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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.
The best way to shop for insurance is to buy a policy with the lowest premium.
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False. The premium reflects the benefits offered, so a low-cost policy may not have the same benefits of a higher-premium policy.
3.
If you live in an apartment, what form of insurance would cover your belongings?
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Renter's insurance. Renter's insurance is for those who rent homes, such as apartments.
4.
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.
5.
Insurance protects a person from risks.
Choose wisely. There is only one correct answer.
False. Insurance cannot protect a person from risk; instead, it protects a person from financial losses caused by risks.