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Financial Planning Courses: Insurance and Risk Management

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1.
There are many ways to manage risks in your financial life. For example, not taking any steps at all to reduce the risk of financial loss is called _______.
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Assuming risk. In this scenario, you assume the risk yourself, along with having to pay for the financial consequences.
2.
Life insurance places a value on a person's _______.
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Earning ability. The purpose of life insurance is to pay benefits that replace one's lost earnings ability if one dies.
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.
Insurance is used to manage what?
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Financial risk. Insurance is not made to manage the other options. Its purpose is to manage the financial risks that we suffer.
5.
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.