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1. How does an insurance policy's stop-loss feature differ from its life-time limit feature?
a. causes insurance premiums to be high because co-insurance has very high administrative costs.
b. allows insurance premiums to be lower because the insurer's liability is less.
c. allows insurance premiums to be lower because it reduces the patient's incentive to seek frivolous medical care.
d. both b and c
3. Which of the following tends to make a person more likely
to have insurance coverage for cancer?
a. the person's income is lower than average.
b. the person is in a group that has a high likelihood of getting cancer.
c. the person is very risk averse.
d. the loading charge (and hence the insurance premium) is abnormally high.
4. What is the expected value of the annual loss from an event that will cost a person $500 when it happens, but which only occur once every ten years, on the average?
Also look at p. 160, questions 2, 3, 6, 7 and 12.
last updated February 12, 2002, by Jim Frederick
copyright 2002 Jim Frederick