Insurance Basics
Insurance companies make money by...
a. Refusing to pay out claims to policyholders.
b. Collecting money from the government.
c. Collecting more in premiums than they need to pay out in claims.
d. Keeping costs low with minimal advertising.
c. Collecting more in premiums than they need to pay out in claims.
A health insurance premium is...
a. a measure of how many procedures your insurance plan covers.
b. the amount you must pay monthly for insurance, regardless of whether you use any services.
c. the amount you pay out of pocket for a specific procedure or service.
d. an extra amount you can pay for higher quality service than what is covered in a basic plan.
b. the amount you must pay monthly for insurance, regardless of whether you use any services.
How do most Americans get health insurance?
a. Through Medicare
b. Through their employer
c. Through Medicaid
d. Through the Marketplace
b. Through their employer
Which of the following types of insurance are you required to carry in almost every state (49 of 50)?
a. Coverage for when you get in an accident with someone who does not have insurance
b. Coverage for when you are injured in an accident
c. Coverage for when a natural disaster causes damage to your car
d. Coverage for when you cause damage to someone else or their property
d. Coverage for when you cause damage to someone else or their property
When discussing homeowners or renters insurance, what is a home inventory?
a. A list of similar houses or apartments in your price range, should your own home get damaged
b. A list of the top ten most valuable items inside your home and their approximate replacement costs
c. A list created by the insurance company of what types of damages or accidents are covered in your policy
d. A list of all of your possessions inside your home that you create ahead of time in case you ever need to file a claim
d. A list of all of your possessions inside your home that you create ahead of time in case you ever need to file a claim
All of the following life events are likely reasons for someone to get life insurance EXCEPT...
a. Getting married
b. Buying a new car
c. Having children
d. Buying a house
b. Buying a new car
In general, why do individuals purchase insurance coverage rather than just putting money aside into a savings account in case of emergency?
a. Savings accounts are risky, so there's a chance of losing money from your account
b. Accidents and illnesses can be far more expensive than the average American will have saved
c. Insurance companies are nonprofit organizations, while banks offering savings accounts are for-profit businesses
d. The federal government mandates that individuals have health, life, disability, and auto insurance
b. Accidents and illnesses can be far more expensive than the average American will have saved
How does a copay differ from coinsurance?
a. A copay is the amount your insurance company pays; coinsurance is the leftover amount that you're responsible for.
b. A copay is the percentage of the bill you pay to see a doctor or fill a prescription; coinsurance is the fixed amount you pay.
c. A copay is the leftover amount that you're responsible for after your insurance company pays the coinsurance.
d. A copay is the fixed amount you pay to see a doctor or fill a prescription; coinsurance is the percentage of a healthcare bill you are responsible for paying.
d. A copay is the fixed amount you pay to see a doctor or fill a prescription; coinsurance is the percentage of a healthcare bill you are responsible for paying.
d. A copayment is the fixed amount you pay to see a doctor or fill a prescription; Coinsurance is the percentage of a health care bill that you are responsible for paying.
Which of the following is a benefit of signing up for health insurance through your employer-sponsored plan?
a. Premiums are often lower because your employer is paying part of the bill for you.
b. You have a much wider range of plans you can choose from.
c. If you need to use your plan for an ER visit, your employer will pay your deductible, copays, and out-of-pocket expenses.
d. Doctors tend to treat patients better when they use employer-sponsored healthcare plans.
a. Premiums are often lower because your employer is paying part of the bill for you.
