Insurance is a

Insurance is a

• A. Layered coverage.
• B. Funded risk transfer measure.
• C. Large loss exposure.
• D. Liability.

Answer: (B)

Insurance is a funded risk transfer measure. By paying a premium, the insured shifts the financial consequences of potential losses to the insurer, who pools premiums to pay claims as they arise. This prepaid funding, through the premium, distinguishes insurance from unfunded or self‑insurance methods. Other concepts like layered coverage, large loss exposure, or liability describe how risk or coverage is structured or the type of risk, but not the mechanism of transferring risk itself.

Insurance is a funded risk transfer measure. By paying a premium, the insured shifts the financial consequences of potential losses to the insurer, who pools premiums to pay claims as they arise. This prepaid funding, through the premium, distinguishes insurance from unfunded or self‑insurance methods. Other concepts like layered coverage, large loss exposure, or liability describe how risk or coverage is structured or the type of risk, but not the mechanism of transferring risk itself.