Importance of Insurance in Maintaining Lifestyle and Future Plans
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Questions and Answers

What is the main reason individuals are willing to pay for insurance?

To avoid a risky situation.

How does insurance provide financial stability?

By transferring the risk of financial losses from the insured to the insurer.

Describe a scenario where insurance can prevent financial disaster.

Freddy met with an accident and damaged his car extensively.

How does insurance benefit individuals when unfortunate events occur?

<p>Individuals can get their money back for the losses.</p> Signup and view all the answers

What is one of the key functions of insurance in stimulating business enterprise?

<p>Transferring financial risks from businesses to insurers.</p> Signup and view all the answers

How does insurance contribute to peace of mind for individuals and families?

<p>By protecting their financial stability.</p> Signup and view all the answers

How can insurance help mitigate the financial impact on an individual if an unfortunate event occurs?

<p>Insurance can help mitigate the financial impact by providing indemnity or alleviating hardship on the insured.</p> Signup and view all the answers

Why is insurance considered a positive stimulus for businesses?

<p>Insurance is considered a positive stimulus for businesses as it relieves them from the worry of how to meet the cost of risks.</p> Signup and view all the answers

How does insurance contribute to stimulating business enterprise?

<p>Insurance contributes to stimulating business enterprise by allowing entrepreneurs to transfer some risks to insurers.</p> Signup and view all the answers

What benefits do individuals gain from knowing that insurance exists to meet financial consequences of risks?

<p>Individuals gain peace of mind from knowing that insurance exists to meet financial consequences of risks.</p> Signup and view all the answers

Why are entrepreneurs more willing to invest in business ventures when insurance is available?

<p>Entrepreneurs are more willing to invest as they know they can transfer some risks to insurers and not lose everything.</p> Signup and view all the answers

How does insurance help individuals maintain their present lifestyle and future plans?

<p>Insurance helps individuals maintain their present lifestyle and future plans by providing financial protection.</p> Signup and view all the answers

What are some examples of benefit contracts?

<p>Personal Accident Insurance, Critical Illness Insurance, Hospital Income Insurance, Life Insurance policies (Term, Endowment, Whole Life)</p> Signup and view all the answers

Why are losses like umbrellas and key pouches not normally insured?

<p>Because the financial burden caused by such losses is minimal compared to the cost of administering an insurance program.</p> Signup and view all the answers

Give an example of a loss that could cause significant financial hardship to most people.

<p>A fire gutting a row of residential housing resulting in significant home loss.</p> Signup and view all the answers

What is the fifth requirement for a risk to be insurable?

<p>The insurance must be affordable.</p> Signup and view all the answers

Why is the financial burden caused by certain losses a requirement for insurance?

<p>To ensure that the loss is large enough to warrant financial protection through insurance.</p> Signup and view all the answers

What types of losses are unlikely to be insured?

<p>Losses like umbrellas, key pouches, and sunglasses.</p> Signup and view all the answers

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