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c. Vandalism that does $425 of damage to a home; the insured has a
$500 deductible.
2. Beverly and Kyle Nelson currently insure their cars with separate
companies paying $650 and $575 a year. If they insure both cars with
the same company, they would save 10 percent on the annual
premiums. What would be the future value of the annual savings over
ten years based on an annual interest rate of 6 percent?
3. As of 2008, per capita spending on health care in the United States
was about $8,000. If this amount increased by 5 percent a year, what
would be the amount of per capita spending for health care in 10
years?
4 Sarah’s comprehensive major medical health insurance plan at
work has a deductible of $750. The policy pays 85 percent of any
amount above the deductible. While on a hiking trip, she contracted a
rare bacterial disease. Her medical costs for treatment, including
medicines, tests, and a six-day hospital stay, totaled $8,893.
A friend told her that she would have paid less if she had a policy with
a stop-loss feature that capped her out-of-pocket expenses at $3,000.
Was her friend correct? Show your computations. Then determine
which policy would have cost Sarah less and by how much.
5 The Kelleher family has health insurance coverage that pays 80
percent of out-of-hospital expenses after a $500 deductible per person.
If one family member has doctor and prescription medication expenses
of $1,100, what amount would the insurance company pay?
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BUSN 380 Week 6 Quiz