Part 1

Please respond to the following questions:

1. Which two types of natural disasters are not covered in a homeowners policy?

2. Why would having an older vehicle increase your cost of insurance? Why might it decrease the cost of insurance?

3. Why is it important that the insurance company knows who the drivers are? What role does this information play in the price of car insurance?

4. Why would an agency want to know whether or not you own pets?

5. What role would you expect the number of occupants in the home to play in the cost of insurance?

6. Why do insurance policies have a deductible?

Part 2

For the purpose of this assignment, we will be using the three plans shown below. Assume that all of the medical expenses occur in the same billing year--so carry over the accounts from each previous year. With each situation, calculate what the individual would owe and find the important amounts to carry over to the next event. We will also assume that a doctors visit only costs the co-pay. The plans shown below are gross simplifications of actual insurance plans so be careful when it comes to calculating your own medical expenses.

Plan A: Everything has a $20 co-pay. The plan has a $1,000 deductible but pays 100% of expenses after that. This plan also has a yearly limit on total deductible expenses of $2,500.

Plan B: Most things have a $10 co-pay. There is a $200 deductible with 80% coinsurance after that. There is no limit on yearly out-of-pocket expenses. There is a co-pay limit of $100 for the year.

Plan C: This is a health savings account. There is a $50 co-pay for everything and the account has $40,000 in it.

Medical expenses for the year

1. The whole household wants to play in a family kickball league so they need to get physicals. This ends up being five visits to the doctors office.

2. Kip sprains his ankle badly sliding into first base. This involves a doctors visit along with an MRI which costs $3,000

3. Annalee has a baby. The total cost ends up being $15,000 along with the co-pay.

4. Everyone gets strep so this ends up being five doctors visits.

5. Ahmed gets appendicitis. The surgery costs $12,000, but while he was in the hospital, he also got pneumonia. He had to remain hospitalized for 14 days at a cost of $200 per day. This also ends up being 3 co-pays.

6. Lee ends up getting a rare but treatable form of leukemia. He is hospitalized for several months and makes a full recovery. He total medical bills end up being $130,000 and one co-pay.

Required

State how much the family paid for each medical expense using Plan(s) A, B, and C.

State how much the familys total medical expenses are for the year using Plan(s) A, B, and C.

State how much the insurance company would pay for each medical expense using Plan(s) A, B, and C.

State how much the insurance companys total medical expenses would be using Plan(s) A, B, and C.