What is the basic purpose of insurance Quizlet?
Asked by: Deonte Bartoletti Jr. | Last update: July 19, 2025Score: 5/5 (22 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 main purpose of insurance Quizlet?
The purpose of insurance is to transfer risk that we can't handle ourselves. What does insurance do? Insurance protects you from losing money if something bad were to happen, therefore it does not make money for you but protect you from getting into financial trouble.
What is the primary purpose of life insurance Quizlet?
The primary purpose of life insurance is to protect family members of the insured from financial loss in the event of his or her untimely death.
What is the basic purpose of insurance is to protect you from the results of accidental losses?
**Insurance is designed to provide financial protection:** When you have insurance coverage, such as health insurance, auto insurance, or home insurance, it helps safeguard you and your family from the financial burden that may arise due to unexpected events like accidents, illnesses, or damages to your property.
How Does Life Insurance Work?
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 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 is the primary function of insurance?
1. 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.
Is the basic purpose of insurance to protect you and your family from economic losses?
Its primary purpose is to protect the surviving members of a family or any other dependent against the loss of an individual's income or services. Essentially, life insurance is a means of spreading financial risk among a large number of people who pay premiums.
What is the purpose of life insurance _____?
In exchange for a premium, the life insurance company agrees to pay a sum of money to one or more named beneficiaries upon the death of the policyholder. The purpose of life insurance is to help provide financial security to your loved ones upon your death.
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 is the primary purpose of life insurance?
Buying life insurance protects your spouse and children from the potentially devastating financial losses that could result if something happened to you. It provides financial security, helps to pay off debts, helps to pay living expenses, and helps to pay any medical or final expenses.
What is the purpose of insurance in healthcare?
No one plans to get sick or hurt, but most people need medical care at some point. Health insurance covers these costs and offers many other important benefits. Health insurance protects you from unexpected, high medical costs. You pay less for covered in-network health care, even before you meet your deductible.
What is the purpose of insurance Quizlet?
Significance of insurance is its promise to substitute future economic certainty for uncertainty and to replace the unknown with a sense of security.
What is the basic idea of insurance?
Insurance is a mechanism of risk transfer and sharing by pooling of risks and funds among a group of individuals who are exposed to similar kinds of risks for the benefit of those who suffer loss on account of the risk.
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 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.
Why is insurance an important part of a financial plan?
Insurance is your financial plan's safety net – having the right insurance at the right amount protects you and your family from unforeseen events and provides a baseline financial cushion. Insurance can even be used to diversify your portfolio, add some predictability and reduce your tax burden.
What is the purpose of insurance to avoid or eliminate risk?
Insurance in risk management serves as a financial safety net, mitigating the impact of unforeseen events by not only identifying and monitoring such risks but also effectively transferring part of this risk through the policy.
What is insurance in simple words?
Insurance is a contract between an individual or business with an insurance company to help provide financial protection and mitigate the risks associated with certain situations or events. There are various types of insurance available, including health, dental and vision, life, auto, and legal insurance.
What are the 7 basic principles of insurance?
In insurance, there are 7 basic principles that should be upheld, ie Insurable interest, Utmost good faith, proximate cause, indemnity, subrogation, contribution and loss of minimization.
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 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.
Why did insurance become mandatory?
By requiring car insurance in almost every state, U.S. car insurance laws help financially protect individuals in the event they cause or are involved in an accident. These laws attempt to ensure that every driver has insurance to cover a minimum level of costs for injuries and property damage they're responsible for.