Insurance Basics
What is the primary purpose of insurance?
A) To save money for vacations
B) To protect against financial loss
C) To pay taxes
D) To invest in stocks
B) To protect against financial loss
Which insurance helps pay for medical expenses?
A) Auto insurance
B) Health insurance
C) Homeowners insurance
D) Life insurance
B) Health insurance
What is a deductible?
A) The amount the insurance company pays before you pay
B) The amount you pay out of pocket before insurance covers the rest
C) A discount on your premium
D) The total coverage amount
B) The amount you pay out of pocket before insurance covers the rest
Why is having insurance important for financial responsibility?
A) It guarantees you will never lose money
B) It helps protect you from large unexpected expenses
C) It replaces all your expenses
D) It lowers taxes
B) It helps protect you from large unexpected expenses
You have renter’s insurance and your laptop is damaged in a fire. What should you do first?
A) Replace the laptop immediately
B) File a claim with your insurance company
C) Call the police
D) Cancel your policy
B) File a claim with your insurance company
Which term describes the person or entity covered by an insurance policy?
A) Beneficiary
B) Premium
C) Insured
D) Claimant
C) Insured
What type of insurance protects your vehicle?
A) Auto insurance
B) Renter's insurance
C) Disability insurance
D) Travel insurance
A) Auto insurance
What is a beneficiary?
A) The person who receives benefits from an insurance policy
B) The insurance company
C) The person paying the premium
D) The agent selling insurance
A) The person who receives benefits from an insurance policy
If you cause a car accident, which insurance typically pays for the other person’s damages?
A) Collision insurance
B) Liability insurance
C) Comprehensive insurance
D) Personal injury protection
B) Liability insurance
You rent an apartment and want to protect your belongings. What insurance should you get?
A) Homeowners insurance
B) Renter’s insurance
C) Auto insurance
D) Life insurance
B) Renter’s insurance
What is a premium in insurance?
A) The amount paid monthly or yearly for coverage
B) The total value of insured property
C) The amount paid after a claim
D) The payment for your policy
D) The payment for your policy
What does life insurance primarily provide?
A) Money for car repairs
B) Money to beneficiaries after the insured person dies
C) Coverage for lost luggage
D) Payment for hospital bills
B) Money to beneficiaries after the insured person dies
What does "coverage limit" mean?
A) Maximum amount an insurance policy will pay for a claim
B) Minimum premium you must pay
C) Number of years a policy lasts
D) Number of claims allowed
A) Maximum amount an insurance policy will pay for a claim
What is the consequence of not having required car insurance?
A) Fines or legal penalties
B) Free car repairs
C) Lower taxes
D) More coverage
A) Fines or legal penalties
Which insurance would cover a phone stolen from your car?
A) Personal Injury
B) Collision
C) Comprehensive
D) Liability
C) Comprehensive
What happens when you file a claim?
A) You cancel your policy
B) You request payment for a loss covered by insurance
C) You pay your premium
D) You increase your coverage
B) You request payment for a loss covered by insurance
What insurance covers damage or loss to your home and belongings?
A) Health insurance
B) Auto insurance
C) Homeowners or renter’s insurance
D) Life insurance
C) Homeowners or renter’s insurance
What does “liability” mean in insurance?
A) The value of your property
B) Responsibility for causing harm or damage to others
C) The amount you pay monthly for coverage
D) A type of insurance policy
B) Responsibility for causing harm or damage to others
How can a higher deductible affect your premium?
A) It usually lowers your premium
B) It increases your premium
C) It has no effect on premium
D) It cancels your policy
A) It usually lowers your premium
After a house fire, you file a claim. What will the insurance company likely do?
A) Investigate the claim and pay for covered losses
B) Cancel your policy immediately
C) Increase your premium without payment
D) Ignore the claim
A) Investigate the claim and pay for covered losses
How does insurance differ from a warranty?
A) Insurance covers unexpected losses; warranties cover repairs
B) Insurance only covers health; warranties cover all damages
C) Insurance has no premiums; warranties do
D) Warranties cover accidents; insurance does not
A) Insurance covers unexpected losses; warranties cover repairs
What type of insurance can replace income if you are unable to work?
A) Disability insurance
B) Travel insurance
C) Auto insurance
D) Life insurance
A) Disability insurance
What is a policyholder?
A) Someone who sells insurance
B) The person who owns the insurance policy
C) The person who pays for damage
D) A person who files a claim
B) The person who owns the insurance policy
What is risk in insurance terms?
A) The chance of loss or damage that insurance protects against
B) The amount paid for insurance
C) The value of property insured
D) The document proving insurance
A) The chance of loss or damage that insurance protects against
You get into a minor car accident and have collision coverage. What will your insurance do?
A) Pay for damage to your car after you pay the deductible
B) Pay for damage to the other car only
C) Cancel your policy
D) Pay for rental car only
A) Pay for damage to your car after you pay the deductible