Answer
The benefit that people derive from insurance is that of mitigating their risk.
Work Step by Step
One problem that makes the insurance industry from working properly is that of adverse selection. Adverse selection is when someone more likely to have a need for a certain type of insurance. (Someone with multiple health problems is more likely to have a need for health insurance than a healthy person.)
Another problem that makes the insurance industry from working properly is that of moral hazard. Moral hazard is when, after purchasing an insurance policy, people are more likely to take riskier actions.
