Which insurance principle is correctly paired with its definition? A)

QUESTION

Which insurance principle is correctly paired with its definition?

A) principle of economically feasible premium: the principle that states that insurers will not pay the insured more in damage claims than the dollar loss actually sustained
B) principle of indemnity: the principle that groups that are more apt to need insurance are also those that are more apt to want it
C) law of adverse selection: the principle that says that insurers must spread their risks so that no single disaster or catastrophe forces them to satisfy all the claims by all the insured at the same time
D) law of large numbers: the principle that says the future probability of a loss can be predicted from a large number of past occurrences
E) principle of catastrophic hazard: the principle that states that a premium must be priced low enough to be affordable to the insured, but substantially less than the face value of the policy

ANSWER

Answer: D
Explanation: D) The law of large numbers is a principle that says the future probability of a loss can be predicted from a large number of past occurrences.