Jerry has an insurance policy with a premium of $150 per month. In

June, he's in an accident and receives a bill with a total cost of $6000.

His deductible is $1500, and his coverage limit is $4000.

1. How much total money will Jerry pay in the month of June?

He would pay 2,150 dollars.

2. Assume Lauren has the same exact accident, but her

monthly premium she pays for the insurance policy is $250.

Would you expect Lauren's deductible to be higher, lower, or

the same as Jerry's? Why?

The correct answer for (1) is $2650 and (2) since the premium of Lauren is higher or increased, a lower deductible is expected.

Explanation:

Solution

(1) Because the cost supersedes the coverage limit, the amount of the coverage limit (4000$) will only be accepted which by the deductible. will reduce further

In this example, total amount Jerry will be pay in the month of June, is given below,

4000-1500+150 = $2650

$2650 this means the = (coverage limit - deductible + monthly premium)

(2) Because the premium of Lauren is higher or increased, a lower deductible is expected

This will result in the amount Lauren will pay, she will receive higher amount from the insurance company, since the deductible will be lower.

The premium will be an hindrance, or affect in a negative way, the amount of coverage she have, this will also affects the amount of bill protected by the policy amount.