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What happens if your car crashes or your house burns down or your baggage gets lost on your next flight or you are diagnosed with a critical illness whose treatment is going to cost you tons of money? Will you dig deep into your coffers every time such a crisis occurs? The human race has invented a sort of fantastic cmpanies called insurance over its history and it has been an absolute life-saver for people all over the world. Unless you have been living under a rock all your life, you would most probably know what insurance is. The dictionary defines insurance as —.
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YouTube has become a content phenomenon. According to Statistics Brain a staggering 1,,, people use YouTube, watching 4,,, videos every day. Is it any surprise, therefore, that YouTube stars are often more influential than traditional celebrities? Of course, successful YouTube stars do not provide their entertainment for free. They do not put themselves on the medium for philanthropic reasons. They have found that it is perfectly feasible to make money on YouTube, and if you manage to break into the ranks of the famous and influential it can be seriously good money.
What Is Cash Value Life Insurance?
What happens if your car crashes or your house burns down or your baggage gets lost on your next flight or you are diagnosed with a critical illness whose treatment is going to cost you tons of money? Will you dig deep into your coffers every time such a crisis occurs? The human race has invented a sort of fantastic concept called insurance over its history and it has been an absolute life-saver for people all over the world.
Unless you have been living under a rock all your life, you would most probably know what insurance is. The dictionary defines insurance as —. An arrangement by which a company or the youfube i.
Insurance has been around for centuries. Hundreds of years ago, when ships used to get destroyed and sailors used to lose their cargo, they came up with the idea that by dividing the cargo among ships, they can divide their risk yojtube.
Total financial decimation was avoided. The same principle is applied in this case as. Thousands of people pay small amounts to cover the costs of a few in times of crisis. Now the premium you pay every year is just a small fraction of the total sum insured and thus you happily end up paying it up every year.
But for any business to be profitable, income must be greater than the expenses. Have you ever wondered how the insurance companies operate? If what you pay to your insurance company is just a small fraction of what they pay you when you file a claim, how do they even make money? How are they even in business and a quite profitable one at that?
The business model of mooney companies revolves around risk. The premium is decided by pricing that risk using sophisticated algorithms and statistical tools which vary across companies and types of insurance.
Whenever an insurer offers a conditional payout of a seemingly huge sum, the likeliness of the insured claiming for that payout is calculated and is stretched across the entire premium payment duration. The amount collected as premiums from various people is collectively slightly more than what the insurer has to pay to the some of the insured every year.
This is so because most of the revenue comes from the interest that is generated from investing the premium money in safe, short-term assets. This is what generates profits for any insurer and covers expenses such as commissions, salaries, administrative costs. When a customer files a claim, the claim is checked for authenticity and accuracy first before the payout is made, so that losses due to fraudulent claims can be minimised.
There is insurance for everything in the world today, from life to property to car to even travel. The basic business model mostly remains the same, though the process of determining the premium amount and conditions of payout might vary.
Underwriting Income: This is the difference in the amount of money collected from the people as premiums and the money paid when a claim is filed in the hour of need. Investment Income: What you pay as a premium is invested further so that it accrues interest over time and that is further used to cover the various expenses of the insurer.
Most insurance companies have a well-diversified portfolio and invest in both low-risk fixed-income securities and high-risk, high-return equity markets. The premium amounts vary for different individuals.
Let me give insurancs a simple example to explain why. Your friend has insured his health from the same insurer but he is a full-blown alcoholic and on the verge of having cirrhosis.
As an insurance company, it makes plain business sense to charge a higher hoq from your friend as there is a higher probability of him ending in a hospital and filing a claim. For all we know, someone as fit as you might never even need to visit yotuube hospital. So the money the insurer gets from people like you is used for people like your friend. When an insurance company assumes greater risk, the corresponding premium goes up.
This is also called loading of premium. If yours is a genuine case and you have all the necessary documentation and proofs available, then the claims get processed without a glitch. So in 9 out of 10 cases on an average, you get the insured sum when you make the claim. If you lie about your personal and other relevant details while applying for the insurance, then it is a different matter altogether. The insurer is free to not pay anything to your friend, if they later find this out, when he makes the claim in times of need.
You might be how do insurance companies make money youtube how the insurance companies even manage to pay more than times the premium amount when you claim it. It might seem unbelievable to you but the insurance companies arrive at the premium amount after careful research and estimations so that the premium collected every year from all people is slightly more than what they have to disburse at the time of claim. If there are people insured, there will be only 3 who would file a claim and the other 97 would not.
Since the insurance industry runs on volume, these odds keep the insurance machinery well-oiled and running. The extra money that remains can be carried forward and used in years when the number of claims goes up due to some reason. Insurance companies keep track of the claim ratio or the youtubd ratio for every year.
This the ratio of total money paid in claims and other adjustment expenses to the total amount earned in premiums. Based on this ratio, the premiums for future years are calculated.
At the end of the year, the actual payouts are compared with the original estimations and the premiums are future cases are adjusted accordingly. We have seen how beneficial insurance can be in unexpected adverse situations. Imsurance keeps us stress-free and relaxed and also compannies the insurance companies the money to invest and keep the economy running. At the end of the day, insurance is a volume game. The insurance companies operate like casinos and know that they have maake odds in their copanies and even if there are an overwhelming number of claims in one year, it shall balance out in the coming year.
In the long run, they shall be profitable. As for you, it would be wise to insure every precious thing you own, including your life. You never know when and how life throws you a curveball. As they say, when life gives you lemons, make insufance or better still, get insurance. Did we miss something?
Come on! Average rating 4. Vote count: How do Insurance companies make money has been rightly explained in the article along insudance many other things.
Hence this article is quite helpful. I would like to ask if a person purchase a property insurance. And the house got burnt, is he going to be paid the full initial cost of the house or not?
Startup Essentials. The 10 Best Slack Alternatives. YouTube vs. Vimeo: A Detailed Comparison. Google Maps vs. Waze: A Detailed Comparison. Branding Essentials. Please log in. The login page will open in a new tab. After logging in you can close it and return to this page. Be it taxis, hotels, groceries, food, or travel, the aggregator business model has entered into and has disrupted every industry Table of Contents. The Startup Process.
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Let us improve this post! Banks are always competition for your business, and one of the ways they do it is by having bonus offers where you can get cash deposited into your account simply for opening an account with. How much life insurance do you need? That’s huge. Blockchain for Dummies. If you enjoy woodworking, like crafting things like toys or furniture, you can also sell these items! In fact, some of the largest YouTube channels out there currently are based all around product reviews usually toys or tech, but there are some very large beauty channels as. I should say tutoring in general, but online tutoring is all the rage right. Get Paid To Exercise Did you know that you can insurwnce paid to exercise and do other healthy activities like walking, tracking your food, or taking health surveys.
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