Unit 6 Critical Thinking Questions What is the relationship between insurance and successful financial management? Why is insurance important? The connection between effective financial management and insurance is crucial because insurance is a contract designed to guarantee that your assets are protected and damage is paid for in the event that an unforeseen event occurs, while effective financial management aids in emergency planning. Consider your home and possessions. What types of risks do you face? What insurance would you recommend to someone in a similar location? You would require homeowners insurance to protect your possessions from harm from fires, strong winds, hail, and lightning. If natural disasters are common, you might need additional coverage to be protected from them. What are personal, property, and liability risks? What are examples of personal, property, and liability risk? Poor health and aging, having your property ruined, and being held accountable for something that happens that could result in a lawsuit are some examples of personal, property, and liability risks. Why is estate planning important? In order to safeguard your loved ones and pass your assets to your heirs, estate planning is important. What is the principle of indemnity? Why is this principle important? Indemnity is based on the notion of compensation, which ensures that you will not suffer financial loss.
