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Question 14 of 20:

Select the best answer for the question.

All insurance is based on a principle called

A. investment premiums.

B. cash value coverage.

C. premium earnings.

D. division of risk.



Answer :

GinnyAnswer

Final answer:

Insurance is based on the principle of dividing risk among a large group of policyholders, ensuring no one individual bears the full burden of a loss.


Explanation:

The principle that all insurance is based on is the division of risk. Insurance companies manage risk by spreading it among a large number of policyholders, so no single individual has to bear the entire burden of a loss. This principle allows for the pooling of resources to protect against unforeseen events.


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