Insurance Basics Test

What is the primary purpose of purchasing insurance?

• To protect from financial loss

• To avoid paying taxes

• To invest in stocks

• To increase financial gain

What does an insurance company agree to do when you purchase a policy?

• Provide free financial advice

• Pay for catastrophes or unexpected costs outlined in your policy

• Pay for any personal expenses

• Cover any travel costs

What do insurance policies specifically cover?

• Events not mentioned in the policy

• Only the events written in your policy

• All possible future events

• Any event that occurs

Why is it important to understand what each type of insurance policy covers?

• To avoid paying premiums

• To get a refund on unused policies

• To choose insurance that meets your needs

• To ensure all events are covered

What factors determine the type of insurance a person needs?

• Their life circumstances, including age and location

• Their favorite food and drink

• Their favorite color and hobbies

• The number of friends they have

What else does the need for insurance depend on?

• The number of pets they have

• The things they own and wish to protect

• The type of car they drive

• Their favorite TV shows

What is an insurance policy?

• The amount of money you pay for insurance

• A government-issued document

• A type of investment plan

• A detailed contract listing coverage details

What does the term "premium" refer to in insurance?

• A discount on your insurance

• The amount of money you pay for your insurance policy

• A penalty for late payment

• A type of insurance policy

What is a claim in insurance terms?

• A request made to an insurance company to pay for an event covered by your policy

• A request to increase the coverage of an insurance policy

• A request to cancel an insurance policy

• A request to change the beneficiary of an insurance policy

What is a deductible in insurance terms?

• The total amount of your insurance premium

• The amount of money your insurance company pays you annually

• The amount of money you save by having insurance

• The amount of money you will pay for a specific event before your insurance begins to pay for expenses