Financial Planning Skills Test, Grade 3 | Risk Management and Insurance Questions

Large accidental losses that are hard to bear alone are the ones suited to transfer through insurance.

The policyholder concludes the contract and bears the obligation to pay the premiums.

The beneficiary is designated at the time of contracting, fixing who is paid when the insured event occurs.

Term insurance provides death cover for a set period and generally pays no maturity benefit.

Unless the policy is cancelled, whole life insurance provides death cover for the whole of life.

Insured events, exclusions and limits are confirmed in the summary of cover and the policy conditions.

Depending on the contract, fire insurance covers buildings and contents against fire, storm damage and so on.

Compulsory automobile liability insurance exists to provide relief to the victims of motor accidents.

Damage to homes and contents from earthquake, volcanic eruption and tsunami is covered by earthquake insurance.

The cover needed and the risks faced change with life events, so review periodically.