Jill paid an annual premium of $2,000 in total coverage for her homeowner's insurance, including $250,000 in damage coverage and
$250,000 in liability coverage. Ten years into her policy, a friend fell off a ladder while working on the roof of her house and claimed $75,000 in medical expenses. Eleanor's insurance company paid the claim. Did the cost of the annual premiums outweigh the benefit of transferring the risk to the insurance company?
After ten years of paying an annual premium of $2000 to the insurance company, Jill has paid $20,000 in total to the insurance company in order to transfer them the risk, and when something happend, the insurance company spent $75,000 for the accident that happened in Jill´s house, this leaves jill debt free and with a $55,000 profit from her decision to transfer the risk to the insurance company, otherwise she would have had to pay the $75,000 in medical bills and if she had being saving that premium fee over the years she would only have $20,000.
Based on the information provided within the question it can be said that this is likely due to Armand's static reasoning. In the context of psychology, this term refers to a child's belief that the world around them is completely unchanging and will remain that way forever. Which is why he was shocked since he sees his teacher at school only and his mind believes that she is always at school.
