Question

question 9 (1 point)
the purpose of insurance is not to:
a diversify an investment portfolio
b share risk with other policy holders and the insurance company
c protect assets
d protect against potential losses

Explanation:

• Option a: Diversifying an investment portfolio is related to investment strategies (like mutual funds, stocks), not insurance. Insurance's core is risk - sharing/protection, not investment diversification.
• Option b: Insurance shares risk among policyholders and the company (e.g., many car insurance holders’ premiums help cover a few who have accidents). This is a key purpose of insurance.
• Option c: Insurance protects assets (e.g., home insurance protects the home, health insurance protects against medical cost losses to one's financial assets).
• Option d: Insurance protects against potential losses (e.g., life insurance protects against financial loss from a breadwinner's death, property insurance against fire damage).

Answer:

a. Diversify an investment portfolio