Economically feasible cost

To be covered by insurance, the possibility of loss to be minimal. The cost for the insurance is composed of net premium, or the amount actually needed to afford the loss of payments and the share of cost. If the possibility of loss of 100%, the cost of the policies exceed the amount that the insurance company is obligated to pay under the contract.

For example, it would be possible for a company life insurance policy of $ 1,000 on issueman, 99 years. Net premiums alone, but would be around $ 980, he wanted to be an amount for expenses that would bring the total premium, as well as the amount of insurance. For you, life insurance premiums attractive, much less the prize face politics.

Possibility of loss should be calculated

Some probability of loss can be determined only by logic, for example, the probability that the launch of a coin. Othermust be determined empirically, ie through the evaluation of past experience, with an advantage of this experience in future.

All types of insurance are likely to be determined on empirical grounds. There is some possibility of loss, but who are determined both by the logic or the past. Unemployment is one example. Unemployment rate occurs with such a degree of irregularity, so far nobody has been able to provide a method to determine its futureIncidence.

This is one reason why unemployment insurance is not sold by private insurance companies. If there is no possibility of existing statistics on the loss, it is impossible to predict losses, despite a large number of appeals.

Unlikely that most of the loss of simultaneously produce

Can afford no insurance, a kind of loss that is likely to happen in any large proportion of people exposed to ensure. True, life insuranceensure their insured against death, although it is clear that each of them die.

Life insurance is really its policyholders and insurance against premature death. Fees and collections of books are in a way that they can be expected to pay respect to the requirements without financial difficulties of the company to intervene.

When in front of all policyholders of a life insurance company must die, this company would alsoFailure of a company whose policies of fire insurance lost all their homes by fire.

The unemployment rate is due to this last barrier, too. Those who secure their jobs will never be sold for unemployment. Potential customers would be only by those who felt their work situations will be considered at risk.

If a recession occurs, the reception of the insured would lose their jobs at the same time. That would mean a lifeInsurance Company, a large part of its insured, at the same time.

Insurance is an agreement under which the few who are unhappy to lose the lucky many who compensated the loss of flight. Especially those whose financial welfare depends on what is often the case with the families of life long-term policies of insurance. If the many who suffers damage, then it is only a few are proving insufficient to compensate adequately, if not an uneconomicPremium.

To protect against catastrophic losses, insurance against fire, for example, a distribution range of risks and seek to establish standards that prohibit the underwriting business concentration in small sections of a city. They also put a clause in his contract without losses through wars, have raised the danger of catastrophic losses from nuclear war.

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