The idea of insurance
A)would not appeal to a risk-averse person.
B)is,other things the same,to reduce the probability of a fire,accident,or death.
C)is to share risk.
D)is to provide a sure thing,not a gamble.

Question

Quizplus · Accepted Answer

Insurance works by spreading the risk of an uncertain event among a large group of people. The premiums paid by the policyholders go into a pool and are used to pay the claims of those who suffer a loss due to the specified event. By spreading the risk, no individual has to bear the full burden of the loss. This is the basic principle of insurance, and the reason why it appeals to risk-averse people who want to protect themselves against unforeseen losses. Option A is incorrect, as insurance is aimed at risk-averse people who want protection from financial losses. Option B is partially correct, as insurance can help reduce the financial impact of an unforeseen event, but it does not reduce the probability of the event occurring. Option D is incorrect, as insurance is still a gamble, albeit one where the potential losses are spread out over a large group of people.

The Idea of Insurance