Unit 5C Vocabulary

Front

What is the process of identifying, assessing, and minimizing potential financial losses?

Back

Risk Management

Answer explanation

Risk Management is the process of identifying, assessing, and minimizing potential financial losses. It involves strategies to mitigate risks, making it the correct choice for this question.

Front

What is a contract that provides financial protection against loss or harm?

Back

Insurance

Answer explanation

Insurance is a contract that provides financial protection against loss or harm, making it the correct choice. Liability and warranty relate to responsibilities and guarantees, while investment pertains to asset growth.

Front

What term refers to a situation where two or more parties are responsible for a financial obligation?

Back

Shared Liability

Answer explanation

The term 'Shared Liability' describes a situation where two or more parties share responsibility for a financial obligation, making it the correct choice. Other options do not pertain to shared financial responsibilities.

Front

What strategy helps guard personal wealth from lawsuits or creditors?

Back

Asset Protection

Answer explanation

Asset Protection is a strategy designed to safeguard personal wealth from lawsuits or creditors, making it the correct choice. Other options like bankruptcy and escrow do not specifically focus on protecting assets.

Front

What is the term for a person’s eligibility to obtain insurance based on risk factors?

Back

Insurability

Answer explanation

The term 'insurability' refers to a person's eligibility to obtain insurance based on various risk factors. It assesses whether an individual meets the criteria set by the insurer.

Front

What is the amount paid regularly for an insurance policy?

Back

Premium

Answer explanation

The amount paid regularly for an insurance policy is called a premium. It is the cost of maintaining the insurance coverage, unlike a deductible or co-pay, which are costs incurred when making a claim.

Front

What is the amount a policyholder must pay out-of-pocket before insurance covers the rest?

Back

Deductible

Answer explanation

The deductible is the amount a policyholder must pay out-of-pocket before their insurance starts to cover the remaining costs. It is distinct from premiums, co-insurance, and coverage limits.

Front

Which type of insurance provides protection against financial loss from car accidents?

Back

Auto Insurance

Answer explanation

Auto Insurance provides financial protection against losses from car accidents, covering damages to vehicles and medical expenses. Other options like Term Life Insurance and Renters Insurance do not offer this specific coverage.

Front

What covers damages to other people and their property when you are at fault in a car accident?

Back

Liability Insurance (Auto)

Answer explanation

Liability Insurance (Auto) covers damages to other people and their property when you are at fault in a car accident. It is specifically designed to protect you from financial responsibility in such situations.

Front

What covers vehicle damage from non-collision incidents like theft or weather?

Back

Comprehensive Coverage (Auto)

Answer explanation

Comprehensive Coverage (Auto) protects against vehicle damage from non-collision incidents such as theft, vandalism, or weather-related events, making it the correct choice for this question.