What is the explanation of how insurance works
Answers
Answer:
Insurance uses probability and the law of large numbers to determine the cost of insurance premiums it charges its clients based on various risk factors. The rate must be sufficient for the company to pay claims in the future, pay its expenses, and make a reasonable profit, but not so much it turns away customers.
Explanation:
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Explanation:
Summary Explanation of How Insurance Works. An insurance policy is a financial contract between a policyholder and an insurer, which is almost always an insurance company. The insurer agrees to pay in the event that the person or property insured suffers a type of loss named in the policy.
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