insurance test review

Auto Insurance

A type of insurance you need for your cars, motorcycles, and trucks. It protects against property damage and bodily injury that come from an accident.

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

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?

Life Insurance

Designed to protect the financial future of your selected beneficiaries after you die. With adequate coverage, your loved ones who depend on you financially will have enough to cover outstanding debts you leave behind, maintain their current way of living or pay for your burial or funeral expenses.

His homeowners insurance will be MORE expensive than his renters insurance was

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?

$1,000

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?

The company assesses the individual's risk factors and assigns higher premiums to higher risk individuals

How do insurance companies generally decide how much to charge an individual for their monthly premiums?

Collecting more in premiums than they need to pay out each year

How do insurance companies make money

True

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

Health Insurance

Insurance you get to protect you against the risk of medical expenses.

Jasmine doesn't need to cancel her policy because something unexpected could happen and she will have to pay for those expenses out of her own pocket, causing her to lose lots of money and potentially go into debt.

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.

Lula pays $800, the insurance pays $0

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?

Individuals in low-income households

Medicaid generally provides insurance for what group of people?

Insurance Premium

Monthly payment to your insurer, regardless of whether you use any services.

Homeowners Insurance

Protects private residence against losses that happen to our home or the contents of your home. It can also serve as a liability insurance for accidents that might happen at your home, such as a dog bite.

Renters Insurance

Protects tenants property against things such as vandalism, fire, and theft. Does not provide coverage for the dwelling structure as this is the responsibility of the building owner.

Flood Insurance

Protects your home against damage caused by rising groundwater due to situations like heavy rain, melting snow, severe coastal weather.

Insurance will pay $7,000, due to him having liability insurance, it will not cover the $2,000 of damage done to his car. Rocco will have to pay the $500 deductible and then he will pay $1,500 out of pocket for the damages done to his car.

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.

Comprehensive

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?

Co-insurance

The percentage of covered medical expenses you are responsible for paying after your deductible is met

Your monthly premium

What is not an out-of-pocket expense

Insurance if you cause injury to another person

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

A new window when a baseball breaks the original one

What will a standard renters insurance policy not cover?

Life Insurance

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

They charge more because you are more likely than someone that is at a low risk to end up breaking, crashing, or destroying something and filing an insurance claim on it.

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

Health insurance only covers medical bills, while long term disability will help compensate for lost work with a percentage of their income

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

$58,000

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.

height

Your car insurance company will not consider ______ when setting your premium

A high deductible plan with a low monthly premium

Your parents tell you that on your 22nd birthday, hey 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 best for you to get?

$0

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 pay?

Disability Insurance

a type of insurance that will provide income in the event a worker is unable to perform their work and earn money.

Long Term Care Insurance

provides nursing-home care, home-health care, personal or adult day care for individuals above the age of 65 or with a chronic or disabling condition that needs constant supervision.