Risk_Management_Activities_Flashcards
(8 cards)
What do most clients want to maintain when managing risk?
Most clients want to maintain their lifestyles and keep their possessions.
What is essential for guiding the identification of risks?
General and specific risks based on the client’s circumstances.
What should you compare when determining the appropriate action for risk management?
The potential financial loss and consequences compared to the probability of the risk.
How are insurance premiums determined?
Insurance premiums are based on the probability of events occurring, anticipated costs of claims, underwriter costs, and profits.
Why is disability insurance often costly?
Due to the high likelihood of becoming disabled and the severity of the financial risk involved.
How can clients manage premiums more effectively?
By determining what they can afford to risk and accumulating reserves to afford more risk.
What is the general recommendation for how much income should be spent on risk protection?
Families should allocate an average of 10% of their income to risk protection, with young families and retirees potentially allocating more.
What areas of client information should be gathered for comprehensive risk management?
Property coverage policies, possession inventories, and upgrades or changes to the home or possessions.
