Financial Risk Management Flashcard

Front

What is the primary purpose of creating a living will?

Back

To state preferences for end-of-life medical care

Front

Which of the following is NOT a tool used by families for risk management?
Insurance,
Trusts,
Investment in stocks,
Power of attorney

Back

Investment in stocks

Front

What do businesses often review to manage risks?

Back

Client credit ratings and contingency plans

Front

Which type of insurance is specifically mentioned as necessary for individuals and families to manage financial risks? Options: Travel insurance, Health insurance, Pet insurance, Educational insurance

Back

Health insurance

Front

What is the primary purpose of estate planning?

Back

To minimize taxes, court costs, and legal fees

Front

What does a living will typically specify?

Back

The medical treatments a person wishes to refuse if they are incapacitated.

Front

What is a trust primarily used for in estate planning?

Back

To manage and distribute a person's assets without probate

Front

What happens to the ownership of assets in an irrevocable trust?

Back

It is transferred to the beneficiary.

Front

Under what circumstances might a power of attorney be activated? Options: When the person is unable to make decisions due to a medical condition, When the person reaches a certain age, When the person decides to live in another country, When the person purchases a new property

Back

When the person is unable to make decisions due to a medical condition

Front

What is the primary purpose of prenuptial contracts according to the text?

Back

To offset the risk of divorce