Financial Planning Courses: Insurance and Risk Management

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1.
Liability insurance would cover a situation where another person sued you.
Choose wisely. There is only one correct answer.
True. This is the purpose of liability insurance.
2.
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.
3.
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.
4.
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.
5.
Which of the following is a way to manage risk?
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All of the above. Risk is all around us, and we manage it by assuming it, avoiding it, sharing it, or transferring it to someone else.