True / False Questions 1) Disability insurance replaces part of your income if you become disabled and can no longer work, but you usually must be disabled for a specified period of time before benefits are provided

Name: True / False Questions 1) Disability insurance replaces part of your income if you become disabled and can no longer
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True / False Questions

1) Disability insurance replaces part of your income if you become disabled and can no longer work, but you usually must be disabled for a specified period of time before benefits are provided.

Workers' compensation insurance guarantees payment of wages, medical care, and rehabilitation services for employees who are injured on the job.
The premium charged for workers' compensation insurance is the same for all workers, regardless of their occupation.
Workers' compensation insurance is required in all states except Louisiana.
Professional liability insurance is also sometimes known as malpractice insurance.
Product liability insurance covers liability arising out of defective products sold.
Firms can take out term life-insurance policies on their top executives.
Most homeowners' insurance policies automatically provide adequate coverage for small home-based businesses.
An endorsement can provide additional coverage to a homeowner's policy for business equipment.
A fidelity bond covers losses resulting from a second party's failure to fulfill a contract.
A surety bond protects employers from employee dishonesty.
Risk management is concerned only with risks to individuals and businesses.
Worldwide risks need to be prioritized so that international funds can be spent where they can do the most good.
Risks such as global warming are the concern of businesses and governments primarily in the U.S.
Harmon works on a highway construction crew and frequently handles explosives. His friend Willie works as a bookkeeper for a retail store. The amount of workers' compensation premiums paid by Harmon's employer will probably exceed the premiums paid by Willie's employer.
It's good advice for doctors and lawyers to carry malpractice insurance.

Multiple Choice Questions

Which of the following is a goal of enterprise risk management?
1. Defining which risks the program will manage
2. Deciding how to petition the government for financial help
3. Assigning risk management to a lobbyist in Washington
4. Refining the business plan for risk management

Risk management for business is critical due in part to:
1. natural disasters.
2. profitability.
3. legal requirements.
4. international requirements.

Enterprise risk management is:
1. important to business.
2. irrelevant to business.
3. only used by nonprofit organizations.
4. only used by the Department of Homeland Security.
Risk management is:
1. only a consideration to insurance companies.
2. increasing in importance.
3. decreasing in importance.
4. used exclusively when engaging in global Internet business.
Jonathon is in charge of risk management for Learnit Corp., a large chain of preschools in the midwest. He has decided to build enterprise risk management into the organization. The first step Jonathon should take is to:
1. decide on the spyware software the organization should buy.
2. send a letter to all of the staff informing them that using e-mail for personal purposes will not be allowed.
3. remove the playgrounds from all of the locations.
4. decide which risks the organization should manage.
is a term that refers to the chance of loss, the degree of probability of loss, and the amount of possible loss.
1. Speculation
2. Hazard
3. Insurability
4. Risk
risk involves a chance of either profit or loss.
1. Insurable
2. Managed
3. Speculative
4. Pure
risk involves the threat of loss with no chance for profit.
1. Minimum
2. Pure
3. Speculative
4. Managed
Which type of risk management strategy is a company using when it installs mirrors and surveillance cameras to spot and prevent shoplifting?
1. Avoiding the risk
2. Insuring against the risk
3. Assuming the risk
4. Reducing the risk
Some businesses will set aside money to cover routine losses and buy "catastrophe" policies to cover big losses. This is an example of which of the following?
1. Avoiding the risk
2. Self-insuring against the risk
3. Reducing the risk
4. A loss-prevention program
A firm that chooses to self-insure and cover losses out of its budget is said to:
1. fly blind.
2. roll boxcars.
3. go bare.
4. internalize risk.
An insurance company would not be willing to insure a risk if it:
1. results from political disruptions.
2. has a measurable loss.
3. results from an accident.
4. has a low probability of occurring.
A policyholder must have a(n) in what is being insured, meaning that the policyholder must be the one at risk to suffer an economic loss.
1. speculative interest
2. uncertain stake
3. unsecured holding
4. insurable interest
is the armor individuals, businesses, and nonprofit organizations use to protect themselves from various financial risks.
1. A good accountant
2. Investment in AAA bonds
3. Insurance
4. Indemnity