Personal Finance Questions: Life and Health Insurance

Here are the most important questions on Life and Health Insurance:

Question: What is the main purpose of life insurance?
 The main purpose of life insurance is to transfer the risk of a premature death onto the insurance company
- The named insured is someone whose loss will create a financial or emotional loss to the beneficiaries of the policy.

Question: What are some good reasons for a young, healthy, single person to purchase life insurance?
 The best time to purchase life insurance is when you are young and healthy since the premiums will be the lowest possible
- Funerals today are very expensive so why would you want to be a financial burden on your family if you die? At least with a good insurance foundation in place, you will have some insurance in force regardless of your health.

Question: Why is being the policy owner so important?
The policy owner controls the decisions concerning the policy itself
- They determine who the beneficiaries will be and they determine the settlement options
- They are also the one the insurance company contacts if there are missed payments or pending cancellation.


Question: Why is the beneficiary decision so important when buying life insurance?
The beneficiary is the person or persons who will receive the death benefit of the insurance policy
- The beneficiary designation supercedes your Will
- It is critically important that you double check your beneficiary designation every time you have a life changing event such as marriage, divorce or the birth of children
- Sadly, many ex-spouses receive the death benefit because the policy owner forgot to make appropriate changes to their beneficiary designation.


Question: List five questions you should ask in an attempt to determine life insurance needs
-How long after your death do you want to ensure your surviving spouse's financial stability?
-Will your surviving spouse be earning any income?
-Is a drop in your surviving spouse or children's lifestyle acceptable?
-Do you want to provide funding for your children's college education?
-Do you want to immediately pay for the home mortgage and other debts?
-Do you want life insurance to pay for any estate taxes that might be due?


Question: The needs approach attempts to determine the amount of funds necessary to meet the needs of a family after the death of the primary breadwinner - Name the seven common family needs
- cleanup funds
- debt elimination
- immediate transition
- dependency expenses
- spousal life income
- educational expenses for children
- retirement income


Question: What factors should be considered when selecting a life insurance policy?
Select an agent who will work for you; that is, meet your needs, not his or hers
- Choose a company that is highly rated by one of the independent rating firms such as A.M
- Best
- Be sure to compare costs and choose a policy with a low cost index
- Carefully select the amount of life insurance needed, the type of policy, and the method of premium payments.
Make sure the beneficiary designation is correct
- Choose between using an advisor
(agent) or buying direct from a company.


Question: Define policy rider and describe the purpose of the five basic ones.
A rider is a special provision that may be added to your policy, which either provides extra benefits or limits the company's liability under certain conditions
- A waiver of premium for disability rider allows your insurance protection to stay in place by paying your premiums if you become disabled before you reach a certain age, usually 65
- An accidental death benefit rider or multiple indemnity rider doubles or triples the death benefit when the insured dies from an accident rather than from natural causes.
The guaranteed insurability rider gives the right to increase your life insurance protection in the future without a medical examination
- A cost-of-living adjustment rider increases the death benefit at the same rate as inflation without forcing you to pass a medical exam.
Some cash-value policies allow for living benefits; that is, this rider allows for early payout of a percentage of the anticipated death benefits for the terminally ill, enabling them to pay medical bills, etc.


Question: Briefly explain the four common settlement options
- The lump-sum settlement gives a beneficiary the entire death benefit in one large check.
- An interest-only settlement provides payment of interest while the company holds the principal.
- The installment-payments option pays the beneficiary both principal and interest over a fixed period or in fixed payments.
- A life annuity option gives the beneficiary an income for life, generally in a monthly check.


