Premium — Social Studies definition
The price paid for specified insurance coverage.
Where it is taught
- Taxes, Withholding, Insurance & Risk Sharing — Household Finance & Major Decisions, Government, Civic Participation & Economics, Grade 12
In use
Paying a premium does not mean every event or loss is covered.
Taxes, Withholding, Insurance & Risk Sharing
Questions using premium
Problem 1
Answer and explanation
Coverage, exclusions, deductibles, limits, and the ability to bear remaining loss can differ. The price is one dimension. Compare relevant scenarios and contract terms without assuming every loss is covered.
Problem 2
Answer and explanation
No. The contract defines covered events, eligibility, deductibles, limits, and exclusions. Compare the particular scenario with those terms. Payment of a premium establishes participation in an arrangement, not unlimited reimbursement.
Response criteria
- Explain the relevant institution or economic concept accurately; show correct calculations where needed.
- Connect supplied evidence and stated assumptions to an explained conclusion.
- Compare feasible options and their effects on different people without stereotypes.
- Identify a limitation, tradeoff, uncertainty, or condition that qualifies the conclusion.
Problem 3
Answer and explanation
The insurer pays $750. The insured bears $150 of the loss plus the separate $80 premium, totaling $230 under the supplied scenario. Coverage assumptions and exclusions are essential; this is not every real contract.
Response criteria
- Explain the relevant institution or economic concept accurately; show correct calculations where needed.
- Connect supplied evidence and stated assumptions to an explained conclusion.
- Compare feasible options and their effects on different people without stereotypes.
- Identify a limitation, tradeoff, uncertainty, or condition that qualifies the conclusion.