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in Insurance-Introduction and Importance by (53.6k points)

Insurance is a method of spreading the risks, not prevention of risk. Comment.

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Under Insurance, an individual surrounded by general types of risk contributes in common funds in the form of premium. Upon occurrence of any type of mishappening, the individual is paid from the funds to cover his damage. Therefore, in insurance, a liability of an individual is transferred to others, but loss cannot be stopped or prevented. That is why, we can say that insurance is a method of spreading the risks, not prevention of risk.

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