Have you repaired your phone in the last year?

• Yes

• No

The cost of AppleCare+ is either a one-time fee of $199 or $10 per month. If you want loss and theft protection too, it’s $269 or $13.49 per month. Is having this insurance a “good deal?”

• Yes

• No

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What is the cost to repair an iPhone screen?

Why would you carry cell phone insurance?

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AppleCare+ is basically an insurance plan, and like any insurance, before you can decide if it’s a good plan to purchase, you need to understand how it works. Watch this video and answer the next 3 questions.

1. The purpose of insurance is to…

• 1. build wealth

• 1. transfer risk

• 1. manage assets

• 1. build relationships

2. 2. Why is it important for insurance companies to have a large risk pool of people paying premiums?

• 1. If a large pool of people pay premiums, insurance company employees will get more bonuses included in their next paycheck

• 1. The premium payments of all the insured clients will cover the costs for the emergencies of the few who need it

• 1. The more people that pay premiums, the more careful each insured client becomes with their lifestyle choices

• 1. A large pool of people paying premiums allows insurance companies to have a larger social media following

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2. 3. What role does math play in the insurance industry? 

• 1. Insurance companies use statistics to find how likely a client will need to use the insurance so they can set premiums in order to have the highest chance of making a profit

• 1. Insurance companies use algebra and geometry to calculate the distance from clients' major emergencies to nearest hospitals

• 1. Insurance companies use statistics to hypothesize how likely clients are to switch over to competitive companies

• 1. Insurance companies use calculus to find out how likely a client will need to use the insurance so they can set premiums in order to have the highest chance of making a profit

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In addition to having a fixed premium, most insurance plans also have a deductible and a coverage limit. Use this infographic to answer the next 4 questions.

1. Jerry has an insurance policy with a premium of $150 per month. In June, he causes an accident and receives a bill with a total cost of $6000. His deductible is $1500, and his coverage limit is $10,000. 

• $1650
• How much money will Jerry have to pay for the accident’s bill?
• $1500

• How much total money will Jerry have to pay in the month of June, given he pays for the accident?

• $4500

• How much will the insurance company pay for the accident?

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1. After the accident, Jerry starts thinking, “Wow, that $1500 deductible is a lot to pay for all at once! Who knows when I’ll get in another accident, but I sure wish my deductible were lower!” He asks his auto insurance agent, who shows him this chart: 

   
   

• Lower out of pocket cost for an accident

• What is the relationship between low deductibles and high premiums?
• High monthly to low out-of-pocket cost

• What will Jerry need to do in order to pay a lower deductible?

• Pay a higher monthly premium

• Name a benefit of a lower deductible.

• Fits a monthly budget

• Name a benefit of a lower premium.

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This video will explain how insurance companies manage to make money, when it seems they might be stuck paying out huge claims for ruined houses, wrecked cars, and stolen laptops. Watch the video and answer the next 3 questions.

Why do you think the mathematical models used by insurance companies are so complex?

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