Question

“Insurance does not remove risk, but it compensates for the loss resulting from the risk” Justify this statement.

Answer 1

• As the civilization grows and world develops risks associated with the growth and development also rises.
  Risk of life, health, property, machinery, raw material, finished good, etc. are several types of risks that insurance covers.
• The risks that we face may be either man-made or natural. It is not in the hands of insurance companies to stop these risks. Their sole objective is to safeguard a person in case he faces any such risks.
• So, by taking insurance one cannot say he can stop the risks but he can surely say he can safeguard himself against the financial loss that might occur due to such risks.