3. Risk Management & Insurance Basics Automobile InsuranceHealth Insurance Life Insurance Property & Liability Insurance 1611611 2722722 383333 44444 555

5. The three elements of risk management. What are Risk Reduction, Risk Transfer and Risk Retention?

6. TRUE OR FALSE: you will be able to transfer all of your risk for a peril to an insurance company. What is FALSE?

7. If you have an insurance policy for $25000 and you suffer $8000 in losses then the insurance company will pay you this amount. What is $8,000?

9. The three main principles of risk transfer. What is Pooling to utilize the Law of Large Numbers to determine frequency and severity of losses, The transferee must be willing to assume the risk, and Not all risk can be transferred?

10. HIGHER or LOWER: If the frequency risk of loss is higher then your premium will be this. What is HIGHER?

11. HIGHER or LOWER: If the severity risk of loss is higher then your premium will be this. What is HIGHER?

12. HIGHER or LOWER: If the retained risk by the insured is higher then your premium will be this. What is LOWER?

13. HIGHER or LOWER: If the transferred risk is higher then your premium will be this. What is HIGHER?

14. This type of automobile insurance is required in all states (other than no-fault states). What is Automobile Liability?

15. This portion of automobile insurance will pay for damages to other people and their property caused by you in an accident that is your fault. What is Automobile Liability?

16. This portion of automobile insurance will pay for damages to your car caused by you in an accident that is your fault. What is Collision?

17. This portion of automobile insurance will pay for damages to your car due to vandalism. What is Other Than Collision (Comprehensive)?

19. The 3 normal expenses covered by routine medical expense insurance. What are Visits to the doctor, Treatment of basic illnesses, and Prescription drugs?

20. A co-pay is normally associated with this type of insurance. What is Health Insurance?

22. These two terms both refer to a specific dollar amount you pay every time you make a claim on your insurance. What are Deductible and Co-pay?

23. You have a $12,000 health insurance claim. On your policy, you have a $2,000 deductible and a 20% co- insurance requirement. This is how much you will pay for the surgery. What is $4,000?

24. HMO or PPO: this type health insurance company requires you to see a primary care physician in order to get a referral to see a specialist. What is an HMO?

25. HMO or PPO: this type health insurance company requires you to pay a deductible and/or co-insurance requirement for major medical treatments. What is a PPO?

26. This type of insurance replaces lost income if you become disabled and unable to work. What is disability insurance?

27. This term refers to the person who receives the payout from your life insurance policy. What is a beneficiary?

29. The normal intent for the use of life insurance. What are Pay funeral expenses, Pay off debt, Replace lost income, and Pay for college?

30. The amount paid out by the insurance company if a person has a term life insurance policy and dies after the end of the policy’s term. What is $0?

31. The amount paid out by the insurance company if a person has a $250,000 limited-pay whole life insurance policy and dies. What is $250,000?

32. TERM LIFE or WHOLE LIFE: this type of life insurance normally has a lower premium. What is TERM LIFE?

33. The types of hazards covered by an open-perils property insurance policy. What is All hazards except those specifically excluded by the policy?

34. TRUE or FALSE: renters need not get property insurance because their personal property is insured by their landlord. What is FALSE?

35. ACTUAL CASH VALUE or REPLACEMENT COST: The type of property insurance that will pay you the amount needed to buy a new version of property should it be lost or stolen or damaged. What is REPLACEMENT COST?

36. This type of liability insurance provides additional coverage on any of your existing policies (auto and property). What is an Umbrella policy?