All insurance is based on a principle called

A. cash value coverage.
B. investment premiums.
C. premium earnings.
D. division of risk.



Answer :

Final answer:

Insurance is based on the division of risk principle, where risks are spread among policyholders to minimize individual losses.


Explanation:

Insurance is based on a principle called division of risk. This principle involves spreading the risk among a pool of policyholders to minimize the impact of individual losses. Insurance companies collect premiums and invest them to ensure they have funds available to cover claims when needed.


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