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Financial Planning Courses: Insurance and Risk Management

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1.
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.
2.
What form of insurance would pay for the costs of assisted living?
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Long-term care insurance. This form on insurance covers costs of caring for you over a long period.
3.
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.
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.
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.