Multiple Choice QuestionIf your health insurance policy has a limit of $1,000 per hospital day, and your hospital charges $900 per day:Multiple choice question.the entire $9,000 will be covered.the entire $900 will be covered.the entire $1,000 will be covered.the entire $100 will be covered.

Fill in the Blank QuestionFill in the blank question.A policy with limits will pay only a fixed amount for your hospital room no matter what the actual rate is. For example, if your policy has a $500 limit and you are in a $600 room, you will pay $.

Multiple Choice QuestionIn terms of dollar amount or a number of days in the hospital, what determines the maximum amount paid?Multiple choice question.benefit limitscopaymentservice benefitsinternal limits

There is an insurance company and three customers, Alice, Bob and John. The timing is as follows.(1) The insurance company announces the premium and excess of a health insurance policy.(2) At Date 1, each customer decides whether to purchase the health insurance policy.(3) At Date 2, each customer will discover their health status, which is either G (healthy) or B (needing treatment inhospital).(4) Nothing happens if a customer is healthy. If a customer needs treatment in hospital, then they pay $10,000 if theydo not hold a health insurance or the excess of the policy if they do. They are cured after treatment in hospital.For simplicity, assume that the insurance company is a monopolist.Each customer has the following utility index: 𝑢(−𝑥1) + 11.02 𝑢(−𝑥2), where 𝑥𝑡 is the payment (either to the insurancecompany or to the hospital) at Date 𝑡 and 𝑢(−𝑥) = 40000√1 − (𝑥∕20000) − 40000. Table 1 summarizes each customer’sage and probability of remaining healthy.Name Age Probability of GAlice 25 99.5%Bob 25 98%John 60 95%(a) First, assume that the insurnace company offers the policy with premium $210 and excess $750. Who would like tobuy this policy? (You should find that Bob and John would like to buy the policy.)(b) David is also 25 years old and will remain healthy with probability 98% at Date 2. Unlike Bob, David’s utility indexis −𝑥1 + 11.02 (−𝑥2). Show that David does not want to buy the insurance policy in (a).(c) Note that David and Bob are equally healthy, what makes one buy the insurance policy and the other does not?(d) Next, assume that the insurance company offers the policy with premium $530 and excess $500. Who would like tobuy this policy?(e) From the insurance company’s perspective, describe the potential problem of selling only one of the two policies in(a) and (d)

On September 1, 20X1, a firm purchased a 1-year insurance policy for $5,700 and paid the full premium in advance. The insurance expense associated with this policy for the year ending December 31, 20X1, is:Multiple Choice$475.$1,900.$3,800.$5,700

If your health insurance policy has a $100 deductible, you will be responsible for paying this amount at which of the following times?Each time you seek medical careOnce every year when services of at least $100 are usedEvery month you exceed $100 in medical servicesOnly once in your lifetime