Future Business Leaders of America (FBLA) Personal Finance Practice Test

Which type of insurance is typically designed to cover expenses related to medical conditions?

1. Life Insurance

2. Health Insurance

3. Auto Insurance

4. Homeowners Insurance

The correct answer is: Health Insurance

Health insurance is specifically designed to cover expenses related to medical conditions, including hospital visits, surgeries, prescription medications, and preventive care. This type of insurance provides financial protection against high medical costs and helps individuals manage their healthcare expenses more effectively. Health insurance typically operates by covering a portion of the costs incurred by the policyholder when they receive medical treatment. This can include a variety of services such as doctor's visits, emergency services, and mental health support, making it a critical component of personal finance for managing health-related expenses. In contrast, life insurance focuses on providing financial support to beneficiaries after the insured individual's death, auto insurance covers damage and liability related to vehicles, and homeowners insurance protects against risks associated with home ownership, such as property damage or theft. Each of these other types of insurance serves different needs and situations, establishing why health insurance is the correct choice for covering medical expenses.