ECONOMICS
INSURANCE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The secondary functions of insurance will include all of the following, EXCEPT
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risk transfer mechanism.
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means of savings.
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cost stabilization.
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reducing losses.
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Explanation:
Detailed explanation-1: -Annotation: Insurance is a well-known form of risk transfer, where coverage of a risk is obtained from an insurer in exchange for ongoing premiums paid to the insurer.
Detailed explanation-2: -The functions of insurance are risk sharing, assisting in capital formation, economic progress, etc. Lending of funds is not a function of insurance.
Detailed explanation-3: -Insurance is a risk transfer mechanism that facilitate shifting the cost of a risk away from he (insured) who runs it to an external party (insurer) in exchange for payment of premium (Marshall, 2001).
Detailed explanation-4: -Prevention of loss. It Provides Capital. It Improves Efficiency. It helps Economic Progress.
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