how can an insurance company make a profit by taking in premiums and making payouts?\no the value of the…

how can an insurance company make a profit by taking in premiums and making payouts?\no the value of the premiums the company takes in is higher than the value of the payouts it makes.\no the value of the premiums the company takes in is equal to the value of the payouts it makes.\no the company only makes payouts from a pool of funds, not from individual premiums.\no the company issues its policies to individuals who are unlikely to require payouts.

how can an insurance company make a profit by taking in premiums and making payouts?\no the value of the premiums the company takes in is higher than the value of the payouts it makes.\no the value of the premiums the company takes in is equal to the value of the payouts it makes.\no the company only makes payouts from a pool of funds, not from individual premiums.\no the company issues its policies to individuals who are unlikely to require payouts.

Answer

Brief Explanation:

Insurance companies profit when the total amount of premiums collected exceeds the total amount of payouts made. This is the basic business - model principle. Other options are incorrect as if premiums equal payouts there's no profit, using a pool doesn't explain profit, and it's not practical to only issue policies to those unlikely to claim.

Answer:

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