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JAMB Commerce 1997 Question 30

Question 30

Insurance

The main purpose of insurance is to

  1. A.encourage business to survive and grow
  2. B.ensure that facilities are available for operations
  3. C.accept risks and extend credits to policy holders
  4. D.spread individual losses over all covered participants.
Show the answer and explanation

Answer: D (spread individual losses over all covered participants.)

Explanation

Insurance pools premiums from many people so the losses of the few are shared by all.