Why is insurance said to be a mechanism of risk coverage and investment?
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Insurance facilitates the spreading of risk from the insured to the insurer. The basic principle of insurance is to spread risk among a large number of people. A large number of persons get insurance policies and pay the premium to the insurer. Whenever a loss occurs, it is compensated out of funds of the insurer.
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Explanation:
insurance c2b a mechanism of risk coverage and investment
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