Which statement best describes a situation in which people have to pay a deductible?

• A. When an individual pays a monthly premium for health insurance coverage.
• B. When an individual receives a tax refund from the government.
• C. When an individual files an insurance claim and must pay a specified amount out-of-pocket before the insurance covers the remaining costs.
• D. When an individual invests in a retirement account and receives employer matching contributions.

Answer: (C)

Verified step by step guidance

1. Understand the concept of a deductible: A deductible is the amount an individual must pay out-of-pocket for expenses before their insurance policy begins to cover the remaining costs.
2. Identify the context in which deductibles are relevant: Deductibles are typically associated with insurance claims, such as health, auto, or property insurance.
3. Analyze the options provided in the problem: Evaluate each statement to determine which one aligns with the definition and purpose of a deductible.
4. Eliminate incorrect options: For example, paying a monthly premium is not a deductible, as it is a regular payment for maintaining insurance coverage. Similarly, receiving a tax refund or employer matching contributions does not involve deductibles.
5. Select the correct statement: The correct description of a deductible is when an individual files an insurance claim and must pay a specified amount out-of-pocket before the insurance covers the remaining costs.