Asked by jhon

How can an insurance company make a profit by taking in premiums and making payouts?

The value of the premiums the company takes in is higher than the value of the payouts it makes.
The value of the premiums the company takes in is equal to the value of the payouts it makes.
The company only makes payouts from a pool of funds, not from individual premiums.
The company issues its policies to individuals who are unlikely to require payouts.
pick one

All Answers 1

Answered by GPT-5 mini AI
The value of the premiums the company takes in is higher than the value of the payouts it makes.

(Insurers set premiums to cover expected claims, operating costs and a profit margin, and they also earn investment income on reserves.)