Questions and Answers
When an insurance company needs to provide a payout, the money is removed from:
What is the $25 fee Maria's mother paid when Maria visited the doctor?
Why do most people prefer to pay health insurance premiums rather than pay out-of-pocket for medical expenses?
Medical costs can be extremely high, and insurance is more affordable than paying out-of-pocket for a hospital stay.
Which type of insurance policy would someone get to protect others only?
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Which is always a cost when buying insurance?
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What type of risk management is it when an entrepreneur keeps backup funds in a savings account?
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What does insurance allow a consumer to do?
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What questions about risk should someone ask before making a big purchase? Check all that apply.
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How can Roland avoid risk with his new tablet? Check all that apply.
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Why does insurance often provide 'peace of mind'?
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What must happen in order for an insurance company to make a payout? Check all that apply.
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In what way does a deductible help an insurance company?
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What is the basic purpose of insurance?
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In what circumstance would a property insurance claim be rejected?
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Study Notes
Insurance Basics
- Insurance payouts come from a pool of funds rather than consumer income or personal accounts.
- Health insurance often involves co-payments (e.g., a $25 fee for doctor visits) in addition to premiums that are deducted monthly (e.g., $350 from paychecks).
Understanding Health Insurance
- Health insurance premiums are generally preferred over out-of-pocket medical expenses due to the high cost of medical care.
- Families may have a deductible (e.g., responsible for the first $1,000 of medical bills) before insurance covers further costs.
Types of Insurance
- Life insurance protects others financially in the event of the policyholder's death.
- There is always a premium when purchasing insurance, which is the cost paid for the policy.
Risk Management
- Backup funds in savings to offset business losses exemplify reducing risk.
- Insurance allows consumers to share liability with a company rather than transferring all risk.
Risk Assessment
- Important questions to ask before significant purchases include:
- What problems are most likely to happen?
- What could go wrong?
- What problems could be most damaging?
Risk Avoidance Strategies
- To avoid risk associated with new purchases, one might use:
- A screen protector
- An antivirus app
- A protective case
Psychological Aspects of Insurance
- Insurance provides peace of mind by assuring protection from potential risks.
Claim Process for Payouts
- For an insurance company to make a payout, essential steps include:
- Verifying the claim
- The insured party filing the claim
- Having an active insurance policy
- Experiencing a covered loss
Role of Deductibles
- A deductible helps insurance companies by lowering the payout they must make when claims arise.
Insurance Purpose
- The primary purpose of insurance is protection against unforeseen events and financial loss.
Claims Rejection Instances
- A property insurance claim may be rejected if damage is intentionally caused by the homeowner or if it results from a natural disaster not covered under the policy.
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Description
Test your knowledge on fundamental insurance concepts with these flashcards. Each card presents key terms and scenarios related to insurance payouts and health plans. Ideal for anyone looking to enhance their understanding of insurance.
