Financial Planning Courses: Insurance and Risk Management

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1.
It is possible to eliminate all risk in personal finance.
Choose wisely. There is only one correct answer.
False. Though it is possible to minimize it, no one has yet succeeded in eliminating risk entirely.
2.
The more risk you transfer to an insurance company, the _______ your premiums will be.
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Higher. Premiums will rise to compensate the insurance company for taking on your risk.
3.
Which of the following is true?
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Neither is true. In managing risk, you should buy only the amount of insurance necessary to cover a risk you cannot afford. The premium reflects the benefits, so a low-cost policy may not have the same benefits of a higher-premium policy.
4.
Liability insurance would cover a situation where another person sued you.
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True. This is the purpose of liability insurance.
5.
Insurance is used to manage what?
Choose wisely. There is only one correct answer.
Financial risk. Insurance is not made to manage the other options. Its purpose is to manage the financial risks that we suffer.