Question

What does purchasing insurance for a business reveal about the business owner’s attitude toward financial risk?

Answer 1

Insurance is a means of protection from financial loss. It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss.Insurers may use the subscription business model, collecting premium payments periodically in return for on-going and/or compounding benefits offered to policyholders.It shows that the owner acknowledges the financial risks and is willing to pay every month to transfer the risk to an insurance company.

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