Is the basic purpose of insurance to protect you and your family from economic losses?
Asked by: Ethan Conroy | Last update: May 30, 2025Score: 4.8/5 (15 votes)
What is the basic purpose of insurance?
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 purpose of insurance to protect?
Insurance is a financial product that provides peace of mind and protection against loss, damage or theft. The list of what you can protect is almost limitless, with the most common relating to the things and people you love. For example, you can insure your home, car and phone.
What is the primary purpose of insurance protection?
From our discussion in class and the "insurance function" slide with narration, we know that the primary purpose of insurance is to protect against risk. For discussion purposes risk refers to the possibility of a substantial financial loss from an event of which the probability of occurrence is relatively small.
What is the purpose of insurance to protect you from financial loss?
Insurance helps manage the financial risks from unexpected events such as illness, accidents, natural disasters and death. By transferring these risks to an insurance company, you can protect yourself and your families from potentially devastating financial losses.
HOW LIFE INSURANCE CAN HELP PROTECT YOUR FAMILY DURING A RECESSION
What is the basic purpose of insurance Quizlet?
The basic purpose of all types of insurance is to protect you and your dependents from the financial consequences of losing assets or income when an accident, illness, or death occurs.
What type of insurance protects things you own from loss?
Personal property coverage — also known as contents coverage on a home policy — helps cover the cost of your personal items if they are destroyed, damaged, or stolen due to a covered loss or peril.
What is the prime purpose of insurance?
Provide protection : The primary purpose of insurance is to provide protection against future risk, accidents and uncertainty. Insurance cannot check the happending of the risk, but can certainly provide for the losses of risk.
What was the original purpose of insurance?
Insurance is the oldest method of transferring risk, which was developed to mitigate trade/business risk. Marine insurance is very important for international trade and makes large commercial trade possible.
What are the two primary function of insurance?
The Insurer gives certainty of payment of loss to Assured by charging premium . ii To Provide Security : The next primary function of Insurance is to provide security to the insured person .
What is the main purpose of protection?
Purpose of Protection : It will endanger the important person from bodily harm and his life; It is to protect the important person from situations such as death threats, kidnapping, armed attack, to prevent an offensive and embarrassing verbal attack, to prevent his clothes from getting soiled, and to prevent the ...
What is the basic concept of insurance?
The concept of insurance is that the losses of Page 3 a few are made good by contribution from many. It is based on the law of large numbers. It stemmed from the need of man to find a solution for mitigation of losses. It also reflects the nature of man to find a solution collectively.
What does insurance protect us from?
Insurance helps to protect you and your family against unexpected financial costs and resulting debts or the risk of losing your assets. Insurance helps protect you from expensive lawsuits, injuries and damages, death, and even total losses of your car or home.
What is the primary purpose of the life insurance?
The primary purpose of life insurance is to provide a financial benefit to dependents 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.
What is the most important insurance and why?
Health Insurance
The soaring cost of medical care is reason enough to make health insurance a necessity. Even a simple visit to the family doctor can result in a hefty bill.
What is the cause of a potential loss called?
This chance of loss is called as risk. The cause of the risk event is known as peril.
What is the primary burden of risk?
The primary burden of risk consists of losses that are actually suffered by households (and business units), as a result of pure risk events.
What is the largest life insurance policy ever written?
We've set a new Guinness World Record for the most valuable life insurance policy ever sold, worth US$250 million. Issued and fully underwritten by HSBC Life, our insurance business in Hong Kong, it was taken out by an individual customer earlier this year.
Which is the oldest form of insurance?
Ancient Indian history has preserved the earliest traces of insurance in the form of marine trade loans and carriers' contracts.
What is the prime purpose?
Our prime purpose in this life is to help others. And if you can't help them, at least don't hurt them. Dalai Lama XIV.
Which of the following is not a function of insurance?
The functions of insurance are risk sharing, assisting in capital formation, economic progress, etc. Lending of funds is not a function of insurance. It is a function of banks.
What was the reason for insurance?
Insurance is a financial safety net, helping you and your loved ones recover after something bad happens — such as a fire, theft, lawsuit or car accident.
What should you not say to homeowners insurance?
Avoid any admissions of fault or liability when talking to your adjuster. Such statements can be used to shift blame, potentially decreasing the amount you might be compensated. Instead, focus on describing the damage and the events as they happened, without inserting personal opinions about who might be at fault.
Can insurance protect you from financial loss?
Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to protect against the risk of a contingent or uncertain loss.
Is it illegal to have two home insurance policies?
Yes, you can have two home insurance policies on the same house. If you're a homeowner, it's likely that you'll have both buildings insurance and contents insurance to protect your home.