How do insurance companies make money?
Insurance companies generate revenue from premiums paid on outstanding policies and net profit on the difference between revenue and policy claim expenses.
How does an insurance broker make money?
Insurance brokers typically earn commissions on the sale of policies, either on a flat rate per policy or on a percentage of the insured amount.
Why do insurance policies have deductibles?
Insurance policies often have deductibles, especially with health and auto insurance, in order to partially offset the cost of providing coverage by the company and can keep premiums lower if customers opt for higher deductible amounts.
Do men and women pay the same for insurance coverage?
There is definite gender bias in insurance coverage depending on type of insurance. With auto insurance there can be gender discrimination tied to income and credit scores, while with life insurance women generally pay lower rates due to longer life expectancy.
Can bundling insurance policies save money?
Yes, insurance carriers typically offer significant discounts for those who have multiple types of coverage with their company, such as bundling car and homeowners insurance.
Insurance coverage refers to the amount of protection within an insurance policy that covers a specific type of loss.
An insurance premium is the amount of money the customer pays to the insurance underwriter each month to maintain the policy.
An insurance underwriter is the company that takes on the risk of covering a specific type of loss event in exchange for payment of premiums during the term of the policy.
An insurance claim is the notification of the underwriter by the policyholder that a covered loss has occurred.
An insurance adjuster is an employee of the insurance underwriter who investigates covered loss claims and authorizes payouts.
Self insurance is a process by which a person or company assumes the risk of loss themselves by saving the money that would have otherwise been paid in the form of premiums in order to build up a fund to cover potential losses.