When you purchase insurance you are in essence:

Question

Quizplus · Accepted Answer

When you purchase insurance, you are essentially buying a put option. This is because you are paying a premium to protect yourself against the risk of a potential loss. In other words, the insurance policy gives you the right, but not the obligation, to make a claim and receive compensation if you experience a covered loss. This is similar to buying a put option, which gives you the right, but not the obligation, to sell a stock at a certain price.

When You Purchase Insurance You Are in Essence