Final answer:
The statement is true; insurance serves to protect the insured from financial losses, covering legal liabilities among other risks. Policyholders pay premiums in exchange for the insurer's financial protection against certain events. Different types of insurance, including health, vehicle, and property, cater to specific needs.
Step-by-step explanation:
The statement 'Designed to protect the insured against claims for which they are legally liable' can be deemed as true. Insurance is fundamentally a method of protecting a person or entity from financial loss. In the context of liability insurance, policyholders make regular payments, known as premiums, to an insurance company. In return, should they face a claim for which they are found legally liable, such as property damage or bodily injury caused to a third party, the insurance company will cover the financial damages up to the limits of the policy.
Important to note is the concept of moral hazard, which occurs when having insurance makes an individual less likely to guard against a risk. While a money-back guarantee is not typically a feature of insurance, the guarantee of financial remuneration for covered losses is. This essential coverage allows individuals and organizations to mitigate risks that could otherwise have catastrophic financial consequences.
Various types of insurance are available, covering different aspects of our lives, such as health insurance, car insurance, and homeowners insurance, each serving to safeguard policyholders from specific financial losses.