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WorksheetsChapter 21 Review
Total questions: 25
Worksheet time: 11mins
Name
Class
Date
1.
It is possible to protect yourself from the consequences of pure risks.
a)
True
b)
False
2.
You can buy insurance on your neighbor's home.
a)
True
b)
False
3.
Factories begin laying off workers during the decline period of the business cycle.
a)
True
b)
False
4.
Factories begin laying off workers during the decline period of the business cycle.
a)
True
b)
False
5.
Insurance is a way to enrich policyholders; it is to put them in a better financial position than they were in before the loss or damage.
a)
True
b)
False
6.
Some risks are not serious enough to insure.
a)
True
b)
False
7.
Risk transfer is the process of accepting the consequences of risk.
a)
True
b)
False
8.
Risk transfer is the process of accepting the consequences of risk.
a)
True
b)
False
9.
Generally, the _____ the deductible, the ____ the insurance premium.
a)
higher; higher
b)
higher; lower
c)
lower; lower
10.
The premiums for group plans are usually considerably ______ than for individual plans.
a)
higher
b)
the same
c)
lower
11.
Which of the following is an example of a speculative risk?
a)
the chance that your house could catch on fire
b)
the possibility that you will have an accident while driving to school
c)
the possibility of becoming sick with the flu
d)
placing a bet on a horse race
12.
All of the following types of insurance protect against personal risk except
a)
life insurance
b)
property insurance
c)
disability insurance
d)
health insurance
13.
Under an insurance policy, the insurer agrees to assume an identified risk when the policyholder pays a fee called the
a)
premium
b)
benefit
c)
exclusion
d)
claim
14.
A condition that creates or increases the likelihood of some loss is called a
a)
peril
b)
probability
c)
hazard
d)
proof of loss
15.
Understanding the types of risk you will face and their potential consequences is called
a)
risk management
b)
risk avoidance
c)
risk assessment
d)
risk administration
16.
Buying insurance is an example of
a)
risk assumption
b)
risk reduction
c)
risk shifting / risk transfer
d)
risk avoidance
17.
Which of the following will likely result in lower insurance costs?
a)
pay your premiums monthly rather than yearly
b)
buy more than one type of insurance from the same company
c)
purchase an individual plan rather than a group plan
d)
choose a lower deductible
18.
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 ______.
a)
risk shifting
b)
risk reduction
c)
risk transfer
d)
risk avoidance
19.
__________ risk is a chance of loss with no chance for gain.
a)
Pure
b)
Speculative
20.
Making an investment to help offset against loss is called __________.
a)
Speculating
b)
Hedging
21.
Making an investment to help offset against loss is called __________.
a)
Speculating
b)
Hedging
22.
__________ is a method for spreading individual risk among a large group of people.
a)
Risk Avoidance
b)
Insurance
23.
__________ means putting the policyholder back in the same financial condition he or she was in before the loss
occurred.
a)
Indemnification
b)
Speculation
24.
Risk __________ lowers the chance for loss by not doing the activity that could result in the loss.
a)
transfer
b)
reduction
c)
avoidance
d)
shifting
25.
Using seat belts or installing smoke alarms in your home are examples of risk __________.
a)
transfer
b)
reduction
c)
avoidance
d)
shifting
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