Question: It should be everyone's goal to become self-insured when it comes to Life insurance - Explain how and why this should be?
- When most people are young, they have negative or low net worth because they have few assets and higher levels of debt
- When they become financially responsible for someone else, then they need to cover the risk of their death by purchasing Life insurance to replace their lost financial support
- As a person goes through the Financial Life Cycle, they generally acquire more assets, especially Investment assets that appreciate in value, and they tend to pay off most of their debt, developing positive net worth
- At middle age their dependent children have grown up and are now independent
- Their mortgage is paid off and they have substantial assets, especially in their retirement accounts
- Their spouse would be able to live comfortably off these investments so the loss of the financial support of the breadwinner would not be a catastrophic loss
- At later ages, Term insurance premiums become prohibitive
- There is really no reason to maintain life insurance coverage for the average person at this time.


Question: Why is it critically important to check out the financial health of a Life Insurance Company through a ratings company like A.M - Best before you purchase the insurance?
When you purchase a life insurance policy, you are basically entering into a partnership with the Insurance Company that may last for 40+ years or more
- You want to make certain that this company or partner will be there when your beneficiaries desperately need the death benefit of the policy
- It is not unusual for Insurance companies to become insolvent and fail
- It is not unusual for Insurance scams to happen, especially via the internet
- Ratings companies evaluate the financial health of the Insurance company and their ratings are a good predictor of the ability of the Insurance company to remain solvent for many years into the future
- There would be nothing worse than for your Insurance company to fail after you have paid premiums for many years and you have developed a pre-existing health condition during this time
- Now you may have a hard time finding a new Insurance company or the premium may be cost prohibitive due to age and health.


Question: Name and briefly describe the ten features found in almost all life insurance contracts
- The beneficiary provision allows for a primary and contingent beneficiary to receive the death proceeds (face amount) upon the insured's death.
- A grace period is an automatic extension for premium payments, generally 30 or 31 days after the premium is due.
- The loan clause allows for loans, generally at a guaranteed rate, against the cash value of the policy.
- A non-forfeiture clause gives the policyholder the cash value in exchange for the policy's termination, or allows exchanging the cash value for a paid-up policy with a reduced face value, or allows exchanging the policy's face value for a paid-up term policy.
- The policy reinstatement clause provides the conditions for restoring a lapsed policy to its full rights, force, and effect.
- A change of policy clause stipulates the conditions and allows the policyholder to change the form of the policy.
- The suicide clause states that the insurance will not pay the death benefit for suicide during the first two years.
- A payment of premium clause defines the alternatives for paying the premiums and allows for a change in payment methods.
- The incontestability clause ensures that the insurance company cannot dispute the validity of the contract after it has been in force for a specified number of years, usually 2.
- A list of settlement options gives the beneficiary options for receiving the policy benefits.


Question: What are some drawbacks of term life insurance?
Term life insurance becomes very costly in later years and is prohibitive for most people at that time
- It has no cash-value build-up
- You cannot use the cash value to pay the premiums later.


Question: How is variable life different from universal life and term insurance? Who is it best suited for?
Like universal life, it has a cash value with flexible premiums and death benefits
- Unlike universal life, the cash value and death benefit are tied to and vary according to the performance of a set of investments that are chosen by the policyholder
- Term life in any of its forms has none of these features
- Variable life is aimed at individuals who want to manage their own investments and are willing to take associated risks.


Question: Tell about the pros of group term life insurance
Group term life is often less expensive than an individual policy, especially if you are older or less healthy
- Uninsurable individuals are able to get relatively low-cost insurance whereas they would not otherwise
- You may be able to get more coverage for the same or less money.


Question: Describe the major difference between renewable term and group term versus decreasing term and credit/mortgage group life insurance
Renewable term and group term are generally level insurance amounts ? the face amount of life insurance does not change over time
- Decreasing term and credit mortgage group face amounts usually do decrease over time to match the amount of outstanding debt.


Question: Explain the advantage of reentry term life insurance
Reentry term is guaranteed renewable at one of two possible premium levels
- If you pass a medical exam, you qualify for the lower premium
- In other words, you reenter the same policy at a cost that would not otherwise be available.


