Insurance works because
A) all policyholders pay in according to risks and all then receive a pay out in return.
B) all policyholders pay in according to risks and then receive a pay out only if they incur a loss.
C) all policyholders pay in according to risks and nobody receives any pay out.
D) only high risk policyholders pay in while everyone is entitled to a pay out.

Question

Quizplus · Accepted Answer

Insurance operates on the principle of risk pooling, where policyholders pay premiums based on their risk level, and only those who incur a covered loss receive a payout.

Insurance Works Because