Question

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.

Answer 1

A

Explanation:

Answer 2

An insurance make a profit by:

The value of the premiums the company takes in is higher than the value of the payouts it makes.

Explanation:

Insurance companies earn profit from short-term investment of the premium money they collect as premiums but the payout or claims of services are made are paid several months later ways.

Insurance companies realize profits by setting premium levels that are higher than might be necessary.

Hence, the correct answer is:

The value of the premiums the company takes in is higher than the value of the payouts it makes.