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Select the best answer for the question.
12. All insurance is based on a principle called
O A. division of risk.
O B. premiu
earnings.
O C. investment premiums.
D. cash value coverage.



Answer :

GinnyAnswer

Final answer:

Insurance is based on the principle of division of risk, ensuring premiums cover claims, operational costs, and profits.


Explanation:

Insurance is based on a principle known as division of risk. This principle ensures that the average premiums paid by individuals over time cover their average claims, the company's operational costs, and still allow for profits. Insurance companies also generate income through investment premiums, investing collected premiums in safe and liquid assets to earn returns.


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