Insurance MCQ

If two people are invited to invest and become partners in a business, the business owners will then _______ the risk. a. share b. move c. avoid d. replace Answer:  a. share

Which questions about risk should someone ask before making a big purchase? Check all that apply. a. What problems are most likely to happen? b. What can be done to avoid liability? c. What could go wrong? d. What problems could be most damaging? e. What option has no risk? Answer:  a. What problems are most likely to happen? c. What could go wrong? d. What problems could be most damaging?

An entrepreneur keeps backup funds in a savings account so that if their business experiences a loss, they will be able to recuperate. What type of risk management is this an example of? a. reducing risk. b. sharing risk. c. avoiding risk. d. maximizing risk. Answer: a. reducing risk.

Under which circumstance would someone need disability insurance? a. A person's suitcase was stolen and valuables were lost. b. A person has contracted the flu and needs a prescription. c. A person was in a car accident and cannot work for several months. d. A person's house was seriously damaged during a natural disaster. Answer: c. A person was in a car accident and cannot work for several months.

What must happen in order for an insurance company to make a payout? Check all that apply. a. The insurance company must verify the claim. b. The insured party must file a claim. c. The insured party must purchase property. d. The insurance policy must be in place. e. The insured party must experience a covered loss. Answer:  a. The insurance company must verify the claim. b. The insured party must file a claim. d. The insurance policy must be in place. e. The insured party must experience a covered loss.

How can an insurance company make a profit by taking in premiums and making payouts? a. The value of the premiums the company takes in is higher than the value of the payouts it makes. b. The value of the premiums the company takes in is equal to the value of the payouts it makes. c. The company only makes payouts from a pool of funds, not from individual premiums. d. The company issues its policies to individuals who are unlikely to require payouts. Answer: a. The value of the premiums the company takes in is higher than the value of the payouts it makes.

Roland has purchased a new tablet. How he can avoid risk? Check all that apply. a. by using a screen protector b. by letting his toddler play with it c. by using an antivirus app d. by using a protective case e. by letting his friends borrow it Answer:  a. by using a screen protector c. by using an antivirus app d. by using a protective case

Which type of insurance policy would someone get to protect others only? a. health insurance b. life insurance c. property insurance d. disability insurance Answer: b. life insurance

Insurance companies create a pool of funds to handle_____ Answer: risk

What is the definition of premium? a. the value of something lost or damaged b. the highest payout by an insurer c. the amount paid for an insurance policy d. the best insurance available Answer: c. the amount paid for an insurance policy