Chapter 6 - Personal Risk Management

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false

All risks have serious potential losses and should be managed with risk avoidance or risk transfer (true/false)

replacement cost

For insurance purposes, what you would pay today to replace an item is the ______

level term

In which type of term insurance policy will the death benefit remain the same?

basic health care

What is a type of health insurance plan that includes coverage for medical, hospital, and surgery expenses

term insurance

What kind of insurance is known as pure insurance?

liability coverage

What type of coverage would pay for injuries to guests in your home?

stop-loss provision

a clause that provides 100 percent coverage of medical expenses after a certain amount has been paid

home inventory

a list of items of value in your home

true

a major advantage of HMOs is their focus on preventive care and wellness (true/false)

loss

a physical injury, damage to property, or disappearance of property

health insurance

a plan for sharing the risk of medical costs

renter's insurance

a tenant's policy that protects against the loss of personal property in a rented residence

risk transfer

buying insurance to shift the risk of financial loss

false

driving without a spare tire will usually lead to serious personal risk (true/false)

risk reduction

finding ways to lower your chance of incurring a loss

risk reduction

finding ways to lower your chance of loss is _____

true

having a home security alarm system can reduce your insurance premium (true/false)

false

high-risk pools offer maximum insurance coverage at high cost to poor drivers (true/false)

false

homeowners insurance protects a a homeowner from fire damage but does not include liability coverage (true/false)

false

if you have health insurance, you do not have to worry about the costs of health care (true/false)

liability coverage

insurance protection against injuries suffered by others on your property or as a result of your actions

life insurance

insurance that pays money to the beneficiary upon the death of the insured person

automobile insurance

insurance that protects a car owner from losses as a result of accidents and other events

homeowner's insurance

insurance that protects against risk of loss to a home and its contents

permanent life insurance

insurance that provides a death benefit and builds cash value

disability insurance

insurance that provides income to replace a portion of normal earnings when the insured is unable to work due to nonwork-related injury or illness

umbrella policy

liability coverage above that of homeowner's and car insurance

risk avoidance

not participating in dangerous activity is _____

risk assumption

self-insuring is a form of ______

self-insure

setting aside money to be used in the event of injury or loss

short-term disability insruance

temporary coverage for nonwork-related illness or injury is covered by ____

term life insurance

temporary insurance that pays only a death benefit

false

term insurance is an important part of your permanent life insurance plan (true/false)

risk

the chance of injury, damage, or economic loss

probability

the likelihood of a risk resulting in a loss

beneficiary

the person designated to receive money from a life insurance policy

premium

the price paid for insurance coverage

risk assessment

the process of identifying risks and deciding how serious they are

fee-for-service

what is an example of unmanaged care?

true

you can reduce your insurance premium cost by paying annually instead of monthly (true/false)

false

you should assume the risk for large expenses and get insurance to cover small and routine costs (true/false)


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