Question

Which among the following is a secondary burden of risk?

a.

Business interruption cost

b.

Goods damaged cost

c.

Setting aside reserves as a provision for meeting potential losses in the future

d.

Hospitalisation costs as a result of heart attack

Posted under IC38 Life Insurance Agent Exam

Answer: (c).Setting aside reserves as a provision for meeting potential losses in the future Explanation:The setting aside of reserves as a provision for meeting potential losses in the future is a secondary burden of risk. This is because it involves the cost and strain of managing reserve funds even if the loss event does not occur. Business interruption cost is an example of the primary burden of risk, as it is a cost resulting from an actual loss event. Goods damaged cost is also an example of the primary burden of risk, as it involves the actual loss of goods. Hospitalization costs as a result of a heart attack are an example of the primary burden of risk, as they result from an actual health-related event.

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Q. Which among the following is a secondary burden of risk?
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