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Risk is the possibility (uncertainty) that a loss might occur, and
it is the reason people buy insurance.
Some people think the risk you take with insurance is the same as
the risk involved with gambling.
The risk in gambling is "speculative" risk. Gambling creates a risk
situation that offers an opportunity for gain as well as for loss.
Insurance deals with "pure" risk. With pure risk there is the
possibility that a certain event will occur, e.g., accident or
sickness.
What is the difference between insurance and gambling? The purpose
of insurance is to restore the insured to his original position, not
to afford the injured person the possibility of making a profit.
There might be gain in gambling. In insurance there is no
possibility of gain. |
