Personal Finance Risk Presented By Mrs. Bowden

Warm Up: Read pp. 567 – 570 Read pp. 575 - 578

Today we will: Define risk and the types of risk that insurance can cover and the ways to manage that risk Identify the needs for insurance coverage and the different types of insurance coverage

Risk: RISK – a state of uncertainty where some of the possibilities may result in a loss or gain due to the situation Ex. Stock market PURE RISK is a chance of loss with no chance for gain Ex. Accidents, Illness, Acts of nature

Types of Risk: Types of Pure Risk: Speculative – could possibly result in a gain or a loss – ex. Stock market. These types of risk are not accidental and are chosen by the individual Economic – A gain or loss due to the economy changing. Ex. Losing a job Insurable – pure risk for which the amount of loss can be predicted or estimated and for which there is usually insurance coverage to protect the individual Types of Pure Risk:

Insurable Risks: Personal Risk – involves your income and standard of living Property Risk – chance of loss or harm to your property Liability Risk – chance of loss that may occur when your errors or action result in harm to or injuries to others.

Insurable Risks – types of insurance to cover risks: Automobile Insurance – Collision and Liability Renters/Homeowners Insurance Health Insurance Life/Disability Insurance.

Question Time???: What is the main difference between a PURE RISK and a SPECULATIVE or ECONOMIC RISK?

Classwork Activity: 1. Recreate chart 25.2 on p. 570 in your notes