How Much Do You Know About Insurance?

1. Risk is best defined as:

A. The chance of loss

B. The chance of harm

C. The chance of loss or injury

D. None of these

Correct!

Wrong!

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2. Which of the following can be classified as an unexpected event that puts people at risk?

A. Tornado

B. Car accident

C. Illness

D. All of the above

Correct!

Wrong!

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3. You are at risk for personal financial loss when:

A. Unexpected events can damage your income or assets

B. Unexpected events can damage your property

C. Unexpected events can damage your health

D. All of the above

Correct!

Wrong!

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4. Insurance is best described as:

A. A contract to transfer financial risk to a third party

B. A requirement to protect your car from loss due to accident

C. A product that will pay you in the event you have an unexpected loss

D. All of the above

Correct!

Wrong!

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5. An insurance premium is:

A. An amount you pay to the doctor for coverage

B. An amount you pay to the insurance provider for coverage

C. An amount you pay to the hospital for coverage

D. None of these

Correct!

Wrong!

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6. Where do insurance companies get money to pay out claims?

A. By investing the owner's money in stocks or bonds

B. By pooling funds collected from premiums

C. By investing the owner's money in bank accounts so it will be safe

D. By soliciting or asking for donations after the incident

Correct!

Wrong!

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7. Which of the following best describes the relationship between risk and insurance premiums?

A. The higher the risk, the lower the premium

B. Premiums are a function of time, not risk

C. The lower the risk, the lower the premium

D. There is no relationship

Correct!

Wrong!

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8. You can potentially lower insurance premiums by:

A. Shopping around with different providers

B. Completing a safe-driver course

C. Limiting your coverage to only what you need

D. All of these are potential ways to lower your insurance premiums

Correct!

Wrong!

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