Insurance Terms and Car Coverage Quiz

Questions and Answers

What is a policy in insurance?

The contract between an insurance company and the insured individual.

What is a premium?

The amount you pay monthly for insurance.

What is a deductible?

The amount of money you will pay out of pocket before the insurance company will make a payment.

What is a claim?

A formal request by a policyholder to the insurance company for compensation for a covered loss. Signup and view all the answers

What does full coverage car insurance include?

All of the above Signup and view all the answers

Which of the following are considered types of necessary coverage? (Select all that apply)

Homeowners or renters insurance Signup and view all the answers

What does collision insurance cover?

Hitting another car, the ditch, or a light pole. Signup and view all the answers

What does comprehensive insurance cover?

Acts of God, weather, and animals. Signup and view all the answers

What does liability coverage protect?

Other people's property damage. Signup and view all the answers

How much does Missouri state law require in liability coverage?

$50,000 Signup and view all the answers

What does uninsured, underinsured motorist protection do?

Pays for those who don't have insurance or don't have enough. Signup and view all the answers

How can someone lower the costs of auto insurance premiums? (Select all that apply)

All of the above Signup and view all the answers

When should someone consider getting an umbrella policy?

When their assets exceed $500,000. Signup and view all the answers

What is replacement cost coverage?

Both A and B Signup and view all the answers

What type of insurance covers stolen items from my car/truck?

Homeowners or renters insurance. Signup and view all the answers

What is health insurance?

Coverage for an individual and their family's medical expenses from illness or injury. Signup and view all the answers

What does HSA stand for?

Health Saving Account. Signup and view all the answers

What is disability insurance?

A type of insurance that replaces a portion of the policyholder's income if they become disabled. Signup and view all the answers

What is the elimination period in disability insurance?

The period of time between when a doctor confirms a disability and when the policyholder receives payments. Signup and view all the answers

How much of your income should disability insurance replace?

65% Signup and view all the answers

Who is the #1 target for identity theft?

Children. Signup and view all the answers

Who is most likely to steal your identity?

Family members and friends. Signup and view all the answers

What is the purpose of insurance?

To take risk. Signup and view all the answers

Is insurance an investment strategy?

No, never an investment strategy. Signup and view all the answers

What can personal property also be referred to as?

Contents. Signup and view all the answers

Does everyone need health insurance?

Yes. Signup and view all the answers

HSA's have a deductible but a _ monthly premium.

higher, lower. Signup and view all the answers

What is the only type of life insurance you should purchase?

Term life insurance. Signup and view all the answers

You only need life insurance when?

Someone depends on your income. Signup and view all the answers

What is a beneficiary?

People designated by the policyholder to receive the death benefit. Signup and view all the answers

Study Notes

Insurance Terms and Coverage

Policy: A contract between an insurance company and an insured person outlining coverage terms.
Premium: Monthly payment made for insurance coverage.
Deductible: Out-of-pocket cost that must be paid before insurance coverage kicks in.
Claim: Formal request for compensation submitted to an insurance company by the policyholder.

Car Insurance Coverage

Full Coverage Car Insurance: Includes liability, collision, and comprehensive coverage.
Collision Coverage: Protects against damage from hitting another vehicle, object, or ditch.
Comprehensive Coverage: Covers damages from non-collision events like natural disasters or animal encounters.
Liability Coverage: Covers damages to others if the policyholder is at fault in an accident.

State Requirements and Protections

Missouri Liability Coverage Requirement: State law mandates a minimum coverage of $50,000.
Uninsured/Underinsured Motorist Protection: Covers damages if the other driver lacks insurance or has insufficient coverage.

Reducing Insurance Costs

Strategies to lower auto insurance premiums include:
- Maintaining good grades.
- Completing a driver education course.
- Driving older vehicles.
- Shopping for competitive rates.
- Staying on a parent's insurance policy.
- Practicing safe driving habits.

Homeowners and Renters Insurance

Homeowners Insurance: Necessary for those who own a home.
Renters Insurance: Needed when an individual does not own a home.
Dwelling Coverage: Protects the structure of the home.
Liability Coverage: Shields from accidents occurring on one’s property.
Personal Property Coverage: Safeguards personal belongings against damage, theft, or destruction.

Additional Insurance Options

Umbrella Policy: Provides extra liability protection beyond standard policies; advisable if assets exceed $500,000.
Replacement Cost Coverage: Ensures reimbursement of the full value of items or property loss.
Life Insurance: Primarily divided into term life insurance (for a specified time) and whole life insurance (lasting for the policyholder's lifetime).

Health Insurance Basics

Health Insurance: Covers medical expenses for individuals and families.
HSA (Health Savings Account): A tax-advantaged account for individuals with high deductibles to save for qualified medical expenses.
PPO (Preferred Provider Organization): A health plan allowing flexibility in choosing healthcare providers.
Co-Pay: A fixed fee paid for medical appointments.
Co-Insurance: A shared cost where the insured pays a percentage after the deductible is met.

Disability and Long-Term Care

Disability Insurance: Provides income replacement if the policyholder cannot work due to a disability.
Elimination Period: Time between confirming a disability and receiving benefits.
Long-Term Care Coverage: Offers financial support for extended care needs; advised to obtain through a provider.

Identity Theft Awareness

Identity Theft: The illegal use of someone’s personal information for financial gain; children are often the primary targets.
Prevention Methods:
- Avoid sharing Social Security numbers.
- Memorize personal information.
- Shred sensitive documents.
- Practice caution on public Wi-Fi networks.

Purpose of Insurance

Main Purpose: To manage risk and protect assets.
Investment Clarification: Insurance should not be viewed as an investment strategy.
Health Insurance Necessity: Essential for everyone to mitigate medical costs.

Miscellaneous

Personal Property: Often referred to as "contents" in insurance terminology.
Health Insurance and HSA: HSAs are characterized by higher deductibles and lower monthly premiums.

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Description

Test your knowledge of essential insurance terms and the various types of car insurance coverage. This quiz covers policy definitions, state requirements, and the specifics of coverage options available to drivers. Understand the importance of each term and how they apply to your insurance needs.