South Carolina Life and Health Practice Exam

Which type of insurance might reduce the insured's financial liability for out-of-pocket medical expenses?

1. Life insurance

2. Disability insurance

3. Health insurance

4. Car insurance

The correct answer is: Health insurance

Health insurance is designed specifically to cover medical costs incurred due to health issues, allowing policyholders to seek necessary medical care without facing overwhelming financial burdens. By providing coverage for hospital stays, doctor visits, surgeries, and medications, health insurance significantly reduces the amount that an insured individual must pay out of pocket for medical expenses. This type of insurance typically has features such as deductibles, copayments, and coinsurance that define how much the insured will need to pay for different types of medical services after the insurance company has covered its share. The primary goal of health insurance is to mitigate the financial risk associated with high medical costs, making it fundamental for protecting against unexpected injuries or illnesses. In contrast, life insurance provides financial support to beneficiaries after the death of the insured but does not cover medical expenses. Disability insurance replaces a portion of income lost due to an inability to work from a medical condition, and car insurance addresses liabilities and damages related to vehicle ownership, which are unrelated to personal health expenses.