Question

When you purchase insurance, you are buying:

(A) Peace of mind that if an insured event does occur, that the insurance company will keep its promise and provide the financial protection that you purchased.

(B) A guarantee of financial security.

(C) Protection from damage to property or personal injury.

(D) A new car if you get into an accident. A new house if yours burns down.

Answer 1

Insurance provides financial protection and peace of mind for unexpected events, but it does not guarantee financial security or replacement of assets.

Step-by-step explanation:

When you purchase insurance, you are buying peace of mind that if an insured event occurs, the insurance company will fulfill its promise and provide the financial protection you purchased. Insurance provides protection from damage to property or personal injury, but it is not a guarantee of financial security or a guarantee of a new car or house if they are involved in an accident or fire.

For example, if you have car insurance and get into an accident, the insurance company will cover the damages to your car as specified in your policy. However, the insurance company will not provide a new car, but rather compensate you for the repairs or the depreciated value of the car.In summary, insurance provides financial protection and peace of mind for unexpected events, but it does not guarantee financial security or replacement of assets in case of damage or loss.