Question 6

All the following are personal risks, EXCEPT:

The risk of being held legally responsible for injury to another

The risk of old age

The risk of unemployment

The risk of disability

Question 7

Which of the following costs and expenses would not be part of the property loss exposure for an insured owner?

Defense costs

Loss of use

Lost income

Reduction in value

Question 8

Some financial planners recommend that a young, single person without dependents defer purchase of life insurance. What is the basis for this recommendation in terms of the matching of risk management techniques with loss severity and frequency?

Avoidance is appropriate for this high severity, high frequency exposure.

Reduction is appropriate for this low severity, high frequency exposure.

Noninsurance transfer is appropriate for this low severity, high frequency exposure.

Retention is appropriate for this low severity, low frequency exposure.

Question 9

Which of the following statements concerning the requirement of insurable interest for an insurance contract is correct?

More than one person cannot have an insurable interest in the same property at the same time.

Property insurance requires an insurable interest only when the loss occurs.

Insurable interest is not an issue with liability insurance.

Life insurance requires an insurable interest only when the loss occurs.