Question: What is the major advantage of universal life insurance at any age?
Universal life allows for flexible premium payments so that policyholders can vary the amount and timing of their payments as their financial needs change.


Question: Which of the types of cash-value policies are permanent insurance?
Whole life, universal life, and variable life are permanent types of life insurance.


Question: What are the two basic forms of variable life insurance?
The two basic forms of variable life are straight variable life and variable universal life.


Question: Why are health care costs so expensive at this time?
There are several reasons why health care is so expensive
- For one, there seems to be a lack of incentives for providers of health care to economize
- There is no incentive for patients to exercise restraint in visits and medical billing
- It is very costly to develop, test, and certify new drugs
- The cost of litigation from malpractice suits has skyrocketed.


Question: Describe the pros and cons of major medical insurance
Major medical covers medical costs beyond those covered by basic health insurance
- It offsets the financial effects of a catastrophic illness or injury
- It takes over where basic health insurance leaves off
- Most plans cover a lifetime cap large enough for most needs.
This type of plan does not provide complete coverage
- There is a deductible and a co-payment provision
- The lifetime cap of $250,000 limits the coverage for more costly bills
- Consider an add-on policy that provides protection of up to at least $1 million.


Briefly explain the different types of health insurance
Most health insurance is basic health insurance, which includes a combination of hospital, surgical, and physician expense insurance
- Hospital insurance covers the costs associated with a hospital stay, including room charges, nursing costs, operating room fees, and drugs supplied by the hospital
- Surgical insurance covers the cost of surgery
- Physician expense covers the physician's fees outside of surgery
- Major medical covers medical costs beyond those covered by basic health insurance.


Question: Why is health insurance so necessary today?
Health insurance is necessary to pay for the bills associated with sickness and injury
- No one can pay for medical expenses out of his or her income
- Even the wealthy will eventually exhaust their resources when paying for a lengthy illness or accident
- The health care providers and facilities could not afford to stay open without some means of being compensated for their efforts
- Health care insurance seems to be the best way to do this
- Without this insurance the quality of health care would go down or not be available to the extent we need it.


Question: Explain the purpose of the government-sponsored health care plans
- Worker's Compensation plans are governed by individual state laws and cover most employees
- Benefits are paid for injuries and illnesses incurred on the job
- Medicare covers disabled persons and persons 65 and older
- Part A is mandatory, is free of charge, and provides hospital benefits
- Part B is voluntary, is paid for by the individual, and covers doctors' fees and a wide range of medical services and supplies
- Medicaid provides medical care for the aged, blind, and disabled as well as to needy families with dependent children
- Medicaid payments go toward Medicare premiums, deductibles, and co-payments.


Compare and contrast group and individual health insurance policies
Group insurance, which is insurance available at work or through some organization, is generally preferable to an individual policy
- Most employer group plans do not require a physical exam; however, association or professional groups do require an exam
- Group insurance is usually 15% to 40% less costly than an individual plan because of its bargaining power
- Just the same, if you are in good health and in a safe occupation, sometimes an individual policy is less costly.
An individual policy has the advantage of being tailor-made for you or your family.
They tend in general to offer the same coverage as group plans
- Since they are expensive, shop around
- If you cannot get group coverage, get a comprehensive personal plan
- The plans are also handy for acting as a supplement to a group policy.


Question: Tell how a PPO is different from a fee-for-service or HMO plan.
A preferred provider organization is a bit like a cross between a traditional fee-for-service plan and an HMO
- Under a PPO, an employer or insurer negotiates with a group of doctors and hospitals to provide health care for its employees or members at reduced rates
- Those doctors and hospitals that agree to the reduced pricing system become members of the PPO.

