How the Insurance Business Works

Revision as of 12:20, June 24, 2007 (edit) Wikinvest MaintenanceBot - Sr. Director (Talk | contribs) m (How the Insurance Business Works moved to Concept:How the Insurance Business Works: Moving concept pages into the Concept namespace) ← Previous diff		Revision as of 12:09, October 3, 2007 (edit) (undo) Ericjfox - Sr. Associate (Talk | contribs) Next diff →
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-	{{concept}}	+	Insurance was created to protect individuals and entities from risk. It involves paying a premium to another party, which agrees to cover that individual or entity from any financial damages if a covered event occurs.
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		+	An example would be a homeowner pays a premium to an insurance company to cover his home in the event of a hurricane causing damage.
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		+	The insurance company makes money two ways: by charging enough premium to cover the damages they have to cover over the life of the policy; and by investing the premiums collected until they have to pay claims.

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Revision as of 12:09, October 3, 2007

Insurance was created to protect individuals and entities from risk. It involves paying a premium to another party, which agrees to cover that individual or entity from any financial damages if a covered event occurs.

An example would be a homeowner pays a premium to an insurance company to cover his home in the event of a hurricane causing damage.

The insurance company makes money two ways: by charging enough premium to cover the damages they have to cover over the life of the policy; and by investing the premiums collected until they have to pay claims.

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