Some insurance policies have deductibles. A deductible is an amount of a claim not covered by nsurance. It's a fixed portion of the medical bills that the insured person must pay in order to make a claim to their insurer. Suppose Rosa's insurance company provides two plans. Plan A has zero deductibles (good!) but charges a high premium (bad!). Specifically, Plan A charges $591 for full coverage. Plan B has a deductible of $197, but charges a premium of just $199. Will Rosa purchase insurance and, if so, which plan?
Some insurance policies have deductibles. A deductible is an amount of a claim not covered by nsurance. It's a fixed portion of the medical bills that the insured person must pay in order to make a claim to their insurer. Suppose Rosa's insurance company provides two plans. Plan A has zero deductibles (good!) but charges a high premium (bad!). Specifically, Plan A charges $591 for full coverage. Plan B has a deductible of $197, but charges a premium of just $199. Will Rosa purchase insurance and, if so, which plan?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Some insurance policies have deductibles. A deductible is an amount of a claim not covered by
insurance. It's a fixed portion of the medical bills that the insured person must pay in order to
make a claim to their insurer. Suppose Rosa's insurance company provides two plans. Plan A
has zero deductibles (good!) but charges a high premium (bad!). Specifically, Plan A charges
$591 for full coverage. Plan B has a deductible of $197, but charges a premium of just $199. Will
Rosa purchase insurance and, if so, which plan?
Rosa will not purchase any insurance
Rosa will purchase plan A
Rosa will purchase plan B
Rosa is indifferent between the two plans
O None of the above
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