Suppose a senior college football player approaches an insurance company and seeks to purchase an insurance policy against him receiving a career-ending injury.The insurance company
A) will sell him an insurance policy because the proposal entails uncertainty not risk.
B) will sell him an insurance policy because the proposal entails risk not uncertainty.
C) will not sell him an insurance policy because the proposal entails uncertainty not risk.
D) will not sell him an insurance policy because the proposal entails risk not uncertainty.

Question

Quizplus · Accepted Answer

The proposal entails risk, not uncertainty, because the probability of a career-ending injury can be estimated based on historical data and actuarial analysis. This makes it insurable.

Suppose a Senior College Football Player Approaches an Insurance Company