New York Insurance Exam Practice Question
What is the purpose of a health insurance premium?
Correct Answer: B
Rationale: Health insurance premiums are payments made by policyholders to maintain their insurance coverage. This funding allows the insurer to provide financial protection against medical expenses.
Option A is incorrect because premiums do not directly pay for claims; rather, they contribute to a pool of funds used to cover claims when they arise. Option C is misleading, as premiums do not typically increase a policy's cash value; this concept is more relevant to certain types of life insurance. Option D is also wrong, as premiums do not waive deductibles; they are separate components of an insurance policy.
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