If there was a flood that caused damage to your car, what kind of coverage must you have in order for the insurance company to help cover the cost of repairs?
a. Liability Coverage
b. Comprehensive Coverage
c. Collision Coverage
d. No-fault Insurance
b. Comprehensive Coverage
What is one way that homeowners insurance differs from renters insurance?
a. Homeowners insurance will cover your physical structure (house, condo, etc.), but renters insurance does not
b. Homeowners insurance is typically cheaper, because houses are less risky than apartments
c. Homeowners insurance will cover car accidents, but renters insurance will not
d. Homeowners insurance is completely voluntary, while renters insurance is mandatory
a. Homeowners insurance will cover your physical structure (house, condo, etc.), but renters insurance does not
Why would someone choose to get long term disability insurance even if they already have health insurance?
a. Long term disability only covers medical bills, while health insurance will help compensate for lost work with 40-60% of their income.
b. Long term disability insurance plans can also extend coverage to family members and pets.
c. Health insurance only covers regular check ups, while long term disability insurance also covers emergencies.
d. Health insurance only covers medical bills, while long term disability will help compensate for lost work with 40-60% of their income.
d. Health insurance only covers medical bills, while long term disability will help compensate for lost work with 40-60% of their income.
How do insurance companies decide how much to charge an individual for their monthly premiums?
a. The company assesses the individual's risk factors and assigns higher premiums to higher risk individuals
b. The company looks at the individual's tax filings from the previous year to assess overall wealth and ability to pay
c. The company charges the same premium for every individual eligible for coverage
d. The company increases or decreases premium rates based on the stock market
a. The company assesses the individual's risk factors and assigns higher premiums to higher risk individuals
All of the following are factors that affect the cost of your monthly health insurance premium EXCEPT...
a. Gender
b. Age
c. Location
d. Plan Type (Platinum, Gold, etc.)
a. Gender
All of the following are typical services that will be included under a standard health insurance plan EXCEPT...
a. Annual Physical Exams
b. Ambulance and Emergency Room Services
c. Immunizations
d. Vision and Dental Care
d. Vision and Dental Care
Miguel has a deductible of $500 and a coverage limit of $50,000 for Bodily Injury liability. He causes an accident and the other driver's medical bills total to exactly $52,300. How much will Miguel pay in TOTAL?
a. $0
b. 500
c. $2,300
d. $2,800
c. $ 2,300
Your best friend Amelia just moved into her first post-college apartment. When you remind her to get renters insurance she says, "I'm going to pass. I don't have that much stuff, and nothing I have is new anyway, so it's not worth much." Why is her logic flawed?
a. Renters insurance is free, so there's no reason not to sign up for it
b. In the case of a major burglary or fire, it can cost thousands of dollars to replace all the stolen or damaged items with new ones
c. Every state in the country requires renters insurance if you don't own your own home
d. A renters insurance policy makes it illegal for your landlord to raise rent more than 5%
b. In the case of a major burglary or fire, it can cost thousands of dollars to replace all the stolen or damaged items with new ones
Social Security generally provides insurance for which of the following groups of people?
a. The elderly or disabled
b. Children and students
c. Anyone with a job
d. Employees who have a government position
a. The elderly or disabled
How does insurance fraud affect insurance costs for all paying customers?
a. Fees paid by individuals charged with insurance fraud are used to reduce all customers' premiums
b. The cost of large, false payouts are passed onto all customers through higher premiums
c. High levels of fraud result in fewer insurance claims overall
d. The federal government reimburses insurance companies for fraud cases, so all Americans are paying these claims through their federal taxes
b. The cost of large, false payouts are passed onto all customers through higher premiums
All of the following are true about Medicaid EXCEPT...
a. Medicaid is a government health insurance program that aims to help people from low-income backgrounds, people with disabilities, and more.
b. All states follow the same Medicaid policies and benefits as defined by the Federal government.
c. You can see if you qualify for Medicaid by applying for health insurance through your Federal or State healthcare marketplace.
d. Many states will want you to re-enroll for Medicaid for the next year.
b. All states follow the same Medicaid policies and benefits as defined by the Federal government.
Which statement about insurance for adults under the age of 26 is TRUE?
a. Your parents MUST keep you on their insurance policy.
b. If your employer offers health insurance, you will have to pay a fee to decline and stay on your parents' insurance policy.
c. You must be living with your parents in order to stay on their insurance policy.
d. You can stay on your parents' health insurance even if you're married.
d. You can stay on your parents' health insurance even if you're married.
