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Financial Planning Courses: Insurance and Risk Management

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1.
Insurance protects a person from risks.
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False. Insurance cannot protect a person from risk; instead, it protects a person from financial losses caused by risks.
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.
Which of these actions are a good reason to have additional insurance coverage?
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Living near a river that floods every year. Floods are high risk, so they justify paying for more insurance coverage.
4.
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.
5.
How we perceive risk remains the same throughout a person's life, regardless of age or experience.
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False. Usually, the way we understand risk changes as we get older.