The Insurance Calculation - Deepstash

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The Insurance Calculation

The calculation for insurance runs like this: The company is profitable when the cost of premiums that we pay is greater than the future claim that we may ask for (having a certain probability).

Cost of Premium > (Cost of claim) x (Probability of claim)

STASHED IN:

47

MORE IDEAS FROM THE SAME ARTICLE

Generally, insurance is understood as a bet. We pay a premium and are secure about some uncertain future costs which may be substantial for us.

  1. We believe that the probability of us experiencing the event that we are insured against is high.
  2. The claim that we may get in event of something happening is substantial with the cost of premium being on the lower side (basically a bargain).
  3. To offset sub...

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