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Insurance and Risk Management Final Exam Quiz

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Insurance and Risk Management Final Exam Quiz

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Questions and Answers

Insurance is a means of reducing all risks to an organization's capital and earnings.

False

The main function of insurance is to eliminate the uncertainty of unexpected financial loss.

True

Pooling of risk in insurance means that policyholders combine their risks together.

True

Insurance companies do not provide reliability for businesses.

False Signup and view all the answers

In many cases, having some form of insurance is legally required.

True Signup and view all the answers

What is the basic objective of insurance?

The basic objective of insurance is to transfer the risk of a person to the insurance company. Signup and view all the answers

What is the main function of insurance?

The main function of insurance is to eliminate the uncertainty of an unexpected and sudden financial loss. Signup and view all the answers

What is the process of identifying, assessing and controlling threats to an organization’s capital and earnings called?

The process is called Risk Management. Signup and view all the answers

What does insurance provide in terms of protection for a company?

Insurance provides protection against the loss or damage that a company may suffer. Signup and view all the answers

How do all the policyholders contribute to the insurance system?

All the policyholders pool their risks together by paying their premiums, and if one of them suffers financial losses, then the payout comes from this fund. Signup and view all the answers

Study Notes

Insurance Basics

Insurance is a means of reducing risks to an organization's capital and earnings.
The main function of insurance is to eliminate the uncertainty of unexpected financial loss.
The basic objective of insurance is to reduce risks to an organization's capital and earnings.
In many cases, having some form of insurance is legally required.

Risk Management

Pooling of risk in insurance means that policyholders combine their risks together.
Risk management is the process of identifying, assessing, and controlling threats to an organization's capital and earnings.

How Insurance Works

Insurance provides protection for a company by reducing the uncertainty of unexpected financial loss.
Policyholders contribute to the insurance system by pooling their risks together.

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Description

Test your knowledge of insurance and risk management with this final examination quiz. Explore the basic objective of insurance, the concept of transferring risk to insurance companies, and the modern insurance system's ability to handle large risks. Perfect for reviewing key pointers for personal finance.