Final answer:
Insurance is d.) the transfer of risk from an individual or organization to an insurance company, which is achieved through regular payments known as premiums.
Step-by-step explanation:
Insurance is essentially a method of protecting a person or organization from financial loss. In essence, insurance works by policyholders making regular payments, or premiums, to an insurance entity. The role of the insurance company is to collect these premiums and then provide compensation to members who suffer significant financial damage due to an event covered by their policy. This process is known as the transfer of risk, as individuals or firms are transferring the financial risk of a potential loss to the insurance company.
It is important to note another concept related to insurance called moral hazard, which arises because individuals with insurance may be less inclined to prevent an insured event from occurring since the financial burden of the loss would not fall on them directly.
To address the question, insurance is most correctly defined as: d. The transfer of risk.