Question

A household can lower their annual premiums on their homeowner's insurance policy by

	a.	removing a security system from their house.
	b.	increasing the coverage.
	c.	getting a swimming pool.
	d.	increasing the deductible.
	e.	decreasing the deductible.

The ability to change a given life insurance policy from term life to whole life or to change a given asset purchase from bonds to stock is called

	a.	insurability.
	b.	renewability.
	c.	convertibility.
	d.	deductability.
	e.	pastability.

Over the course of several years, property and casualty insurance (e.g. homeowner's insurance, auto insurance) expects to encounter _________ claims from a customer, and health insurance expects to encounter ___________ claims from a customer.

	a.	frequent; frequent
	b.	frequent; infrequent
	c.	infrequent; frequent
	d.	infrequent; infrequent
	e.	ulcer-oriented; more ulcer-oriented

Answer 1

1]

A household can lower their annual premiums on their homeowner's insurance policy by

(d) increasing the deductible. This will decrease the premium because the deductible payable by the policyholder is higher, which means that the insurer's liability is lower.

(a) is incorrect. Removing a security system increases the risk, which would increase the premium

(b) is incorrect. Increasing the coverage would increase the insurer's liability, resulting in higher premium

(c) is incorrect. Getting a swimming pool would increase the insurer's risk, resulting in higher premium

(e) is incorrect. This will increase the premium because the deductible payable by the policyholder is lower, which means that the insurer's liability is higher.