The Basic Underlying Concept of Insurance Is ___________

question 4

Multiple Choice

The basic underlying concept of insurance is ___________.

• A) to spread the risk by writing coverage for a large pool of individuals
• B) writing coverage to return a profit to shareholders
• C) to be able to meet claims and return profits to the company's shareholders
• D) to spread risk by writing coverage for a large enough pool of individuals so that the premium structure has been established correctly and the prediction of claims are made accurately and the company can be able to finance those claims and return a profit to its shareholders

---

Definitions:

Resold

A term referring to items that have been sold and then sold again, either by the original buyer or by another party.

Additional Paid-In Capital

The amount of equity capital that is more than the par value of issued shares, representing additional investment from shareholders.

Stock Dividend

A distribution of additional shares of a company's stock to its shareholders, usually in lieu of cash dividends.

Cash Dividends

Direct payments of profit made to shareholders, proportionate to the number of shares they own.