Exercise 5 Answers - ACE 240 Exercise 5. Insurance &...

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ACE 240 Exercise 5. Instructions: Turn in typed answers or spreadsheets showing your work. Each question is worth 1 point unless noted otherwise. 1. [2 points] Briefly explain the difference(s) between term and whole life insurance. Term life insurance covers a person for a specified period of time. Whole life insurance lasts for the rest of the person’s life. 2. [2 points] A medical insurance policy calls for a $1,000 annual deductible, a 20% coinsurance requirement subject to a $6,000 annual limit, and a $1,000,000 policy limit. In the absence of any prior medical expenses in the current year, how much of a $14,500 medical bill will be the responsibility of the insured? $1,000 + ($13,500*.20) = $3,700 3. [2 points] Briefly explain the difference(s) between uses of the term “coinsurance” in health insurance and property insurance. Coinsurance is used to describe the percentage that the insured person must cover on a health insurance claim. Coinsurance in regards to property insurance is a clause that stipulates that the insured person must have insurance to cover a certain percentage of the value of the property. 4. [2 points] A freak accident destroyed furniture that Larry purchased 3 years ago for $11,000. Today, the same furniture would cost $17,000.
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This note was uploaded on 08/26/2009 for the course ACE 240 taught by Professor Neelakantan during the Spring '09 term at University of Illinois at Urbana–Champaign.

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Exercise 5 Answers - ACE 240 Exercise 5. Insurance &...

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