Chapter 9 Lesson 1 Insurance Is Important

What is the primary purpose of insurance?

• To increase your monthly expenses

• To transfer risk from you to the insurance company

• To avoid paying any costs for damages

• To make a profit from claims

What is an insurance premium?

• The amount of money you receive from the insurance company

• The amount of money you pay for an insurance policy

• The total cost of all claims filed in a year

• The amount of money you pay after a claim is filed

What is a deductible in an insurance policy?

• The amount the insurance company pays before you file a claim

• The amount you pay out of pocket before the insurance company covers the rest

• The total cost of your insurance premium

• The amount you pay monthly for your insurance

Which of the following is NOT a type of insurance mentioned in the text?

• Auto insurance

• Pet insurance

• Health insurance

• Identity theft protection

What happens if you pay your insurance premium after the grace period?

• You lose your coverage

• Your premium is reduced

• You receive a refund

• Your deductible is increased

What is a copay in health insurance?

• A one-time payment for insurance coverage

• A percentage of the total cost you pay each time you use a service

• The total amount you pay for a prescription

• The amount you pay before reaching your deductible

How can you save on insurance costs according to the text?

• Lowering your deductible

• Paying premiums monthly

• Raising your deductible

• Adding unnecessary coverage

What is the relationship between budgeting, saving, and insurance in a financial plan?

• Budgeting and saving are the defense, insurance is the offense

• Insurance is the offense, budgeting and saving are the defense

• Budgeting, saving, and insurance are all offensive strategies

• Insurance is not part of a financial plan

What is the out-of-pocket maximum in an insurance policy?

• The maximum amount the insurance company will pay in a year

• The most money you have to spend for covered services in a year

• The total cost of all your premiums in a year

• The amount you pay before your deductible starts

Why is insurance considered a key part of a solid financial plan?

• It allows you to avoid all financial risks

• It transfers the financial risk of major catastrophes from you to the insurance provider

• It guarantees you will never have to pay for damages

• It increases your monthly expenses