Financial Planning Courses: Insurance and Risk Management

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1.
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.
2.
An insurance deductible amount is an example of _______.
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Sharing risk. By sharing risk with an insurer through a co-pay or deductible amount, you can lower your insurance premiums.
3.
It is possible to determine the mathematical probability of risk occurring and the financial risk at stake.
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True. This is what insurance actuaries do. The results of their calculations are factored into the premiums you pay.
4.
When you compare two insurance policies, the one with the higher premium is always better.
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False. A more expensive policy may not be better (or worse) than a less expensive one. They may provide different benefits.
5.
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?
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Credit insurance. Credit insurance is made for scenarios like this.