Chapter 14 Study Guide
policy
A contract that states the conditions to which the insurance company and the policyholder have agreed
insurance agent
A person who sells insurance
controllable
A risk that you can reduce or eliminate by actions you take is a(n) _______ risk.
pure risk
A tornado, blizzard, or flood is an example of this type of risk
insurer
A(n) ______ agrees to take on risks and pay for losses if they occur.
Personal risk
A(n) _______ can result in personal losses such as health and well-being.
life, beneficiaries
A(n) ________ insurance policy pays the amount of the policy upon the death of the insured; the payment is made to people named in the policy known as_____________
Premium
Amount the policyholder pays for insurance coverage
Deductible
Amount you pay before the insurance company pays a claim
insurance companies
Businesses that provide planned protection against economic loss
assuming
If you complete a risky activity with full responsibility and agree to deal with the result if you suffer a loss, you are said to be ________ a risk.
insurable risk
Many people face the risk, and the cost of possible losses can be predicted
insurance
Planned protection provided by sharing economic losses
Claim
Policyholder's request for payment for a loss covered by the insurance policy
Risk
Possibility of incurring a loss
Liability risk
Potential losses to others that occur as a result of injury or damage you may have caused
liability risk
Risk that relates to harm or injury to other or their property is ________.
personal risk
Risks associated with illness, disability, loss of income, unemployment, old age, and premature death
Property risk
Risks of damage to or loss of property due to theft, wind, fire, flood, or some other hazard
Economic risk
Risks related to property liability and one's own personal well being
coinsurance
Sharing of expenses by the policyholder and the insurance company
False
T/F There is only one category of economic risk
False
T/F' The amount a policyholder pays for insurance coverage is the claim.
False
T/F; "Premium" and "policy" are two different names for the same thing.
False
T/F; A copyright is a name or symbol that identifies a company's product.
False
T/F; A deductible is the amount paid by the company when the policy-holder files a claim
True
T/F; An employer may provide insurance for you as part of your compensation
True
T/F; An example of self-insurance would be when a family regularly places money in a savings account to cover possible financial losses
True
T/F; An independent insurance agent can sell policies of more than one company.
False
T/F; An independent insurance agent sells policies written by only one company.
True
T/F; An insurance policy is a contract between an insurance company and a policyholder
False
T/F; Businesses are unable to protect themselves from economic losses
True
T/F; Disability is an example of personal risk
True
T/F; Economic risk can be related to property liability
True
T/F; Economic risks can be placed into three categories: personal risk, property risk, and liability risk
True
T/F; Even if you are careful, you probably can avoid all losses
True
T/F; Insurance can help you share economic losses
True
T/F; Insurance companies provide planned protection against economic losses
True
T/F; Insurance is a common form of protection against risk.
True
T/F; Liability risks are potential losses to others when you may have been careless
False
T/F; Loss of income is a property risk
False
T/F; Premature death is not an economic risk
True
T/F; Premiums charged a policyholder are affected by the cost of replacing the insured item.
False
T/F; Premiums usually decrease if losses paid by insurance companies increase
True
T/F; Risk is the possibility of incurring a los
True
T/F; Sharing risks with other can help you avoid large financial loss
True
T/F; Some people fail to collect on insured losses because they do not know what their policies are.
True
T/F; The possibility of incurring a loss is a risk.
False
T/F; The possibility of losing valuable possessions is a liability risk
True
T/F; Workers' compensation is insurance that pays employees injured on the job
False
T/F; coinsurance is the policyholderś request for payment for losses
True
T/F; premiums can be paid once a month, every six months, or once a year
policyholder
The person for whom risk is assumed bu an insurance company
policyholder
The person or company buying an insurance policy is the _______.
uninsurable risk
The risk is not common, and the amount of loss is impossible to predict.
speculative risk
The risk offers the chance either to gain or to lose.
economic risk
The three categories include personal risk, property risk, and liability risk
personnel, property, business operations
The three major categories of business insurance are _________, ___________, and _______ _________
self-insurance
When an individual, family, or business assumes the total risk of economic loss
controllable risk
You can reduce or eliminate the loss by actions you take.
non-economic risk
You may be inconvenienced, but you will not incur financial impact.
Intellectual property
________ includes software, music, books, and movies.
counterfeiting
_________ refers to illegal uses of patents, trademarks, and copyrights.
intellectual
___________ property refers to technical knowledge or creative work, it includes software, clothing designs, music, books, and movies
uncontrollable risk
you cannot reduce the risk by actions you take