Question: Compare and contrast the three basic types of HMOs.
An individual practice association plan is made up of independent doctors who are paid by the HMO as well as have their own private practice
- Patients go to the doctors' regular offices and receive their medical treatment there
- With a group practice plan, doctors are generally employed directly by the HMO and work out of a central, shared facility
- The members can receive their medical treatment only from these doctors and only at these central facilities
- A point-of-service plan allows its members to seek medical treatment from both HMO-affiliated doctors and non-HMO-affiliated doctors.


Question: Compare and contrast fee-for-service and managed health care plans
Fee-for-service or traditional indemnity plans provide reimbursement for all or part of your medical expenditures
- In general, they give you a good deal of freedom to choose your doctor and hospital
- Managed health care or prepaid care plans entitle you to the health care of a specified group of participating doctors, hospitals, and clinics
- The plans are generally offered by health maintenance organizations or variations of them.


Question: Provide seven tips on shopping for any health care insurance
- Enroll in your group plan at work.
- If there is no group plan, purchase the best individual one you can afford.
- Don't be without health care insurance.
- Don't cancel your present plan until the new one comes into effect.
- Consider only a highly rated company.
- Look for companies that provide fast, fair, and courteous claim service.
- Get comprehensive health insurance.
- Take as high a deductible and coinsurance payment as you can afford, so as to reduce costs.


Question: Explain the advantages and disadvantages of medical reimbursement accounts.
An employee is allowed to deposit pretax earnings into a specially designed account for paying health care costs
- In addition to tax savings on unreimbursed health care costs, an MRA allows pretax dollars to pay for other medical expenses that many health care plans do not cover, such as eyeglasses and orthodontia expenses.
The biggest drawback to this plan is that any contributions to the flexible spending account not used by the end of the year are lost
- Care must be taken to set aside the amount of funds that approximate the bills that will be incurred.


Question: How does the concept of 'opting out' work?
an employer may offer employees a cash incentive to either opt out of the firm's health care plan or to elect not to cover their families
- This provides a way for a company to reduce health care costs and increase profits
- If your spouse has health care coverage where she or he works, opting out may be an alternative
- If you opt out, will you be able to reenroll in the plan at a future date? This is a key question, for you do not want to be without health care insurance.


Question: What can each of us do in our personal lives to control health care costs?
We can stay healthier by adopting and living the following practices:
-Have regular health care check-ups.
-Quit smoking.
-Exercise regularly.
-Eat healthy.
-Reduce or eliminate alcohol consumption.
-Reduce stress.
-Get adequate rest.


Question: List the required health benefits that health care plans must provide under the Affordable Care Act
-Ambulatory patient services
-Emergency services
-Hospitalization
-Maternity and newborn care
-Mental health and substance abuse disorder services
-Prescription drugs
-Laboratory services
-Preventive and wellness services
-Pediatric services
-Rehabilitative and habilitative services and devices


Question: List the plans and payment percentages offered in the Health Insurance Marketplace.
bronze: Your plan pays 60 percent, you pay 40 percent.
Silver: Your plan pays 70 percent, you pay 30 percent.
Gold: Your plan pays 80 percent, you pay 20 percent.
Platinum: Your plan pays 90 percent, you pay 10 percent.
Catastrophic: A coverage option if you are under 30 or have very low income.


Question: Describe the disability insurance features that make sense
- Choose a plan with a definition of disability that is to your advantage.
- Consider partial or residual payments when returning to work part-time.
- Given a choice between short-term and long-term benefit durations, choose long-term.
- Choose a waiting/elimination period that is economical ? generally three months.
- It's a good idea to have a waiver of premium to pay the premium when disabled.
- Get guaranteed renewable and noncancellable when you can afford it.
- Obtain rehabilitation coverage to allow for retraining benefits.


Question: Define disability insurance and give the common sources of it.
disability insurance is earning-power insurance for anyone who relies on income from a job for financial support
- It is generally available to replace most of your monthly income when you become disabled due to injury or illness.
Workers' Comp provides benefits when the disability is work-related
- Social Security gives benefits when the disability lasts for more than five months and is expected to last for more than one year
- Employer-sponsored plans can cover short-term and long-term disabilities
- If a plan is not available at work, you might consider an individual plan that would offset your loss.


