Quiz Questions on Insurance and Risk Management - 2

Why is Health Insurance Important Even if You Are Young and Healthy?

Answer: Health insurance is essential for the young and healthy because it safeguards against unexpected medical costs, grants access to preventive care and early intervention, and ensures coverage for potential chronic conditions. With a network of healthcare providers and peace of mind, it offers comprehensive protection and financial security, allowing individuals to focus on their well-being.

Even Though The Total Cost Of An Uninsured Hospital Stay Is Lower, Why Would An Uninsured Person Actually End Up Paying More Than Those With Insurance?

Answer: In insurance, there's usually an inverse relationship between coverage limits and premiums. Higher coverage limits lead to higher premiums because the insurer takes on more risk, while lower coverage limits result in lower premiums as you share more risk. It's important to find the right balance between coverage and cost that suits your financial situation and risk tolerance.

Why is It So Important to Have Restoration Services With Your Id Theft Protection?

Answer: Restoration services are crucial within identity theft protection as they offer expert assistance in swiftly recovering from identity theft, minimizing financial losses, and mitigating the long-term damage caused by fraudulent activity.

Jerry Has an Insurance Policy With a Premium of $150 Per Month. In June, He Causes an Accident and Received a Bill With a Total Cost of $6000. His Deductible is $1500, and His Coverage Limit is $10,000. How Much Money Will Jerry Have to Pay for the Accident’s Bill?

Answer:  $8,650

Explanation:

Premium per month = $150

Total cost of the accident = $6,000

Deductible amount = $1,500

New coverage limit = $10,000

The calculation for the amount Jerry owes in June with the updated coverage limit is as follows:

Amount Jerry owes in June = Coverage limit - Deductible amount + Premium per month

Amount Jerry owes in June = $10,000 - $1,500 + $150

Amount Jerry owes in June = $8,500 + $150

Amount Jerry owes in June = $8,650

 Jerry would owe $8,650 in June for the accident-related expenses.

If You Get Into A Car Accident, Your _______________ May Increase Because You Will Be Considered Riskier For Insurance Companies To Cover.

Answer: Insurance premium 

Explanation: If you get into a car accident, your insurance premium may increase because insurance companies view you as a higher risk to cover. When an accident occurs, it indicates a greater likelihood of future claims, making you a riskier customer. Consequently, insurance companies adjust your premium to compensate for the increased risk, reflecting the potential cost of insuring a driver with a history of accidents.

In Your Own Words, Describe Why It’s Critical to Always Have Auto Insurance. Provide at Least Two Examples of Situations Where You Might Need Insurance.

Answer: Auto insurance is crucial to protect both drivers and passengers in case of accidents. It helps cover medical expenses for injuries and ensures financial support for damages caused by uninsured motorists. Additionally, it safeguards your assets and vehicle, making it essential for responsible driving.

What is the Main Reason Someone Would Want to Have—and Need to Have—renters Insurance?

Answer: Renters insurance is essential to safeguard personal belongings and offer liability coverage. It provides financial security by replacing or repairing property in case of damage or theft and offers protection in accidents. Landlords often require it to reduce liability, and it's an affordable way to secure belongings and peace of mind.

Piper is Willing to Pay a High Premium for Their Disability Insurance. What Are the Likely Outcomes of Paying That Higher Premium?

Answer: Piper's willingness to pay a higher premium for disability insurance typically results in a low deductible and a high coverage limit. This means that Piper would have to pay less out of pocket before their insurance coverage takes effect, providing financial protection in case of disability. By paying a higher premium, Piper secures more comprehensive coverage and greater peace of mind in the event of unforeseen circumstances.