Insurance Basics Review

What is the payment made to an insurance company for coverage?

• Co-insurance

• Premium

• Deductible

• Claim

The amount a person must pay out-of-pocket before an insurance policy begins covering expenses is called the:

• Co-insurance clause

• Annual deductible

• Premium payment

• Major medical benefit

Which term describes the fee paid to a lender in exchange for borrowing money?

• Principal

• Premium

• Finance charge

• Loan balance

If an insurance company considers a policyholder high-risk, how does it affect their premium?

• The premium increases

• The premium decreases

• The deductible is eliminated

• The deductible is reduced

A person paying $400 per year for their renter’s insurance is covering their:

• A. Deductible

• B. Premium

• C. Benefit

• D. Coverage

Which type of life insurance is usually less expensive and provides coverage for a specific time period?

• Term life insurance

• Whole life insurance

• Universal life insurance

• Variable life insurance

What is the key difference between term life and whole life insurance?

• A. Term life lasts for a specific period, while whole life lasts a lifetime.

• B. Whole life is cheaper than term life.

• C. Term life has a cash value component, while whole life does not.

• D. Term life is permanent and whole life is temporary.

Which of the following types of insurance accumulates cash value over time?

• A. Term life insurance

• B. Whole life insurance

• C. Auto insurance

• D. Health insurance

An auto insurance collision policy covers:

• damage to your car from a collision with another vehicle or object

• damage to your car from natural disasters

• injuries to other drivers in an accident

• theft of your vehicle

If a health insurance policy includes a $500 deductible, what does this mean?

• The person must pay $500 per doctor visit.

• The person must pay $500 per emergency visit.

• The person must pay the first $500 of medical expenses each year.

• The insurance will not cover any expenses over $500.