Insurance Answers

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1
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What must happen in order for an insurance company to make a payout? Check all that apply. The insurance company must verify the claim.The insured party must file a claim.The insured party must purchase property.The insurance policy must be in place.The insured party must experience a covered loss.

A
The insurance company must verify the claim.
B
The insured party must file a claim.
C
The insured party must purchase property.
D
The insurance policy must be in place.
E
The insured party must experience a covered loss.
2
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Under which circumstance would someone need disability insurance?

A
A person's suitcase was stolen and valuables were lost.
B
A person has contracted the flu and needs a prescription.
C
A person was in a car accident and cannot work for several months.
D
A person's house was seriously damaged during a natural disaster.
3

How can an insurance company make a profit by taking in premiums and making payouts?

A
The value of the premiums the company takes in is higher than the value of the payouts it makes.
B
The value of the premiums the company takes in is equal to the value of the payouts it makes.
C
The company only makes payouts from a pool of funds, not from individual premiums.
D
The company issues its policies to individuals who are unlikely to require payouts.
5

In what way does a deductible help an insurance company?

A
It adds to the company’s pool of funds.
B
It increases consumers' insurance premiums.
C
It lowers the payout the company has to make.
D
It reduces consumers' co-payments.
7

Insurance is a financial service that allows a

A
consumer to transfer all risk to a company.
B
company to control finances for a consumer.
C
consumer to share liability with a company.
D
company to maximize risk for a consumer.
8

The basic purpose of insurance is to provide

A
loans.
B
prevention.
C
protection.
D
liability.
10

Most people prefer to pay health insurance premiums rather than pay out-of-pocket for medical expenses because

A
people are cautious and believe they are less likely to get sick if they have health-insurance coverage.
B
doctors and hospitals always provide better care to people who have health insurance.
C
people still feel more secure with a health insurance policy, even though out-of-pocket costs are often lower.
D
medical costs can be extremely high, and insurance is more affordable than paying out-of-pocket for a hospital stay.

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