In Determining Insurance Limits and Deductibles,an Important Concept Is That

question 21

Multiple Choice

In determining insurance limits and deductibles,an important concept is that insurance should be used to pay big losses rather than small losses.The objective is to insure big losses that could cause financial ruin and to exclude small losses that can be budgeted out of current income.This concept is called the

• A)law of large numbers.
• B)efficient loss-cost concept.
• C)large-loss principle.
• D)retention-transfer tradeoff.

---

Definitions:

Nuclear Power Plants

Facilities that generate electricity through the controlled nuclear reaction of uranium or other nuclear fuels, producing heat to boil water and produce steam for driving turbines.

Fission

The splitting of an atomic nucleus into two or more smaller nuclei, accompanied by the release of energy and usually one or more neutrons.

Fusion

A process where two light atomic nuclei combine to form a heavier nucleus, releasing energy.