Quarter 4 Exam Review

With inflation, it takes more money to buy the same goods and services.

• True
• False

Generally, the _____ the deductible, the ____ the insurance premium.

• higher; higher
• higher; lower
• lower; lower

The premiums for group plans are usually considerably ______ than for individual plans.

• higher
• the same
• lower

Under an insurance policy, the insurer agrees to assume an identified risk when the policyholder pays a fee called the

• premium
• benefit
• exclusion
• claim

Buying insurance is an example of

• risk assumption
• risk reduction
• risk shifting / risk transfer
• risk avoidance

Putting a waterproof phone case on your new iPhone at the beach is risk reduction. Choosing not to use your new iPhone at all while in the water at the beach is risk ______.

• risk shifting
• risk reduction
• risk transfer
• risk avoidance

__________ is a method for spreading individual risk among a large group of people.

• Risk Avoidance
• Insurance

__________ means putting the policyholder back in the same financial condition he or she was in before the loss occurred.

• Indemnification
• Speculation

Risk __________ lowers the chance for loss by not doing the activity that could result in the loss.

• transfer
• reduction
• avoidance
• shifting

Using seat belts or installing smoke alarms in your home are examples of risk __________.

• transfer
• reduction
• avoidance
• shifting