Financial Math: It's a Money Thing Intro to Insurance

What is the primary purpose of insurance?

• To offer free services

• To sell products

• To offer financial compensation for losses

• To provide entertainment

Which type of insurance was not mentioned in the introduction?

• Health insurance

• Life insurance

• Travel insurance

• Pet insurance

What does paying a premium in insurance signify?

• A one-time purchase cost

• A monthly membership fee

• A payment for the insurer to assume financial risk

• A donation to the insurance company

What event led to Jenny's cat needing insurance coverage?

• The cat had a birthday

• The cat broke its leg

• The cat got lost

• The cat won a competition

How do insurance companies manage to cover large emergencies?

• By pooling premiums from many policyholders

• By investing in the stock market

• By government funding

• By charging high interest rates

Do all policyholders pay the same premium?

• No, it's always a fixed amount

• Yes, but only on Tuesdays

• No, it varies based on risk

• Yes, always

What factors can influence car insurance rates?

• Type of car only

• Age and gender

• Favorite color

• Number of pets owned

Why do insurance providers adjust premiums?

• To cover administrative costs only

• Based on the policyholder's job

• To compete with entertainment industries

• To ensure profitability and cover risks

What is a key factor in determining life insurance premiums?

• Educational background

• Family medical history and lifestyle

• Number of children

• Hobbies and interests

Why is insurance considered a unique financial system?

• Because it involves gambling

• Because it operates on a global scale only

• Because it's based on mutual trust

• Because it pools risk for collective benefit