Econ-Lesson 2.3 Quiz

In insurance terms, what is it meant by sharing risk ?

• You're participating in risky behavior with someone else.
• A policyholder may not have a loss during the term of their insurance so the premium they pay goes toward covering the losses that others suffer.
• The insurance company pays part of the loss and you pay part of the loss.
• If the loss is probable, the insurance company will not cover you.

What is the insurance company actually selling to the customer? 

• A service - protection against a loss
• A good - a new home 
• A service - making the customer's life risk-free
• A service - fixing anything that breaks 

Why are insurance companies interested in having many policy holders for one policy ?

• They feel lonely if they don't have a lot of policyholders.
• Many policy holders spread the risk 
• They don't, they prefer to have few policyholders 
• Fewer policyholders can drive down premiums.

A key to the amount of __________ a person needs is the amount of additional money the survivors will need to maintain their quality of life if the insured person dies.

• Auto insurance
• Life insurance
• Homeowner's insurance
• Disability insurance

 If you become too sick from an illness or too injured in an accident to go to work and earn money, ______________ will help provide an income for you.

• Life insurance
• Homeowner's insurance
• Automobile insurance
• Disability insurance

___________ is the amount you pay on an insurance claim before the insurance company kicks in payment.

• Premium
• Deductible
• Loss
• Coverage

Which plan is better for Nelson to purchase?  Nelson is a single adult, with no existing medical conditions, and lives on a tight budget.

• Option A: $1000 deductible/ $41.95 monthly premium payments
• Option B: $5000 deductible/ $29.95 monthly premium payments
• Option C: $3000 deductible/ $35.95 monthly premium payments
• Nelson should not purchase health insurance.

Which of the following is not covered under your automobile insurance?

• Loss from theft
• Loss from an accident where you were at fault
• Coverage for medical bills that arise from a claim
• The purchase of new tires for the vehicle

A __________ refers to the basis for your insurance claim.  It can be from death, injury, or illness.

• policy
• coverage
• loss
• premium

The amount you are charged for your premium can depend on all of the following expect:

• driving record
• years driving
• type of vehicle you are insuring
• religious preference