How insurance companies generate their income

[Augusta]

The insurance sector of the economy is a money making one though the seek to give converage for whatever is insured. But they also make money through it via the following ways:


Through underwriting : This is where the bulk of the money comes from. This comes from the premium that all clients paid for being insueed.

Through investments: The insurance company get revenue from investing the premium received in other money generating investments. So they make their income from here.

From coverage lapses: This is another good way of making money by the insurance company, this is where a policy expires and there was no claims ofcourse the insurance company will cash in and keep all the premium without paying out any claims.

 

[Lens1000]

The ways the insurance company makes money is so enormous and there is a strategy used because all the insurance promises may not fetch the company the required amount of money. My thought is that they make bulk of the money from whole life insurance. This would give them more than enough time to invest the policy premium on a more profitable long-term investment.

 

[Mataracy]

I know that insurance is a company who are in charge of helping business men or helping in insure human beings in exchange for premium paid by the insured.
Insurance company can get there income mainly from the premium paid. And also insurance company do enter in to some other business too by investment.

 

[Augusta]

The ways the insurance company makes money is so enormous and there is a strategy used because all the insurance promises may not fetch the company the required amount of money. My thought is that they make bulk of the money from whole life insurance. This would give them more than enough time to invest the policy premium on a more profitable long-term investment.

You are on point here, but I like the fact that they invest the money wisely so that they wouldn't have to tax the clients excessively. Because if they were just to depend on premium gotten they would be taxing more. Again, it good that their investment yields so that they can easily remit the money to the client when due.

 

[Augusta]

I know that insurance is a company who are in charge of helping business men or helping in insure human beings in exchange for premium paid by the insured.
Insurance company can get there income mainly from the premium paid. And also insurance company do enter in to some other business too by investment.

You mentioned the core areas by which they generate their income. This is why payment of premium is mandatory that is where they can easily make their money. Get the premium then invest it where it will yields them a lot at the end of the day. This is why they need more clients

 

[Jasmine]

Insurance companies collect money from people in the name of premiums. They insure their company with another company, possibly a bigger company, or a foreign company, and try to minimize their own risk. They also invest money on various companies and businesses. They profit from investment. They generate income mainly from investment.

 

[Augusta]

Insurance companies collect money from people in the name of premiums. They insure their company with another company, possibly a bigger company, or a foreign company, and try to minimize their own risk. They also invest money on various companies and businesses. They profit from investment. They generate income mainly from investment.

You made a valid point here and I think they make good money too from this other big insurance companies that they insure with that help sort them out when they need to pay back some claims. But the bulk of their revenue is both from the premium paid and the investment of the premium received. This is why one needs to have the skills to lure more clients

 

[Setho]

In very simple terms a majority of the profits that insurance companies make come from the annual payments that is being made by their customers. There are also insurance companies that engage in peer-to-peer lending and then they keep the proceeds of such money to themselves. There are some companies that also award premium services.

 

[Augusta]

In very simple terms a majority of the profits that insurance companies make come from the annual payments that is being made by their customers. There are also insurance companies that engage in peer-to-peer lending and then they keep the proceeds of such money to themselves. There are some companies that also award premium services.

Your second paragraph is a very good idea by which insurance company generate their income. So apart from them investing in their different investment portfolios they are also into lending for some interest. This is how some actually find the lifestyle they flaunt. So it is pertinent to find out which will suit one before starting an insurance company

 

[btaliat]

The bulk sum of insurance money come from the premium that their customer pay. There is more probability that most of the insurance policy that people buy may not even come to fruition. Aside this, they also invest with people money for Hugh returns. And most time, insurance is covered by the government agents.

 

[Deleted member 28127]

The most of insurance have affiliate program means if you are an existing client and you refer some of your friends or relatives saying that you are the inviter to become a new customer you will win reductions or commissions from contracts signed by invitees and this is another way to earn money by these companies.

 

[sincerem]

No.1; Not every insured come to reap their benefits from insurance. Remember, not every one stands to get full benefits from insurance, because dangers of life might not come through an insured at a long duration, and he or she continuously pay the premium charges to the insurance company. That's a plus for the insurance company.

 

[Mandy96]

Honestly speaking, this is one of the most occurring questions that have always wanted to ask about insurance. Because I know they do make money somehow but I am not sure how they do that. Someone once said they make their profits by using their clients’ money to invest in another business

 

[Augusta]

Honestly speaking, this is one of the most occurring questions that have always wanted to ask about insurance. Because I know they do make money somehow but I am not sure how they do that. Someone once said they make their profits by using their clients’ money to invest in another business

Yeah they are also business and money making too. They don't have to only rely on the premium paid they have to have other streams of income so they used the premium paid to invest in a business or other investment.they also insureb their company with bigger insurance company for compensation if need be.