Question

How does insurance function as a risk management tool?

a.

By eliminating all risks

b.

By reducing the probability of loss

c.

By transferring the financial impact of losses to an insurance company

d.

By increasing the cost of risk

Posted under IC38 Life Insurance Agent Exam

Answer: (c).By transferring the financial impact of losses to an insurance company Explanation:Insurance functions as a risk management tool by transferring the financial impact of losses to an insurance company.

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Q. How does insurance function as a risk management tool?
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