Definitions
This is the amount of money you pay for your insurance each month.
premium
You hit another car and must pay for their damages. What type of insurance would be used?
liability insurance
A ________ is the amount you pay for your insurance.
premium
True/False: A premium is paid after an accident.
False
Explain the difference between a deductible and co-insurance.
A deductible is the amount you pay before insurance pays. Co-insurance is the percentage you share after the deductible is met.
This is the written contract that explains your coverage.
policy
You crash into a pole and your insurance covers your car’s damage. What insurance covers this?
Collision Insurance
A ________ must be paid before coverage begins.
deductible
True/False: Liability covers damage you cause to others.
True
Why is understanding risk important when choosing insurance?
It helps determine the likelihood of loss and how much coverage you need.
This represents the possibility of a loss.
risk
Your medical bill was $6,000, but you have already met your deductible. You are responsible for 20% of the bill. What is this called?
co-insurance
The ________ owns the policy.
policy holder
If someone stops paying their premium, what happens to their policy?
The policy can lapse (be canceled), meaning they are no longer insured.
Explain the difference between liability coverage and collision coverage.
Liability covers damage or injury you cause to others.
Collision covers damage to your own vehicle in an accident.
This person is protected by the insurance policy.
insured
You owns and are responsible for the insurance contract. What are you?
Policy Holder
________ coverage pays for damage to your car in an accident.
collision
Why is it important to name a beneficiary on a life insurance policy?
So the death benefit is clearly directed to the intended person and avoids legal confusion.
A driver has a $1,000 deductible and $5,000 in damage to their car. How much will insurance pay?
$4,000 (The driver pays the first $1,000.)
This is the amount you must pay before insurance begins to pay.
deductible
Your spouse, sadly, dies and you receive their life insurance. What are you?
Beneficiary
________ means you have insurance coverage.
insured
Give an example of risk and explain how insurance helps reduce financial impact.
Risk: Getting into a car accident.
Insurance reduces financial impact by covering large repair or medical costs.
After meeting a $500 deductible, a policy requires 20% co-insurance on a $2,000 bill. How much does the insured pay total?
$500 deductible
20% of $1,500 = $300
Total = $800