Final answer:
True. Insurance should be considered even when there is a small likelihood that an event will cause a financial loss. Insurance works by pooling together the premiums paid by policyholders to create a pool of money that can be used to compensate those who experience specified bad experiences.
Step-by-step explanation:
True. Insurance should be considered even when there is a small likelihood that an event will cause a financial loss.
Insurance works by pooling together the premiums paid by policyholders to create a pool of money. This pool is used to compensate those who experience a specified bad experience, such as an accident, illness, or theft. Insurance companies calculate premiums based on the probability of these events occurring, including events with a small likelihood. By considering insurance even when the likelihood is small, individuals and firms are protecting themselves from potential financial losses.