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JAMB Commerce 2009 Question 22

Question 22

Insurance

The most important reason for the existence of insurance business is to

  1. A.prevent the occurence of any loss
  2. B.spread losses to all covered participants
  3. C.provide for the replacement of facilities
  4. D.encourage individuals to save
Show the answer and explanation

Answer: B (spread losses to all covered participants)

Explanation

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