08 Insurance and Risk Management Free Online FlashCards

What financial role does insurance serve?

Insurance transfers some financial risk to an insurer in exchange for a known cost, the premium.

What is an insurance premium?

A premium is the amount you pay an insurer for help covering losses described in the policy.

What does health insurance help pay for?

Health insurance helps pay for covered health care. Plans can differ in premiums, out-of-pocket costs, covered services, and provider networks.

What risks can auto insurance cover?

Auto insurance can cover injuries or property damage for which a driver is responsible and, depending on the policy, damage to the insured vehicle.

How does renters insurance differ from homeowners insurance?

Homeowners insurance commonly covers the home, belongings, certain liability claims, and some additional living costs after covered losses. Renters insurance generally covers belongings and may include liability, but not the building.

When does life insurance pay its benefit?

Life insurance pays a benefit to named beneficiaries if the insured person dies while coverage is in force.

What financial loss can disability insurance help address?

Disability insurance can replace part of a person’s income when illness or injury prevents them from working, subject to policy terms and limits.

What does umbrella insurance add?

Liability or umbrella insurance can add liability protection above certain limits in underlying policies.

Which two major risks are typically excluded by standard home or renters policies?

Standard homeowners or renters policies typically exclude flood and earthquake damage; separate protection may be needed for those risks.

What is the trade-off of choosing a higher deductible?

A higher deductible often lowers the premium, but increases what you must pay when a covered claim occurs.

What is a coverage limit?

A coverage limit is the most an insurer will pay for a covered loss or category of loss.

What key details does a declarations page summarize?

A declarations page summarizes important details such as insured people or items, policy dates, coverage amounts, deductibles, and premium.