Life & Health Insurance Practice Exam 2026 - Free Practice Questions and Study Guide

Government insurance programs are primarily funded by the populace through taxation. This means that the funds collected are derived from taxes levied on individuals and businesses, which are then allocated to support various government-funded insurance initiatives, such as Medicare, Medicaid, unemployment insurance, and workers' compensation programs.

This funding model ensures that the insurance programs can provide coverage and services to citizens without the necessity of relying solely on premium payments or private investments, which are more typical in private insurance markets. By using tax revenues, government insurers can offer coverage to a broader segment of the population, including those who may not be able to afford insurance premiums.

In contrast, options like private investors, insurance premiums, and state grants do not accurately represent the primary funding mechanism for government insurance programs, as they involve different sources and methods of financing not primarily tied to public taxation.