Unlike DIs, There Is Never a Need for a Life

question 23

True/False

Unlike DIs, there is never a need for a life insurance company to have a liquidity plan for a "run" resulting from concerns about its solvency.

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Definitions:

Consumer Insurance

A financial product that provides coverage for individuals against potential losses related to their personal assets, health, or life.

Marginal Utility

The change in satisfaction or utility received by consuming an additional unit of a good or service.

Total Utility Function

A mathematical representation of the total satisfaction received from consuming a certain amount of goods or services.

Risk-Averse

A characteristic of individuals who prefer to avoid risk and would rather choose an option with a more certain but possibly lower return over an uncertain option with a potentially higher return.