For the average consumer, the cost of purchasing insurance is greater than expected payoff from the...

For the average consumer, the cost of purchasing insurance is greater than expected payoff from the insurance.

True

False

Expert Solution

True

(Cost of insurance is a complex subject. For the average Consumer the cost of purchasing insurance is greater than the expected pay off from insurance.

Insuranceis purchased to get rid of risk. We can even say that risk aversion is the behavioural foundation of life insurance. The individual demonstres it when he or she pays more than the expected value loss in an insurance contract. Insurer is very much capable of charging a premium that covers expected pay offs . )

Rahul Sunny answered 2 years ago

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