1. Personal Finance
Risk
Presented By
Mrs. Bowden

2. Warm Up:
Read pp. 567 – 570
Read pp

3. Today we will:
Define risk and the types of risk that insurance can cover and the ways to manage that risk
Identify the needs for insurance coverage and the different types of insurance coverage

4. Risk:
RISK – a state of uncertainty where some of the possibilities may result in a loss or gain due to the situation
Ex. Stock market
PURE RISK is a chance of loss with no chance for gain
Ex. Accidents, Illness, Acts of nature

5. Types of Risk: Types of Pure Risk:
Speculative – could possibly result in a gain or a loss – ex. Stock market. These types of risk are not accidental and are chosen by the individual
Economic – A gain or loss due to the economy changing. Ex. Losing a job
Insurable – pure risk for which the amount of loss can be predicted or estimated and for which there is usually insurance coverage to protect the individual
Types of Pure Risk:

6. Insurable Risks:
Personal Risk – involves your income and standard of living
Property Risk – chance of loss or harm to your property
Liability Risk – chance of loss that may occur when your errors or action result in harm to or injuries to others.

7. Insurable Risks – types of insurance to cover risks:
Automobile Insurance – Collision and Liability
Renters/Homeowners Insurance
Health Insurance
Life/Disability Insurance.

8. Question Time???:
What is the main difference between a PURE RISK and a SPECULATIVE or ECONOMIC RISK?

9. Classwork Activity: 1. Recreate chart 25.2 on p. 570 in your notes