Multiple choice

Why should one buy an insurance policy?

  1. It gives high current returns

  2. It gives good capital appreciation over its term

  3. It should be bought due to the need for insurance and not as an investment

  4. All of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Insurance is primarily a risk protection tool, not an investment vehicle. Options A and B are incorrect because insurance policies typically offer low returns and are not designed for capital appreciation. The fundamental purpose of insurance is financial security against unforeseen events, not wealth creation.

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