How Do Insurance Companies Make Money?

Video Transcript

"Hello, my name is Vic Schumacher with HPE Financial Services. Today we are going to talk about how do insurance companies make money. Well they do it two ways. One, they are gambling that something will not happen and your paying them premiums in the hope that something doesn't happen also. But those premiums that the insurance receives are invested in the stock market, their invested in gold, their invested in other businesses. They might even be invested in other insurance companies. You must also consider that the insurance company is there to make money and since all of the premiums are designed by actuaries and the odds that something will happen. Many times those odds don't happen. Like the house in Las Vegas. Their gambling on the odds that your not going to win and we know that the house usually wins in Las Vegas. So how do insurance companies make money? They make money two ways. By taking your premiums and investing them and getting returns on that investment. By also by taking the premiums and gambling that something will not happen. My name is Vic Schumacher HPE Financial Services. Helping people everyday."