4. Other types of insurance

Property and Casualty Insurance

True or False: Property and casualty insurance companies maintain less liquid asset portfolios than life insurance companies because they may experience unpredictable events that result in a massive amount of claims.

True

False

Deborah purchases an older home and wants to obtain homeowners insurance. The home is at an increased risk of water damage because the plumbing has never been updated. In a weak economy, the insurance company charges her a lower premium than usual and agrees to take the risk. This pricing strategy is called

Healthcare Insurance

Larry develops cancer and needs to schedule an appointment with an oncologist. Which type of healthcare plan would allow him to select any doctor he chooses?

Other Types of Insurance

Determine the type of insurance that is used to cover each risk in the following list.

Risk	Type of Coverage
Losses that exceed the coverage of an existing insurance policy
Damages from defective products that cause injury or harm
Loan payments owed to a bank if the borrower dies
Damage to a firms building, furniture, and other assets
Financial loss due to the death of the Chief Financial Officer of a firm

Bond Insurance

True or False: Bond insurance is a promise by the bond insurer to guarantee payments to the investor.

True

False

Mortgage Insurance

Which of the following are true regarding mortgage insurance? Check all that apply.

A credit default swap allows a lender to offset his risk of default with another investor.

To avoid purchasing mortgage insurance, mortgage lenders typically require borrowers to make a down payment greater than 20 percent of the cost of the home.

Mortgage insurance protects a borrower from losses in case the bank defaults on the loan.