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What does insurance companies do with the monthly payments they receive from customers?
Wiki User
∙ 13y ago
Those payments are referred to as "premiums". The premiums are paid in return for the insurance company's promise to pay the face amount of the insurance upon the death of the person insured.
The premiums charged by an insurance company are required to be "actuarially sound". This means that the premiums collected for all policies of a particular type and covering similar kinds of risks (for example, people with no health problems), together with income earned on the premiums, has to be enough to pay expected losses.
Insurance companies are permitted by the laws of the states in which they do business to invest a part of premiums collected in conservative investments. The earnings on those investments adds to the "surplus" of the insurance company and helps to keep it financially sound. In turn, the number of policies that the company can issue (its "risk exposure") is a finction of its surplus and certain other factors specified by the insurance laws of the states in which it operates.
A certain amount of the premiums are also applied to the ongoing business expenses to operate the company.
Wiki User
∙ 13y ago
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What are your monthly payments?
Monthy payments are payments you make every month, like a house payment, loan payment, water, electric, gas (for heating), phone, insurance if you pay monthly, etc.
What is the difference between installment and annuity?
Instalments are payments for your debts which can be paid on monthly, quarterly or yearly basis or way to make payments. Annuity is insurance product which is contract between you and insurance company for your investments.
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How much down and what are your monthly payments ?
How much down and what are your monthly payments
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