Self-insurance requires
A)an analysis for stop loss limits.
B)implementing risk control methods.
C)owning stock in an insurance company.
D)saving money to cover possible future losses.

Question

Quizplus · Accepted Answer

Self-insurance means that a company or individual assumes the financial risk of potential losses rather than transferring that risk to an insurance company. To adequately self-insure, the company or individual needs to have sufficient funds set aside to cover potential losses. This requires saving money to cover possible future losses, making choice D the best answer. While implementing risk control methods is also important in self-insurance, it is not the only requirement. Owning stock in an insurance company would not be relevant in the context of self-insurance. An analysis for stop loss limits would be more relevant in a self-insured plan for employee benefits.

Self-Insurance Requires