Question

Which are benefits of purchasing insurance? Check all that apply.

to gain greater confidence and security
to avoid having to reduce risky behavior
to be prepared for problems or changes
to avoid paying costly monthly premiums
to have protection if something goes wrong
to avoid receiving compensation or payouts

Answer 1

Correct choices:
- to gain greater confidence and security
- to be prepared for problems or changes
- to have protection if something goes wrong

Why the others are incorrect:
- Insurance does not let you avoid reducing risky behavior (it can sometimes create moral hazard).
- You do not avoid paying premiums — premiums are the cost of insurance.
- You do not avoid receiving compensation; compensation/payouts are the purpose of insurance when a covered loss occurs.