Alberta General Insurance Level 1 Practice Exam

Question: 1 / 400

Which of the following is a secondary function of insurance?

Increased risk-taking

Aid to Security

Insurance has two primary functions risk reduction and risk distribution. These translate to risk-taking and security within the choices provided. Increased risk-taking (option A) would be the opposite of what insurance aims to achieve. Reducing premiums (option C) may seem like a secondary function, but in reality, it is simply a factor that determines risk reduction and distribution. Decreasing investment opportunities (option D) does not pertain to the functions of insurance and may, in fact, indirectly cause increased risk-taking. On the other hand, aid to security (option B) is a clear secondary function of insurance as it provides a safety net for individuals in case of unexpected events that could cause financial harm. This aligns with the primary function of risk reduction and distribution, making it a logical and correct answer.

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Reducing premiums

Decreasing investment opportunities

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