Insurance Works Because It

question 42

Multiple Choice

Insurance works because it:

• A) reallocates the costs of unforeseen events, sparing any individual from taking the full hit.
• B) makes it less likely that their clients will experience unforeseen events.
• C) prevents any one individual from experiencing all the unforeseen events.
• D) None of these statements is true.

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Definitions:

Mortgage Payable

A liability account on the balance sheet representing the amount owed by a company or individual for the property's mortgage.

Asset

Resources owned or controlled by a business that are expected to provide future economic benefits, including tangible and intangible items.

Liability

An economic obligation or debt owed by a company to others, typically other businesses or employees.

Contra-Asset

An account on a company's balance sheet that reduces the total value of assets, often used for accumulated depreciation or allowances for bad debts.