Risk Fundamentals
Uncertainty about the outcome of an event.
What is risk?
Deciding to travel in a snowstorm is an example of doing what with risk?
What is accepting risk?
The amount you pay before insurance kicks in.
What is your deductible?
Potential loss due to an activity/event
What is exposure?
The name for the contract between you and your insurance company.
What is a policy?
Pay for minor losses and transfer high-severity risk to insurance.
What is the large-loss principle?
You decide not to go to a party because there will potentially be alcohol
What is avoiding risk?
The monthly cost of insurance
What is the premium?
According to risk exposures, this is an event that can cause financial loss.
What is peril?
Your auto insurance provides a 25/50/25k plan. Your insurance will pay __ for property damage caused by your vehicle.
What is $25k?
Risk=Likelihood x consequence
What is the risk matrix?
You give the cost to the insurance company
What is transferring risk?
The insurance that all drivers are required to have is ___
What is liability?
Specific cause of damage or injury.
What is hazard?
In class, we discussed two types of personal insurance you don't need. Name one of the two.
What is Life insurance for kids/accidental death insurance?
To estimate your risk and potential loss, you need to understand these two key terms.
What are frequency and severity?
You pay the deductible, and the insurance company pays the rest
What is reducing risk?
Dental and medical coverage are included in this.
What is health insurance?
Insurance that helps cover damage to your car, NOT by an accident.
What is comprehensive auto insurance?
You need to be this age in order to receive long-term care, which helps pay for the cost of a nursing home/assisted living.
What is 60 years old?
AMMF stands for these four things, which help when to evaluate and adjust for risk. Name these four things.
What are annually, moving, making a major purchase, and family situation changes?
What is reducing risk?/What is accepting risk?
What is term-life insurance?
Auto insurance that helps cover your direct and indirect medical expenses.
What is Personal Injury Protection (PIP)?
Long-term disability cover __ to __% of your income for 5 years.
What is 40-70%?