What is the purpose of having insurance quizlet?
The purpose of insurance is to protect against losses caused by pure risk. This is accomplished through the insurance contract, which requires one party to pay a specified sum to another if a previously identified event occurs.
Video 4 Purpose & need of Insurance
Is the purpose of insurance to transfer risk?
Insurance. Insurance is probably the easiest to understand example of risk transfer. Insurance shifts the risk of incurring significant financial losses to an insurance company, and protects the business owner against financial risks.
What is the purpose of insurance?
Its aim is to reduce financial uncertainty and make accidental loss manageable. It does this substituting payment of a small, known fee—an insurance premium—to a professional insurer in exchange for the assumption of the risk a large loss, and a promise to pay in the event of such a loss.
What is the main purpose of life insurance?
Life Insurance Overview. The primary purpose of life insurance is to provide a financial benefit to dependants upon premature death of an insured person. The policy pays a specified amount called a “death benefit” to the named beneficiary, when the insured dies.
Which was the primary function of insurance Mcq?
1 Answer. Following are the primary functions of insurance : To provide certainty : Insurance provides certainty of payment for the risk of loss. There are uncertainties of happenings of time and amount of loss.