comprehensive coverage
b. Risk pooling
c. Comprehensive
d. Uninsured motorist coverage
risk pooling
Lucille just graduated college and is on a very tight budget, so she chooses a health insurance plan with a low monthly premium and a high deductible. She figures that if she gets seriously ill or injured, she’ll just change the plan before she heads to the doctor or hospital. Why won’t her plan work?
a. Changing your health insurance plan that quickly can only be done by clients who are 35 or older.
b. People with high deductible plans usually cannot go to the hospital – they have to go to the emergency room instead.
c. You cannot change your plan instantly at any time, and she cannot predict when an emergency will strike.
d. This plan will only work if she goes in-network, and most hospitals are out-of-network.
c. You cannot change your plan instantly at any time, and she cannot predict when an emergency will strike.
How do insurance companies decide how much to charge an individual for their monthly premiums?
a. The company assesses the individual’s risk factors and assigns higher premiums to higher risk individuals.
b. The company looks at the individual’s tax filings from the previous year to assess overall wealth and ability to pay.
c. The company charges the same premium for every individual eligible for coverage.
d. The company increases or decreases premium rates based on the stock market.
a. The company assesses the individual’s risk factors and assigns higher premiums to higher risk individuals.
Your health insurance plan has a $20 copay for certain covered prescription medications. You arrive at the pharmacist and pick up your prescription (which is covered under your plan) which has a list price of $75. How much would you pay the pharmacy?
a. $0 since health insurance plans waive the cost of prescription drugs
b. $20
c. $55
d. $75
20