Which of the following factors can impact your monthly auto insurance premium?
a. How many units you are enrolled in at school and your class schedule
b. The dealership where you bought your car and the popularity of the dealership
c. Your age, driving record, and annual mileage
d. How much you pay for rent and utilities
c. Your age, driving record, and annual mileage
Patricia bought all new dishes for her apartment when she moved in 8 years ago, spending $75 at the time. She has a renters insurance policy for full replacement value when her apartment is vandalized and most of the dishes are beyond repair. What will her insurance company pay?
a. Approximately $15, the current value of 8-year-old used dishware
b. A flat rate of $75, because that's what she originally paid
c. Whatever the current price is to replace all her broken dishes with ones equally nice to what she owned
d. Up to double the original cost, in this case $150 total
c. Whatever the current price is to replace all her broken dishes with ones equally nice to what she owned
Which of the following is the best alternative plan to purchasing cell phone insurance?
a. Buy 2 of the same phone so that you have a backup phone in case the original breaks or needs replacement.
b. Trust that your auto insurance will cover any damages to your phone.
c. Never use your cell phone outside of your house so it is less prone to being damaged, lost, or stolen.
d. Put aside money that is equal to the monthly premium in a savings account, in case of phone repairs or replacement.
d. Put aside money that is equal to the monthly premium in a savings account, in case of phone repairs or replacement.
Roland's auto insurance premium is $100 per month, his deductible is $1000, and his coverage limit is $50,000. He crashes into his own fence and mailbox, causing $2200 in damages. How much will Roland and the insurance company each pay for the accident?
a. Roland will pay $100, the insurance company will pay $50,000
b. Roland will pay $100, the insurance company will pay $1000
c. Roland will pay $1000, the insurance company will pay $1200
d. Roland will pay $1200, the insurance company will pay $1000
c. Roland will pay $1000, the insurance company will pay $1200
What is the benefit of using a Health Savings Account (HSA) or Flexible Savings Account (FSA)?
a. If you sign up for one, you'll get a discount on your deductible through the Federal government.
b. You can use pre-tax dollars to pay for out-of-pocket healthcare expenses.
c. You can move any leftover money once the year is done to your checking account to cover other expenses.
d. The year after you sign up for an account, you are offered plans with discounted premiums.
b. You can use pre-tax dollars to pay for out-of-pocket healthcare expenses.
When reading the fine print on a health benefits form, it's clear that...
a. most insurance plans encourage the use of OUT-OF-NETWORK doctors by offering lower costs on most services they perform.
b. most insurance plans encourage the use of IN-NETWORK doctors by offering lower costs on most services they perform.
c. the costs for in-network and out-of-network doctors are the same for ALL services they offer.
d. office visits, immunizations and annual physicals have the same costs for both in-network and out-of-network doctors.
b. most insurance plans encourage the use of IN-NETWORK doctors by offering lower costs on most services they perform.
All of the following characteristics would lead to a HIGHER than average insurance premium EXCEPT...
a. New driver with less than one year of experience
b. Experienced driver with a good driving record
c. Driver with multiple accidents in recent years
d. Experienced driver with 120 mile commute to work
b. Experienced driver with a good driving record
How much does the typical renters insurance policy premium cost per month?
a. $0
b. Less than $30
c. Between $31-60
d. Between $61-100
b. Less than $30
Many credit card companies offer insurance perks, and in order for you to maximize the available coverages, you should...
a. apply for as many credit cards as you can each month.
b. negotiate with each optional insurance agency to beat the credit card company’s offer.
c. read your credit card policy's plan very carefully to see what the coverage includes and excludes.
d. accept the first credit card offered to you as soon as possible.
c. read your credit card policy's plan very carefully to see what the coverage includes and excludes.