Which statement is correct regarding the overall benefits of insurance?

The statement that insurance helps compensate accident victims, reducing societal costs, is correct because one of the primary purposes of insurance is to provide financial protection and support for individuals and businesses when faced with unexpected events such as accidents, illnesses, or disasters. By compensating victims for their losses, insurance plays a crucial role in stabilizing individuals and families, allowing them to recover more quickly and maintain their financial well-being. This compensation reduces the overall financial burden on society, as it lessens the need for public assistance programs and ensures that victims can access necessary resources for recovery, thereby supporting a healthier economic environment.

Insurance also promotes risk management, encouraging policyholders to take precautions that can lead to fewer accidents and, consequently, lower costs for society as a whole. This aspect of insurance creates a safety net that benefits not just the insured but the community at large by enabling individuals to recover from setbacks without completely devastating their financial status.