Insurance: Choosing Cover for Financial Risks · seed 1 · A4, ink-friendly. The answer key prints on its own page for grown-ups.

Choose cover for the losses you face

Life Skills · Money & Finance · ages 16-18
Name ______________________   Date ____________

  1. What is an excess in an insurance policy?

    • The regular payment you make to keep the policy active
    • The share of a covered claim you must pay under the policy
    • The largest payment the insurer will make for a covered claim

  2. For optional cover, which possible future loss creates the greatest financial need for protection?

    • A rare loss that would use up savings needed for rent
    • A frequent repair you can fund without missing bills
    • A minor loss fully covered by your existing policy

  3. If you could pay a crash bill from savings, the affordability rule lets you skip motor insurance that your local law requires.

    Circle one:   True   False

  4. Your existing policy covers the same kettle faults for the same period, limits and excess. A £12 extra warranty adds no benefit. Which reason supports declining it?

    • The £12 pays for cover during a later period than the existing policy
    • The £12 buys no extra protection beyond the cover already held
    • The £12 pays for a lower excess on faults already covered

  5. A policy has a £250 excess. A covered scratch repair costs £180, with no other payment rule. Why would a claim bring no payout?

    • The £250 excess must be paid as an extra fee on top of the repair
    • The £180 repair uses part of the premium, leaving no claim money
    • The £180 repair is below the £250 excess, so you pay its full cost

  6. Which set includes the price, payout restrictions, risks not covered and your contribution to a claim?

    • Premium, payout limits, excluded events and the excess
    • Premium, payout limits, renewal date and instalment dates
    • Premium, renewal date, exclusions and claim forms

  7. In many US health plans, what does an out-of-pocket maximum limit?

    • Your specified share of covered in-network care costs for the plan year
    • Your premiums and care costs paid during the same plan year
    • The insurer's payments for covered in-network care in the plan year

  8. For your £1,000 bike, quote A is £75 a year and excludes theft. B is £110 a year, covers theft up to £2,000 and has a £150 excess you can afford. Other conditions are met. Which quote meets the theft-cover need, and how much more is its yearly premium?

    • Quote A; £35 less per year
    • Quote B; £185 more per year
    • Quote B; £35 more per year
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Answer key

For grown-ups. Fold this page away before handing over the rest.

Choose cover for the losses you face W1-mt_JrCLZCH881-s1

  1. The share of a covered claim you must pay under the policy · The excess is your contribution towards a covered claim. Its exact application depends on the policy.
  2. A rare loss that would use up savings needed for rent · The rare loss would use money needed for rent. The repair is affordable, and the minor loss already has full cover.
  3. False · The affordability rule concerns optional cover. It does not cancel legal requirements.
  4. The £12 buys no extra protection beyond the cover already held · The question states that the extra warranty adds no benefit. Declining it avoids a £12 cost without losing protection.
  5. The £180 repair is below the £250 excess, so you pay its full cost · The £180 repair is below the £250 excess. Under the stated arrangement, no amount remains for the insurer to pay.
  6. Premium, payout limits, excluded events and the excess · The premium is the price. Limits, exclusions and the excess help show what the insurer covers and what costs remain yours.
  7. Your specified share of covered in-network care costs for the plan year · It limits specified patient cost sharing during the plan year. Premiums, uncovered services and many out-of-network costs remain outside it.
  8. Quote B; £35 more per year · B includes theft within a suitable limit and has an affordable excess. Its yearly premium is £110 - £75 = £35 higher. A excludes the risk you need covered.
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