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Financial Planning Courses: Insurance and Risk Management

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1.
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.
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.
Insurance can help you manage _______.
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Financial loss due to risk. Insurance is not designed to help you manage risk itself, but rather the financial losses caused by risk.
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.
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.