Insurance Fundamentals Quiz

Insurance helps protect individuals and organizations from financial ruin after a covered loss by providing compensation for damages.

Insurance helps manage financial uncertainty by reducing the impact of unexpected losses on an individual's or organization's cash flow.

Insurance policies can fulfill legal requirements, such as auto liability insurance or workers' compensation insurance for employers.

Insurers encourage insured individuals and organizations to take steps to prevent losses, resulting in a safer environment for everyone.

Insurance premiums paid by policyholders become investment funds for insurance companies, contributing to the overall economy.

Insurance helps reduce societal burdens by supporting recovery after a loss, lessening reliance on government assistance.

The cost of insurance includes premiums paid by policyholders, operating expenses of the insurance company, and potential for increased losses due to fraud or moral hazard.

Insurance is a financial tool that involves trade-offs. While it provides protection and other benefits, it comes with associated costs and potential limitations.