Importance of Insurance in Maintaining Lifestyle and Future Plans

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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?

Individuals can get their money back for the losses. Signup and view all the answers

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

Transferring financial risks from businesses to insurers. Signup and view all the answers

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

By protecting their financial stability. Signup and view all the answers

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

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

Why is insurance considered a positive stimulus for businesses?

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

How does insurance contribute to stimulating business enterprise?

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

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

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

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

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

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

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

What are some examples of benefit contracts?

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

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

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

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

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

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

The insurance must be affordable. Signup and view all the answers

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

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

What types of losses are unlikely to be insured?

Losses like umbrellas, key pouches, and sunglasses. Signup and view all the answers