All of the following are characteristics of insurance except risk avoidance.
Based on the definition, an insurance plan consists of the following characteristics:
1. Contract: it is the most important characteristic that insurance is a legal contract between the insurer and the insured.
2. Pooling of Losses: It refers to the sharing of losses. It is the essence of insurance.
3. Payment of fortuitous losses: It means payment of the accidental loss that is the loss must occur unexpectedly.
4. Indemnification: It means promising to pay the party if they suffer losses or damages.
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