Insurance Basics Review

A contract between the insurance company and the insured that states the exact terms including what risks are covered is a(n)?

• premium
• policy
• agent
• deductible

The money paid to an insurance company to purchase a policy.

• deductible
• copay
• premium
• co-insurance

The out-of-pocket money paid by a policyholder before an insurance company will cover the remaining costs caused by a loss.

• premium
• copay
• deductible
• co-insurance

The larger the number of units, the greater the chance of receiving expected results.

• Principle of pooled risks
• Moral hazard principle
• Principle of transferred risks
• Law of large numbers.

John's father passed away. What type of insurance will provide his family with financial support?

• health
• life
• auto
• unemployment

Anthony goes to the doctor and receives a prescription for medication to recover from the flu. What type of insurance can be used in this situation?

• health
• disability
• life
• unemployment 

Clare's father is in a car accident and cannot work. What type of insurance replaces her father's earnings?

• health
• life
• disability
• unemployment

Not locking your car in a high crime area hoping it will be stolen is an example of:

• beneficiary designation
• in-kind policies
• moral hazard
• the best way to get your car replaced

A financial product purchased by many people facing a similar risk to protect against the risk of loss.

• insurance
• deductible
• risk management
• premium

When a policyholder is required to pay a fixed percentage of the loss after the deductible has been paid. This is an example of:

• paying a copay
• paying coinsurance
• paying a premium
• risk avoidance