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Exam 22: Bonus B: Managing Risk

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Question 61

True/False

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One advantage of health savings accounts is that healthy people can use tax-deferred money to save for their future medical needs.

A) True
B) False

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Question 62

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The Pension Benefit Guaranty Corporation provides retirement benefits,life insurance,health insurance,and disability income insurance.

A) True
B) False

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Question 63

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In designing an addition to his successful nursing home,Steve realized that water sprinklers and smoke detectors were now required by state regulations.His existing structure already had sprinklers and detectors because he felt that this was an effective strategy to:

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.

__________ is the armor individuals,businesses,and nonprofit organizations use to protect themselves from various financial risks.

Water sprinklers and smoke detectors can be used to minimize speculative risks.

Any risk is insurable as long as you can pay the premium.

In an effort to minimize the cost of conventional property/casualty insurance,XYZ Electronics decided to manage their risk by self-insuring.The most likely way XYZ would try to do this would be to:

The chance of a fire is an example of a pure risk.

A mutual insurance company is owned by its policyholders.

A surety bond protects employers from employee dishonesty.

All risks are insurable.

Risk management now includes the evaluation of:

When a firm that is self-insuring against risk decides to cover losses straight out of its budget,it is said to be "going bare."

The terrorist attack against the World Trade Center in 2001 is an example of pure risk.

Sadly,during a war many civilians watch everything they have destroyed.Insurance companies will view this type of loss as:

Preferred Provider Organizations (PPOs)offer members the opportunity to choose their own physicians.

________ insurance provides coverage against liability arising out of the sale of goods to customers.

Mini-Case The Bookworm is a bookstore and café located on a busy downtown main street in Denver.The owner,Waata Reader prides himself on the vast selection of books available in the shop.The store has three stories,with both stairs and an elevator to each level.In the back of the first floor is the café,which serves sweets and coffee drinks.Many times customers will linger there over a cup of coffee,deciding which book to purchase.Waata has expanded several times and now he has 22 people on the staff of the current,larger store. -Waata carries health insurance for his family and his staff and their families.While it is a bit more expensive,the policy allows everyone to choose their own doctor.Further,members of the plan have to pay a deductible each year before the insurance will pay any bills.Waata and his staff and families have health insurance with a(n) :

Product recalls can reduce risk.