Question: Define long-term care insurance and describe its basic features
Long-term care insurance pays for nursing home expenses and home health care
- These plans protect you from the high costs of hiring someone to take care of you in a nursing home or at your own home
- Carefully shop around because these types of policies are laden with exceptions and conditions to meet
- Most policies require you to be unable to perform one or more 'activities of daily living' without assistance
- Consider only policies that cover Alzheimer's and Parkinson's disease.


The basic features include:
- Investigate the type of care
- Check to see if you are covered in a nursing home only or if the insurance extends to home care, adult day care, and hospital care.
- The length of the benefit period is important, especially for women who live longer.
Get a minimum of three to six years of coverage when taking out the policy.

- The cost of the waiting period varies with the length
- Take as long of a period as you can afford ? at least 100 days.
- Be sure to include an inflation adjustment provision to cover the rising future costs.
- The waiver of premium lets your insurance company pay for the premiums while you are receiving benefits
- This is optional and is too costly to be included in general.


Question: Explain Section I: Property Coverage for HO-2 and HO-3 policies
Section I covers four major areas important to all homeowners:
-Coverage A: Dwelling protects the house and any attachments to it.
-Coverage B: Other structures protects other structures on the premises that are not attached to the house for 10% of the insurance on the house itself.
-Coverage C: Personal property insures any personal property that is owned or used by the policyholder, regardless of the location of this property.
-Coverage D: Loss of use provides benefits, such as temporarily living elsewhere, if your home cannot be used due to an insured loss.


Question: Describe each of the six HO packaged policies - Which one is the most common?
HO-1 is the basic form
- It provides very narrow coverage and is the least expensive.
HO-2 is the broad form of coverage and protects against named perils
- It is more extensive than HO-1.
HO-3, the special form, has the advantage of insuring against open perils, meaning it covers many perils not specifically mentioned in the policy
- It is the costliest of the three thus far mentioned.
HO-6 covers condo and co-op owners
- It insures like renter's insurance plus it covers structural improvements and alterations.
HO-8 is modified coverage for older homes with expensive replacement costs.
HO-4 is renter's insurance that provides protection for personal property, liability, and loss of use only.

Question: Provide an explanation of Section II: Personal Liability Coverage
This part of a homeowner's insurance policy covers personal liability insurance to protect the insured and family members from the financial loss incurred if someone is injured on their property or as a result of their actions
- It also covers medical expenses and liability suits.

Question: Most companies allow six endorsements or supplemental coverages to meet their customers' needs
- Name and describe the six
- Which one is unique and stands apart from the others?
 
-Personal articles floaters provide additional and extended coverage for all personal property
- It is especially meant for expensive items and collections.
-Earthquake coverage is available in any state and is recommended for earthquake areas.
-Flood protection covers flood, mudslide, and some water erosion damage
-Inflation guard automatically updates your amount of coverage based on an index.
-Personal property replacement cost pays for a new item and not for a used one.
-Added liability protects you from judgments and lawsuits in excess of $100,000
- It is also available for business and professional use of the home
The flood protection is unique in that it is generally administered and subsidized by the federal government
- A community must apply and be approved by the Department of Housing and Urban Development
- At that point insurers can offer the coverage with limits of $250,000 on dwellings and an additional $100,000 on contents.


Question: Describe the difference between actual cash value and replacement value
Homeowner's insurance is set up to pay the policyholder the actual cash value of the loss.
The actual cash value, which is the replacement cost minus estimated depreciation
(wear-and-tear costs), can be well below the cost of replacing the asset
- As an alternative, most homeowner's policies come with optional replacement cost coverage, which provides for the actual replacement cost of a stolen or destroyed item as opposed to the actual cash value.


