You can either purchase insurance with a premium of $400

Question

and a co-pay of $50
or purchase insurance with a premium of $450
and no co-pay. Is there a difference between these policies? Explain.(1 point)
Responses

No, because “co-pay” is a needless term used by insurance companies to make their premiums look smaller. The full premium is effectively $450
.
No, because “co-pay” is a needless term used by insurance companies to make their premiums look smaller. The full premium is effectively 450 dollars.

Yes, because the first policy requires a flat payment of $50
any time services are received, but you would have to pay $50
less of your own money to the service provided before the insurance company will begin to pay for the service.
Yes, because the first policy requires a flat payment of 50 dollars any time services are received, but you would have to pay 50 dollars less of your own money to the service provided before the insurance company will begin to pay for the service.

No, because “premium” is a needless term used by insurance companies to make their co-pays look smaller. The full co-pay is effectively $450
.
No, because “premium” is a needless term used by insurance companies to make their co-pays look smaller. The full co-pay is effectively 450 dollars.

Yes, because the first policy requires you to pay $50
less per month but would require a payment of $50
any time services are received.

Answer 1

To compare the two insurance policies, let's break down the costs associated with each:

1. First Policy:

   • Annual premium: $400
   • Co-pay: $50 (you pay this each time you receive services)

2. Second Policy:

   • Annual premium: $450
   • No co-pay (you do not pay anything out of pocket when receiving services)

Comparison:

• The first policy costs less in terms of the premium, but you will incur additional costs whenever you use the insurance due to the co-pay.
• The second policy has a higher premium but eliminates the uncertainty of additional costs when receiving healthcare services.

Final Analysis:

The major difference lies in how costs are incurred. The first policy has a lower fixed cost (premium) but introduces variable costs (co-pay) each time you use the service. The second policy has a higher fixed cost but is simpler because you pay only the premium without additional charges when accessing services.

Based on this analysis, the correct response would be:

Yes, because the first policy requires a flat payment of $50 any time services are received, but you would have to pay $50 less of your own money to the service provided before the insurance company will begin to pay for the service.