"Insurance does not remove risk, but it compensates for the loss resulting from the risk "Justify this statement.
Answers
Insurance refers to a protection against the risk of loss & uncertainties. The concept of insurance is broadly divided into two types which clears the statement "Insurance compensates for the loss resulting from the risk.
The broadly divided two types of insurance are:
a) Life Insurance, b) General Insurance
Example: A Life Insurance protects the risk of loss of life of the insured.
2) In Fire Insurance, the percentage of loss is measured and then it will be compensated by the insurance company
3) In Marine Insurance, the protection is given to the goods carried in big ships through waterways against the uncertainties that many occur in voyage.
Thus, this clears the statement that Insurance does not remove risk as RISK CANNOT BE REMOVED BUT IT CAN BE AVOIDED just like Medicines does not cure a chronic disease but it prevents it.
Similarly, Insurance does not remove risk, but it compensates for the loss resulting from the risk.
Answer:
A contract for insurance is created between two parties who have full faith in one another. In exchange for paying the premium, the insured receives an assurance from the insurer. Any insurance agreement guarantees to make up for the financial losses suffered by the insured.
Explanation:
An insurance policy has the ability to make up for monetary losses brought on by specific risks. Risks cannot be eliminated by insurance. It is a formal written agreement or contract between two parties. The written agreement is referred to as a "insurance policy." Insurance refers to the two parties' written contract or agreement.
The insurance cannot eliminate the risks involved, but it can make up for any losses brought on by those risks.
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