Question: Pretend you are an insurance agent - Explain the coinsurance and 80 percent rule to a client
The coinsurance provision requires you to pay a portion of your own losses if you do not purchase an adequate level of insurance
- Most companies also require you to carry at least 80 percent of your home's full replacement cost
- This 80 percent rule applies to losses on your dwelling only and not to personal property
- If you insure for less than 80 percent of the replacement value, you will receive the greater of these two:
-the actual cash value of the portion of your house that was destroyed or

The amount of insurance purchased
% of replacement cost of loss
× the amount


Question: Outline the considerations for choosing the amount of homeowner's insurance you need
Purchase enough homeowner's insurance to cover:
-the replacement value of your home in the event of a complete loss
-the effects of inflation eroding away your coverage
-flood and earthquake damage if you are in such an area
-detached structures or elaborate landscaping
-home office for business and professional use
-all of your personal property
-for most people replacement cost is a good idea
-valuable possessions that need special protection need a floater
-assets that are much greater than the liability limits on your present policy
-personal property when you are renting


Question: To make sure all of your personal property is paid for in the event of a loss, it is a good idea to make an inventory of all household contents - Tell what should be included
 
To establish proof of ownership and the value of your assets, use a detailed inventory
- It should include the date of purchase, the cost, the model and serial number, and the brand name
- Make both a written and a videotape inventory.


Question: Give the three basic factors that determine the cost of your homeowner's insurance - List the possible ways of saving money on premiums
The three basic factors are: (1) the location of your home, (2) its type of structure, and (3) your level of coverage and policy type
- Possible ways of saving on premiums include:
-Take as high of a deductible as you can afford.
-Install a security system, smoke detectors, and fire extinguishers.
-Ask for a multiple policy discount with your car insurer-pay premiums annually.
-Ask for other discounts.
-Consider a direct writer.
-Shop around and get bids from several agents.
-Doublecheck your policy to make sure you have the coverage you need.


Question: Your home is hit by a strong wind storm that causes serious damage to one end of it - The rest of your home is livable - What do you do?

Report your loss immediately
- Next, make a detailed list of everything damaged or gone.
Make temporary repairs to protect your property
- Maintain records of the insurance settlement process, especially expenses
- Be sure to confirm the adjuster's estimate with a building contractor.


Question: With automobile insurance damage claims, Insurance companies will use the concept of 'contributory negligence' to determine how much to pay in damages - What does this concept mean?
The term contributory negligence deals with the fact that some driver's behaviors actually contributed to the accident and that these behaviors are not insured by the basic PAP.
Things like speeding, driving too fast for conditions, running a red light, not wearing a seat belt or driving under the influence of drugs or alcohol contributed to the accident occurring
- Since the driver was determined to be negligent in causing the wreck, then the
Insurance company will reduce their payout accordingly.


Question: You plan to purchase a personal automobile policy on your new car - You want to be able to understand the four basic parts, which are:
Part A: Liability coverage provides protection for you if you are legally liable for bodily injury and property damage caused by your automobile
- It includes payment for any judgment awarded, court costs, and legal defense fees.
Part B: Medical expense coverage pays medical bills and funeral expenses, with limits per person, for you and your passengers.
Part C: Uninsured motorist's protection coverage protects you by covering bodily injury and property damage caused by drivers without liability insurance
- It is required in many states.
Part D: Damage to your automobile provides coverage for collision with another vehicle or an object
- With collision insurance, losses are covered regardless of whose fault it is.


