Question: 1. Insurance is protection against possible financial loss.

Answer: TRUE

Insurance is protection against possible financial loss.

Question: 2. Samuel should buy insurance in order to eliminate his risk.

Answer: FALSE

Insurance is a risk-sharing business; one cannot eliminate risk with insurance.

Question: 3. An example of a peril is a robbery.

Answer: TRUE

Question: 4. An example of a hazard is defective house wiring.

Answer: TRUE

Question: 5. An example of a peril is defective wiring.

Answer: FALSE

Defective wiring is a hazard.

Question: 6. Risk avoidance is an organized plan for protecting yourself, your family, and your property.

Answer: FALSE

The definition is for risk management.

Question: 7. Risk management is an organized plan for protecting yourself, your family, and your property.

Answer: TRUE

Question: 8. The first step to setting up an insurance program is to set insurance goals.

Answer: TRUE

Question: 9. Jim and Sandy are setting up their insurance program. One of their goals should be to reduce the possible loss of income due to fire or theft.

Answer: FALSE

One goal should be to reduce the loss of income caused by premature death, illness, accident, or unemployment. Another goal should be to reduce the loss of property caused by perils, such as fire or theft, or hazards.

Question: 10. An important question that should be asked when setting up an insurance program is: “What do I need to insure?”

Answer: TRUE