How a Policy Works: Premium, Deductible, Claim
Aligned to JS:RM-3 — Jump$tart National Standards in K-12 Personal Finance Education & Advance CTE Career Clusters.
What this lesson teaches
The premium is what you pay to keep the policy. The deductible is what you pay out of pocket before the insurer pays anything. A claim is the request you file after a loss. A lower premium almost always means a higher deductible — you are choosing when to pay, not whether.
Worked examples
Example 1
Your policy has a $500 deductible. A repair costs $2,300. You pay $500 and the insurer pays $1,800.
Example 2
That same repair on a $1,000-deductible policy costs you $1,000 — but that policy might save you $20 a month, or $240 a year. Which is better depends on how much cash you could cover on short notice.
Example 3
If the repair costs $400 and your deductible is $500, filing a claim gets you nothing and can still raise your rate. Small losses are usually not worth a claim.
Practice questions
- Define premium, deductible and claim in one sentence each.
- A $3,000 loss with an $800 deductible: who pays what?
- When is it a bad idea to file a claim even though you could?
Watch the lesson
Every lesson comes with a video taught in English and Spanish — the same video the QR code in the printed workbook opens.
▶ Watch this lessonEn español
Cómo funciona una póliza: prima, deducible, reclamo
La prima es lo que pagas para mantener la póliza. El deducible es lo que pagas de tu bolsa antes de que la aseguradora pague algo. Un reclamo es la solicitud que presentas después de una pérdida. Una prima más baja casi siempre significa un deducible más alto — estás eligiendo cuándo pagar, no si pagas.
Ejemplo 1: Tu póliza tiene un deducible de $500. Una reparación cuesta $2,300. Tú pagas $500 y la aseguradora paga $1,800.
Ejemplo 2: Esa misma reparación con un deducible de $1,000 te cuesta $1,000 — pero esa póliza podría ahorrarte $20 al mes, o $240 al año. Cuál conviene depende de cuánto efectivo podrías cubrir de golpe.
Ejemplo 3: Si la reparación cuesta $400 y tu deducible es $500, presentar un reclamo no te da nada y aun así puede subirte la tarifa. Las pérdidas pequeñas normalmente no valen un reclamo.
More Insurance & Risk lessons
Teach this lesson today
An AI tutor that guides with questions instead of just giving answers — all K–12 core subjects, every child in the family.
Start free — no card required