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Personal Finance COPY (chapter names) > Chapter 25 & 26: Insurance > Flashcards

Chapter 25 & 26: Insurance Flashcards

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1
Q

its a method for spreading individual risk among a large group of people to make losses more affordable for all -

A

insurance

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2
Q

its the uncertainty as to as fiancial loss, increased by perils and hazards -

A

risk

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3
Q

under the policy, the insurer agrees to assume an indentified risk for a fee, called the ….

A

premium

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4
Q

premiums are usually paid at regular intervals by the ………… of the policy (……)

A

owner

policyholder

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5
Q

in insurer collects ……… from policyholders under the assumption that only a few policyholders will have financial losses at any given time -

A

insurance premiums

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6
Q

3 insurable risks -

A

personal
property
liability

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7
Q

personal risks have to do w/ …..

A

life, health, disability

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8
Q

property risks have to deal w/ …….

A

fire, theft, wind, rain, accident, natural disaster

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9
Q

liability risks have to deal w/ ……

A

car accidents, personal injuries, business mistakes

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10
Q

its an insurable risk where you are responsible; can be sued

A

liability risk

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11
Q

risk management process - 3 steps -

A

identify risks of loss
assess seriousness of risks
handle risks

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12
Q

pure risk- insurable (……) -

A

accidental

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13
Q

speculaative risk - not insurable (…..) -

A

stocks

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14
Q

3 ways to handle risks -

A

risk avoidance
risk reduction
risk assumption

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15
Q

5steps in making a risk-management plan -

A 
increase deductibles
purchase group insurance
consider payment options
look for discount opportunities
comparison shop
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16
Q

if property is damaged, insurance will pay -

A

property risk

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17
Q

it means you can be sued

-you are at the risk of being sued -

A

liability risk

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18
Q

homeowners insurance covers ….

A

physical damage coveragge
theft and vandalism coverage
liability coverage

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19
Q

2 automobile insurance -

A

cost of automobile insurance

types of automobile insurance coverage

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20
Q

cost of automobile insurance (6) -

A 
model, style, age of car
driver classification
location
distance driven
purpose ofdriving
age/sec of other drivers oof the car
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21
Q

7 types of automobile insurance coverage -

A 
liability
collison
comprehensive
personal injury protection (pip)
uninsure/underinsured motorist
no-fault insurance
assigned-risk policies
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22
Q

collision coverage -

A

something you run into

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23
Q

it covers things that are not covered by collision -

A

comprehensive

24
Q

when you get in an accident & the people dont have inurance, your insurance will kick in -

A

uninsured/ underinsured motorist coverage

25
Q

2 umbrella liabilty insurance -

A

personal catastrophe policy

supplements ur basic auto&propert liability coverage

26
Q

what to do after auto accident -

A 
be prepared
-alert traffic
-hv a pen and card
immediately after accident
-stay calm
-check forinjuries
move car to safe place
-turn hazards on
-call police
-notify insurance
27
Q

It doesn’t matter who’s at fault, each person will pay their own losses -

A

No fault insurance

28
Q

T or F

Do not sign documents unless it’s for the police or your insurance agent

A

True

29
Q

Make immediate …. about the accident

A

Notes

30
Q

Be……, don’t be mean or screaming

A

Polite

31
Q

State only the …..

A

Facts

32
Q

If possible, don’t ….. the accident

A

Leave

33
Q

A method for spreading individual risk among a large group of people to make losses more affordable for all

A

Insurance

34
Q

A risk that may result in either a gain or loss

A

Speculative risk

35
Q

Putting the policyholder back in the same financial condition he or she was in before a loss occurred

A

Indemnification

36
Q

The chances of loss or harm to personal or real property

A

Property risk

37
Q

A chance of loss with no chance for gain

A

Pure risk

38
Q

A financial Interest in life or property

A

Insurable interest

39
Q

The chances of loss that may occur when your errors or actions result in injuries to others or damage to their property

A

Liability risk

40
Q

A risk that may result in gain or loss because of changing economics conditions

A

Economic risk

41
Q

What is the purpose of insurance

A

Can reduce negative consequences of a pure risk by purchasing insurance
- method for spreading individual risk

42
Q

Its a risk that lot of people face

A

Insurable risk

43
Q

Its an event whose occurrence can cause a loss

A

Peril

44
Q

Its. Condition that creates or increases tthe likelihood of some loss

A

Hazard

45
Q

Lowering your chance of loss by not doing high-risk activities

A

Risk avoidance

46
Q

Transferring risk by buying insurance to cover potential losses

A

Risk shifting

47
Q

An organized strategy for controlling financial loss from pure risks and insurable risks

A

Risk management

48
Q

Taking measures to lessen the frequency of severity of losses that might occur

A

Risk reduction

49
Q

The specified amount of a loss that you will have to pay

A

Deductible

50
Q

Understanding the types of risk you will face and their potential consequences

A

Risk assessment

51
Q

Accepting the consequences of risk by self-insuring to absorb the loss

A

Risk assumption

52
Q

This is an ex of….

Instead of having a party at your house and risking damage, rent out a hall.

A

Risk of avoidance

53
Q

This is an ex of….

You may put studded snow tires on your car, wear a seat belt

A

Risk of reduction

54
Q

This is an ex of..

You own a car and buy auto insurance

A

Risk assumption

55
Q

This is an ex of…

Buying insurance to cover fire, theft,injury, or death

A

Risk shifting

56
Q

Changing your deductible reduces your insurance premium by …..

A

If u accept a higher deductible

57
Q

How can u reduce your overall automobile insurance premium costs-

A

Set a higher deductible

Park in garage

Personal Finance COPY (chapter names) (8 decks)

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