Insurance Test

Frank has an auto policy with a coverage limit of $30,000 and a deductible of $1,000. He gets into an accident and the damages to his car total $6,200. Fortunately, he has collision coverage. How much will Frank need to pay out-of-pocket?

$1,000

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?

$20

You cause an accident and injure the other driver. The case goes to trial and there is a verdict to compensate the injured person with $58,000. You have a $75,000 coverage limit per person for Bodily Injury. How much will the insurance company pay?

$58,000

Define "out-of-pocket" expenses.

Anything you pay in insurance that is not at premium

Rocco causes an auto accident on a residential street. He has liability coverage only. He causes $7000 in damage to someone else's car, $2000 in damage to his own car, has a $500 deductible, and has a maximum coverage limit of $10,000. How much will insurance pay toward fixing Rocco's car? Explain.

He pays everything

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?

0

Your parents tell you that on your 22nd birthday, they would like for you to get your own health insurance. You are very healthy, are not taking any prescription medicines, and generally only see your doctor for your annual physical. What type of health insurance is likely to be best for you?

A high deductible plan with a low monthly premium

Highlight the item a standard renter's insurance policy would not cover.

A new window when a baseball breaks the original one

Describe what is meant by a health insurance marketplace?

A service that helps people shop for and enroll in health insurance.

When setting your premium, list 3 things your car insurance company may consider.

Age Driving history Credit score Years of driving experience Location Gender Insurance history Annual mileage

Assuming you're not able to change things about yourself, personally, how can you reduce the amount you pay for health insurance premiums?

Changing your coverage level Go with your employeer

Someone broke into Sam's car by smashing the passenger window. Which type of auto insurance coverage will help cover the cost to get the window replaced?

Comprehensive Coerage

Bruce has just graduated from college 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. Why is this a risky idea?

Definitely should pay for insurance first then emergency fund.

Highlight the statement that is TRUE about auto insurance premiums?

If you have an auto insurance policy and get into multiple accidents within one year, your premium amount will increase

Finn moves from a rented apartment into his very first house. What should he expect regarding the cost of homeowners insurance compared to renters insurance?

It to be more expensive than renters insurance

What type of insurance coverage options would be the lowest priority for a typical single person, with no children, 1-2 years out of high school?

Life Insurance

Why would someone choose to get long term disability insurance even if they already have health insurance?

Long-term disability is a good choice for most people because it reduces the risk of financial setbacks if you become disabled.

Lula's got a pet dog, for whom she bought an accident and illness pet insurance policy three months ago. The dog steps on a mouse trap set out by neighbors and needs his first vet services of the year, totaling $800. Lula's deductible is $1000, her reimbursement rate is 75%, and her coverage limit is $15,000. How much does Lula pay, and how much does the insurance pay?

Lula is $800 and insurance pay none

Ronald is trying to pay down his student loan debt as quickly as possible, so he decides not to purchase disability insurance and uses that money toward debt repayment instead. Ronald has a bad skiing accident, and doctors anticipate he won't be able to work again for six to nine months. Can he enroll in short-term disability insurance tomorrow and file the claim? Why or why not?

NO

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...

Risk pooling

Highlight the person who has the MOST expensive health insurance premiums?

Robin, a high earning business owner who buys a plan for their whole family on the Marketplace

Define insurance premium

The amount you pay for your insurance every month

Define Deductible.

The deductible is the amount paid out of pocket by the policy holder before an insurance provider will pay any expenses.

How do insurance companies make money?

The main way that an insurance company makes a profit is by ensuring the premiums received are greater than any claims made against the policy.

Jasmine has rented the same apartment for 10 years, and she's never had to use her renter's insurance even once. She wants to cancel the policy as a result, because it feels like she's wasting money. Provide a counter argument, telling Jasmine why that's a bad idea.

There is always a possibility of risk and she should have it to be safe.

Why do insurance companies charge more if they believe you are a "high risk" customer?

They are more likely to have to cover something for you because you are higher risk

Your employer offers an employer-sponsored health insurance plan. Highlight the statement that is TRUE?

Your health insurance premiums will be paid directly from your paycheck, pre-tax

In general, how do insurance companies decide how much to charge an individual for their monthly premiums?

Your risk

Medicaid generally provides insurance for which groups of people?

eligible low-income adults, some elderly adults and people with disabilities.

What type of auto insurance are you required to carry in almost every state (49 out of 50)?

liability