Question: The personal automobile policy (PAP) provides broad coverage, but there are a number of standard exceptions - Give five of them here
 You are not covered when:
-intentional injury or damage is involved
-using a vehicle without permission of the owner
-using a vehicle with fewer than four wheels
-driving another person's car that is provided for you on a regular basis
-you own the automobile but do not have it listed on your insurance policy
-you are carrying passengers for a fee
-driving in a race or speed contest


Question: You want to make an informed choice in buying auto insurance - You have studied the major cost determinants - Write a report in first person telling how they will affect you
 The sportier and more high-powered car I own, the more my insurance will cost
- I will consider an economical one
- The less I drive my car to work and other places, the less it will cost to own a PAP
- My age, sex, marital status will have a direct effect on my rates.
Being a young, single male will cost me plenty
- The fewer traffic accidents and tickets I have had, the less my insurance will cost, and vice versa
- My premiums will be less because I live in a rural area
- My friends who live in urban areas will pay more
- By installing certain safety features and showing I possess personal characteristics that identify me as a safe driver, I will save even more.


Question: You want to keep your insurance costs down on your car - Prepare a list of things to ask your agent and to do in general
 - Is your company a high-quality, top-rated firm by A.M
- Best?
- Do you give the standard discounts for nonsmokers, nondrinkers, driving school grads, good students, car poolers, etc.?
- Do you give a good discount for higher deductibles?
- Can you help me keep adequate liability insurance?
- Do I really need all of these policy features?
- I will shop around and improve my driving record.


Question: Your assignment is to explain the basis for no-fault insurance
- Do so in one brief, but thorough, paragraph
 
Over half the states have instituted some variation of no-fault auto insurance
- The theory behind this concept is that your insurance company should pay for your losses, regardless of who is at fault for the accident
- All of the legal expenses associated with attaching blame would then be lifted and insurance coverage should be less costly.
Insurance companies are always looking for ways to keep the costs down, particularly settling claims.

Question: You made a list of things to do when involved in an auto accident ? but you lost it - You have just been in a wreck with another vehicle - What are five important things to do now?
 - Get help for the injured and have someone call the police and an ambulance.
- Move your car to a safe place, if possible, to prevent further accidents.
- Get the names and addresses and license plate numbers of all vehicles involved.
- Cooperate with the police.
- Insist on alcohol tests if you suspect drinking was involved.


Question: List seven general ways you can keep your automobile insurance rates down while ensuring complete coverage
 - Shop comparatively.
- Consider only high-quality insurers.
- Take advantage of discounts.
- Buy a car that's relatively inexpensive to insure.
- Improve your driving record.
- Raise your deductibles.
- Keep adequate liability insurance.


Question: List the most common automobile insurance discounts.
Accident-free discount
Multiple-automobiles discount
Low annual mileage discount
Multi-policy discount
Low 'damageability' discount
Good-student discount
Over-50 discount
Defensive-driving course completion discount
Passive-restraints discount
Non-commuter or carpooler discount
Antitheft-devices discount

Question: Briefly describe the most common automobile insurance discounts.
Accident free: A 10 percent discount on most coverage after three years without a chargeable accident
- After six years, the discount rises to 15 percent.
Multiple automobiles: a 15 percent discount for insuring more than one car with the same company.
Low annual mileage: a 15 percent discount if you drive fewer than 7,500 miles per year.
Automobile and homeowner's together: 5 to 15 percent off of both policies, if the policies are with the same company.
Low 'damageability': 10 to 30 percent off of collision and comprehensive premiums if the car is statistically less likely to result in an expensive claim because it is cheaper to repair or less appealing to thieves.
Good student: Up to a 25 percent discount for unmarried drivers under 25 years old who rank in the top 20 percent of their class, have a B average, or are on the honor roll.
Over 50: A 10 percent discount off of the usual adult rate if you are more than 50 years old.


Defensive driving course: A 5 percent discount if you complete a defensive-driving course (which often only applies to drivers 55 years of age or older).
Passive restraints: Up to a 40 percent discount on some coverage if you have air bags or automatic seatbelts
- Antilock brakes also add a 5 percent discount.
Non-commuter or carpooler: A 15 percent discount if you drive less than 30 miles to and from work each day.
Antitheft devices: A 15 percent discount, depending on where you live and the type of device you employ.