Chapter 6- Personal Risk Management – Flashcards
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automobile insurance
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insurance that protects a car owner from losses as a result of accidents and other events
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beneficiary
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the person designated to receive money from a life insurance policy
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disability insurance
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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
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health insurance
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a plan for sharing the risk of medical costs
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home inventory
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a list of items of value in your home
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homeowner's insurance
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insurance that protects against risk of loss to a home and its contents
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liability coverage
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insurance protection against injuries suffered by others on your property or as a result of your actions
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life insurance
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insurance that pays money to the beneficiary upon the death of the insured person
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loss
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a physical injury, damage to property, or disappearance of property
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permanent life insurance
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insurance that provides a death benefit and builds cash value
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premium
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the price paid for insurance coverage
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probability
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the likelihood of a risk resulting in a loss
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renter's insurance
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a tenant's policy that protects against the loss of personal property in a rented residence
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risk
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the chance of injury, damage, or economic loss
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risk assessment
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the process of identifying risks and deciding how serious they are
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risk reduction
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finding ways to lower your chance of incurring a loss
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risk transfer
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buying insurance to shift the risk of financial loss
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self-insure
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setting aside money to be used in the event of injury or loss
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stop-loss provision
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a clause that provides 100 percent coverage of medical expenses after a certain amount has been paid
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term life insurance
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temporary insurance that pays only a death benefit
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umbrella policy
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liability coverage above that of homeowner's and car insurance
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false
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All risks have serious potential losses and should be managed with risk avoidance or risk transfer (true/false)
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false
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driving without a spare tire will usually lead to serious personal risk (true/false)
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true
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having a home security alarm system can reduce your insurance premium (true/false)
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false
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you should assume the risk for large expenses and get insurance to cover small and routine costs (true/false)
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false
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if you have health insurance, you do not have to worry about the costs of health care (true/false)
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true
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a major advantage of HMOs is their focus on preventive care and wellness (true/false)
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false
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term insurance is an important part of your permanent life insurance plan (true/false)
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false
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homeowners insurance protects a a homeowner from fire damage but does not include liability coverage (true/false)
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false
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high-risk pools offer maximum insurance coverage at high cost to poor drivers (true/false)
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true
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you can reduce your insurance premium cost by paying annually instead of monthly (true/false)
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risk reduction
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finding ways to lower your chance of loss is _____
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risk avoidance
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not participating in dangerous activity is _____
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risk assumption
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self-insuring is a form of ______
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fee-for-service
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what is an example of unmanaged care?
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basic health care
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What is a type of health insurance plan that includes coverage for medical, hospital, and surgery expenses
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short-term disability insruance
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temporary coverage for nonwork-related illness or injury is covered by ____
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term insurance
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What kind of insurance is known as pure insurance?
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level term
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In which type of term insurance policy will the death benefit remain the same?
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liability coverage
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What type of coverage would pay for injuries to guests in your home?
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replacement cost
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For insurance purposes, what you would pay today to replace an item is the ______
