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personal finance
31 cards·by emmatft
What is speculative risk?
exsits in situations where there is potential for gain as well as for loss
What is pure risk?
no potential gain, only for the possibility of loss
What is step one of risk management?
identify sources of risk
What is step two of risk management?
estimate risk and potential losses
What is step three of risk management
choose how to handle risk
What is step four of risk management?
implement the risk management program
What is step five of risk management?
evaluate and adjust the program
What is the first source of risk
suffer a loss to your property, house fire
what the second source of risk?
could held responsible for losses suffered by others such as if you cause an automobile
accident
What is the third source of risk?
may become ill or be injured and have costs associated with health care
What is the fourth source of risk?
you may suffer a loss of income as a result of illness or accident
What is the fifth source of risk?
family may incur expenses and suffer a loss of income as a result of your death
How does insurance work?
protects each group by replacing an uncertain and possibly large financial loss with a
certain but comparatively small fee called premium
What is insurance?
transferrin pure risk through which a large#of individuals share in the financial losses
suffered by members of the group as a whol
What are the first component of a premium?
individuals share of the group losses
What is the second component of a premium?
insurance company reserves set aside to pay future losses
What is the third component of a premium
a proportional share of the expenses of administering the insurance plan
What is the fourth component of a premium?
an allowance for profit
What is a physical hazard?
particular characteristic of the insured person or property that increases the chance of
loss
What is morale hazard?
exists when a person is indifferent to a peril
what is a moral hazard?
when an insured person wants a peril to occur so that he or she can collect on an insurance policy
What is principle of indemnity?
states that insurance will pay no more than the actual financial loss suffered
What does homeowners cover?
property insurance and liability coverage
question number one that should be asked when buying homeowners insurance?
how much coverage will you need to replace the dwelling itself
question number two that should be asked when buying homeowners insurance?
how much coverage will you need on the contents and personal property
The third question that should be asked when buying homeowners insurance?
how much protection will you need for items such as jewelry, money, guns, or antiques that have
specific limits
The third question that should be asked when buying homeowners insurance?
how much coverage will you need you liability proctection
What are the different types of automobile insurnace
liability insurance, medical payments, uninsured and under insured motorist, physical
damage
What are the three numbers on an insurance policy
Bodily injury per person, Bodily injury per accident, Property damage
What is health maintenance organizations?
health insurance plans that provide a broad range of health care services for a set monthly fee
on a prepaid basis
What is traditional health insurance?
proctection against dire medical expenses resulting from illness and injury