Insurance companies collect small, certain amounts of money (premiums) from policyholders who want to avoid the possibility of a large, uncertain financial loss. The insurance allows the dollars of many to pay for the losses of a few. Insurance companies use historical data to figure the probability of losses and charge premiums accordingly, building in profit for themselves.
Originally posted by: her209
How do life insurance companies make money?
Originally posted by: her209
I mean, its not car insurance, i.e., you don't continue paying for life insurance after you, or more accurately, your loved ones collect...
Originally posted by: Joemonkey
ask actuarytim
Death is 100%. And its not like after you die, the life insurance can raise your rates to recoop some of the loss.Originally posted by: DeeKnow
by collecting in premiums more than they have to pay out on policies... its just probability and statistics, and the urge in all of us to avoid 'risk'Originally posted by: her209
How do life insurance companies make money?
Originally posted by: her209
I mean, its not car insurance, i.e., you don't continue paying for life insurance after you, or more accurately, your loved ones collect...
Originally posted by: chambersc
term life meaning that if you don't die you pay for nothing (as stated previously)
preimums that are invested the insurance companies so they make interest off your money.
many people paying into and only a few dying (as stated previously)
I think that about sumbs it up, OP.
Thank you. I knew I was missing the "die only a certain way" clause.Originally posted by: newmachineoverlord
Originally posted by: chambersc
term life meaning that if you don't die you pay for nothing (as stated previously)
preimums that are invested the insurance companies so they make interest off your money.
many people paying into and only a few dying (as stated previously)
I think that about sumbs it up, OP.
The only factor you missed is that most policies exclude certain causes of death from their coverage, particularly suicide. Since suicide is a fairly common cause of death, that makes them a lot of money from people who don't bother to read the terms before they off themselves. There are also those murders which are called suicides because the victim was poor and they don't want to bother investigating, happens more often than you might think.
Originally posted by: upsciLLion
The premiums are invested.
Originally posted by: Joemonkey
ask actuarytim
At times I am in ActuaryTm, but there is no I in ActuaryTm's name.
Originally posted by: upsciLLion
The premiums are invested.
Originally posted by: Joemonkey
ask actuarytim
At times I am in ActuaryTm, but there is no I in ActuaryTm's name.