Financial Planning Courses: Insurance and Risk Management

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Choose wisely. There is only one correct answer to each question.

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1.
Insurance can help you manage _______.
Choose wisely. There is only one correct answer.
Financial loss due to risk. Insurance is not designed to help you manage risk itself, but rather the financial losses caused by risk.
2.
Premiums for insurance are based partly upon the likelihood of a negative event occurring.
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True. That likelihood, as well as other factors such as the amount of benefits to be paid, determine the premiums you must pay for the insurance.
3.
If you take out a loan and then lose your job shortly afterward, what form of insurance would protect you financially if you default on your loan?
Choose wisely. There is only one correct answer.
Credit insurance. Credit insurance is made for scenarios like this.
4.
When you compare two insurance policies, the one with the higher premium is always better.
Choose wisely. There is only one correct answer.
False. A more expensive policy may not be better (or worse) than a less expensive one. They may provide different benefits.
5.
You should only insure property for losses you cannot afford.
Choose wisely. There is only one correct answer.
True. Unless you want to deliberately waste money on premiums, you should determine how much financial loss you can afford, then insure only that which you cannot afford. This will help you keep your premiums as low as possible.