Financial Math: Unit 8 Intro to Insurance

If your auto insurance has a deductible of $1,000 and you get into an accident that causes $5,000 in damage to your car, the insurance company will pay (a)   .

• $1,000
• $4,000
• $5,000
• $0

What happens if you submit a claim for an amount less than your deductible? You will be responsible for paying (a)   .

• the full amount.
• the difference.
• the deductible amount will be lower
• nothing, the insurance company will

What is the primary goal of insurance according to the learning material?

• To ensure everyone has equal wealth

• To share financial risk and prevent financial loss

• To provide unlimited coverage for all possible events

• To make a profit without considering risk

Which factors are mentioned as impacting insurance premiums?

• Age and driving history

• The relationship between premiums, deductibles, and coverage limits

• The color of the car and the model of the phone

• The distance one travels to work every day

How does the insurance industry utilize math?

• To calculate the best vacation spots

• To determine the number of employees needed

• To provide insurance coverage and make a profit

• To predict the weather accurately

The purpose of insurance is to...

• build wealth

• transfer risk

• manage assets

• build relationships

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

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

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

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

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

What role does math play in the insurance industry?

• 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

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

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

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

How much money will Jerry have to pay for the accident’s bill?

• $150

• $1,500

• $4,500

• $6,000

What is the relationship between insurance deductibles and premiums as shown in the chart?

• Higher deductibles lead to higher premiums.

• There is no relationship between deductibles and premiums.

• Higher deductibles lead to lower premiums.

• The relationship between deductibles and premiums is not shown in the chart.