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Insurance: Difference between revisions
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Amwelladmin (talk | contribs) (Created page with "In concept a great idea. In practice, often a stupid one which creates risks, costs and bureaucracy where none would otherwise exist. An insurance contract protects a person...") |
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In concept a great idea. In practice, often a stupid one which creates risks, costs and bureaucracy where none would otherwise exist. | In concept a great idea. In practice, often a stupid one which creates risks, costs and bureaucracy where none would otherwise exist. | ||
An insurance contract protects a person of limited resources from a remote but outsized risk. The theory is that by being a small part of a large class of people each of whom paying an affordable running premium, you are protected from colossal costs that may never happen. Thus you mutualise your risk of loss. | An [[insurance]] contract protects a person of limited resources from a remote but outsized [[risk]]. The theory is that by being a small part of a large class of people each of whom paying an affordable running [[premium]], you are protected from colossal costs that may never happen. Thus you mutualise your risk of [[loss]]. | ||
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'''Example''': | |||
In a group of 1000 people, each has a 1% chance of a £100,000 loss in a ten year period. | In a group of 1000 people, each has a 1% chance of a £100,000 loss in a ten year period. | ||
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Who would not pay £200 to be immunised against a £100,000 risk? | Who would not pay £200 to be immunised against a £100,000 risk? | ||
Right? | ''Right?'' | ||
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Well, hold on tiger. | |||