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- Tracey is a 28-year-old unmarried man living in Region A. He commutes 38 miles to work and qualifi es for the long-term
customer discount.
a. Calculate Tracey’s semiannual liability premium.
b. What would Tracey’s premium be if he switched to a 250/500 policy? - Marissa is a 38-year-old married woman living in Region C. She commutes 5 miles to school.
a. Calculate Marissa’s semiannual liability premium.
b. What would her premium be if she switched to a 100/300 policy? - Suppose that Tracey (from Exercise 40) also carries collision coverage, and his semiannual premium is $115.43 with
a $250 deductible. How would increasing his deductible to $750 change his premium? - Suppose that Marissa (from Exercise 41) also carries collision coverage with a $250 deductible. Her semiannual
premium is $182.43. How much would she save by increasing her deductible to $1,000?
E. Additional Exercises- In Exercise 37 the difference between the pure premium and the actual premium charged for the policy was enormous.
Why do you suppose people actually buy these policies when the gap between their cost and the pure premium is so
large? - Six months ago Jennifer bought a new car for $23,500. Today, the car is worth $19,500, but she owes $21,925 on her
car loan for it. She has collision insurance with a $500 deductible. Jennifer has a serious accident, and her car is totaled
(meaning that the damage is bad enough that it cannot be repaired). Her insurance will reimburse her for the value of
the car, and then she will need to pay off the balance of her loan. How much of her own money will she need to be able
to pay off the loan?
13.2 Health Insurance and Employee Benefits 53713.2 Health Insurance and Employee Benefi ts
In many countries, health care is primarily funded through a governmental program. This
sort of arrangement is often referred to as socialized medicine or universal health care.
Every citizen is provided with the same basic package of benefits, paid for through a gov-
ernmental agency with funds collected in taxes (or borrowing). The government program
may not cover all medical expenses (prescription drugs, for example) or may not provide
access to all the health care providers or services that an individual may want. But since
basic coverage is automatic, insurance for health care expenses not covered by the govern-
ment plan may be desirable, but is not a critical issue for most people.
In the United States, on the other hand, there is no national universal program for health
insurance coverage. Medicare provides coverage for Americans over the age of 65, and
Medicaid provides coverage for the poor, but for the rest, paying for medical expenses
is another matter. While paying cash for medical expenses is of course an option—
theoretically—even a comparatively minor illness can easily cost thousands of dollars, and
the cost of treating a major illness can be staggering. In this environment, having health
insurance coverage becomes essential to be able to access medical care without facing the
prospect of financial ruin.