econ test unit 6

What is the main purpose of Insurance?

To protect from loss.

Insurance protects individuals from fungal loss due to unexpected events

True

Insurance guarantees, you will never have to pay out-of-pocket cost

False

What is a contract that specifies what risks are covered and how much will be paid for losses?

Insurance policy

The amount you pay out-of-pocket before insurance coverage begins is called what

Deductible

Irregular fee you pay to maintain insurance coverage is called what

Premium

What type of other insurance covers damage to your own car from an accident?

Collision insurance

What type of other insurance is required in North Carolina?

Liability insurance

What type of auto insurance covers damage caused by theft or natural disasters?

Comprehensive insurance

What does health insurance cover?

Medical expenses

Give one example of dental insurance coverage

Cleanings or fillings

What is the main purpose of life insurance?

Financial support for family after death

What does disability insurance help individuals with?

Replace lost income

Which insurance protects renters personal belongings?

Renters insurance

Name two types of property insurance that cover natural disasters

Homeowners insurance and flood insurance

Travel insurance typically covers what

Emergencies

What is the diversification important in investing?

Reduces risk

What is a government bond and why is it considered low risk?

Loan to government government repayment is reliable

What are dividends and capital gains?

Investment earnings

What is a mutual fund?

Pooled investments

What type of investment is generally considered the highest risk and potentially highest reward?

Stocks

Who typically funds a pension?

Employer

What is the main purpose of Social Security?

Income after retirement

name one difference between a Roth IRA and a traditional IRA

Roth is taxed now traditional is taxed later