What Are Characteristics Of Insurance? - Fixanswer

Insurance is a means of protection from financial loss. … The functions of insurance are risk sharing, assisting in capital formation, economic progress, etc.

Lending of funds

is not a function of insurance.

What is insurance and its characteristics?

The most important feature of insurance is that it is

legal contract between the insurer and insured

, under this insurer promises to compensate the insured for the loss which is mentioned in the policy and the insured promise to pay a fixed rate of premium which is consideration in this contract for the promise of the …

What is the role of insurance?

The function of insurance is

to safeguard against financial loss

by having the “losses of the few” paid by “contributions of the many” that are exposed to the same risk. Insurance companies invest premium dollars collected annually in a wide range of investments.

What are the 4 types of insurance?

Home Insurance. As the home is a valuable possession, it is important to secure your home with a proper home insurance policy. …
Motor Insurance. Motor insurance provides coverage for your vehicle against damage, accidents, vandalism, theft, etc. …
Travel Insurance. …
Health Insurance.

What are the main principles of insurance?

In the insurance world there are six basic principles that must be met, ie

insurable interest, Utmost good faith, proximate cause, indemnity, subrogation and contribution

. The right to insure arising out of a financial relationship, between the insured to the insured and legally recognized.

What are the disadvantages of insurance?

1 Term and Conditions. Insurance does not bear every type of loss that occur in individual and business. …
2 Long Legal formalities. …
3 Fraud Agency. …
4 Not for all People. …
5 Potential crime incidents. …
6 Temporary and Termination. …
7 Can be Expensive. …
8 Rise in Subsequent Premium.

What are the unique features of insurance services?

Insurable interest. …
Contract of ‘Uberrimae fidei' or Contract of Utmost good faith. …
Indemni0. …
Mitigation of Loss. …
Causa proxima. …
Subrogation. …
Contribution. …
Re-insurance.

What are the two types of risk in insurance?

There are generally 3 types of risk that can be covered by insurance:

personal risk, property risk, and liability risk

.

What are the six requirements of an insurance risk?

There must be a large number of exposure units.
The loss must be accidental and unintentional.
The loss must be determinable and measurable.
The loss should not be catastrophic.
The chance of loss must be calculable.
The premium must be economically feasible.

What are the different types of risk associated with insurance?

#1 – Pure Risk. …
#2 – Speculative Risk. …
#3 – Financial Risk. …
#4 – Non-Financial Risk. …
#5 – Particular Risk. …
#6 – Fundamental Risk. …
#7 – Static Risk. …
#8 – Dynamic Risk.

Which is not a function of insurance?

Answer Expert Verified

Lending funds

is not a function of insurance. Among the given options option (c) lending funds is the correct answer. Explanation: The main functions of insurance are : Protection, Risk sharing , Asset in capital formation, Providing certainty.

What is the definition of insurance identify and explain four basic characteristics of insurance?

3. (c) The four key characteristics stressed in the definition of insurance are covered in both statements. These characteristics include:

pooling, fortuitous losses, transfer of risk, and indemnification of losses

.

Which of the following is an example of moral hazard?

This economic concept is known as moral hazard. Example:

You have not insured your house from any future damages

. It implies that a loss will be completely borne by you at the time of a mishappening like fire or burglary.