What is the main purpose of insurance?
Understand the Problem
The question is asking us to identify the main purpose of insurance from the provided options, focusing on its role in providing compensation for losses.
Answer
To reduce financial uncertainty and manage accidental loss.
The main purpose of insurance is to reduce financial uncertainty and make accidental loss manageable by transferring the risk of a large loss to a professional insurer in exchange for a known fee, such as an insurance premium.
Answer for screen readers
The main purpose of insurance is to reduce financial uncertainty and make accidental loss manageable by transferring the risk of a large loss to a professional insurer in exchange for a known fee, such as an insurance premium.
More Information
Insurance helps individuals and organizations manage risk by compensating for losses due to unforeseen events like accidents or disasters. It's a financial safety net that allows for more predictable management of finances.
Sources
- Insurance 101 - Insurance Information Institute - iii.org
- What is Insurance and Why is it Important? - Grange Insurance - grangeinsurance.com
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