General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
Which statement about the law of large numbers is correct?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The law of large numbers makes group outcomes predictable while individual outcomes remain uncertain. No insurer can say whether one particular insured will file a claim, but with enough similar insureds the total number of claims becomes highly predictable. This is why insurance works as a pool: the group's certainty finances each individual's uncertainty.
Why the other options are wrong
- B) The law says nothing about individuals; any single insured can suffer a loss at any time.
- C) The law concerns the size and similarity of the group, not uniform policy amounts.
- D) The law applies to all insurable lines, including health and disability, wherever loss statistics are pooled.
Memory hook
The crowd is predictable, the individual is a coin flip. Insurance banks on the crowd.