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Free response · 5.2 Managing Personal Risk
Exam-style personal-finance task: read a household's situation and write a recommendation. Suggested time 12–13 minutes.
FRQ 2 — Personal finance (household recommendation)
The Park household: Jiho (38) and Min (37) own a home with a mortgage, have two children (ages 4 and 7), and both work full time; Jiho's job provides the family health plan. They own two cars and carry only the state-minimum auto liability coverage. They have no life insurance and a $1,000 emergency fund. Jiho describes himself as 'not a worrier' and wants to cut their $310/month in insurance premiums. Last week Min received a call from someone claiming to be from their mortgage company, asking her to 'confirm' their account number and the last four digits of her Social Security number.
(A) Identify TWO types of insurable risk the Park household is exposed to that are NOT adequately covered, and explain why each matters given their situation. 1 pt
(B) Jiho wants to cut premiums. Explain, using risk tolerance and deductibles, what trade-off that creates for a household with two young children and a small emergency fund, and recommend whether and how to do it. 1 pt
(C) Explain what the phone call to Min most likely is and recommend TWO specific protective actions from the framework. 1 pt