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When an insurance company needs to provide a payout, the money is removed from |
a pool of funds |
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An entrepreneur keeps backup funds in a savings account so that if their business experiences a loss, they will be able to recuperate. What type of risk management is this an example of? |
reducing risk |
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Which questions about risk should someone ask before making a big purchase? |
What problems are most likely to happen? What could go wrong? What problems could be most damaging? |
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After he bought a new car, Nelson purchased car insurance. He must pay $75 each month for the plan.Later that month, Nelson caused a car accident when he lost control of his vehicle. He was required to pay the first $500 of his repair costs, and then the insurance company covered the rest. Read the passage about Nelson’s car insurance. What is the $75 payment Nelson must make each month? |
premium |
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What is the definition of premium? |
the amount paid for an insurance policy |
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Why does insurance often provide "peace of mind"? |
People are less worried when they know they have protection from risk |
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Insurance companies create a pool of funds to handle what? |
risk |
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How can an insurance company make a profit by taking in premiums and making payouts? |
The value of the premiums the company takes in is higher than the value of the payouts it makes. |
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Maria’s family has a health insurance plan. Her mother has $350 deducted from her paychecks each month.When Maria visited the doctor, her mother paid a $25 fee. The insurance company covered the rest of the cost of the visit.When Maria’s mother went to the hospital, her family was responsible for paying the first $1,000 of the bill. After this payment, the insurance company covered the rest of the costs. Read the passage about a family health insurance plan. What is the $25 fee Maria’s mother paid when Maria visited the doctor? |
co-payment |
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Which type of insurance policy would someone get to protect others only? |
life insurance |
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Most people prefer to pay health insurance premiums rather than pay out-of-pocket for medical expenses because |
medical costs can be extremely high, and insurance is more affordable than paying out-of-pocket for a hospital stay. |
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If two people are invited to invest and become partners in a business, the business owners will then ______ the risk |
share |
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