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An illustration of how insurance works?

Suppose there are a hundred people in a group and there's a 1 percent chance that any of them could get sick and they know that it could cost at least ten thousand dollars in medical care. But you don't know if it's you that's going to get sick. Nobody knows if it's them.

So each person will pay a hundred dollars into a collective pool of money that they total will have ten thousand dollars to cover the medical cost of the one person who ends up getting sick. So everybody has to give up one hundred dollars. No matter if it's you or not they get sick but that means nobody is going to lose a hundred dollars and it could have cost ten thousand so ninety nine people don't collect anything they just put in one hundred dollars just in case it was them But they are able to gain the peace of mind so feeling comfortable with it to them what are they going to do. And they have important protection against such a large loss of ten thousand dollars. So again we shift the risk of a lot of financial losses from us having to pay it to the insurance company paying it.

 So benefits of insurance the payments that you receive from an insurance policy can far exceed the premiums you pay. So if you have an accident it's a hundred thousand dollars in hospital bills you might not have ever paid up to that amount. Insurance premiums that your monthly payments but the insurance still covers it for you. It allows you to feel better about your life and going about your day to day existence So financial security and peace of mind.

And there are some different common types of insurance we're going to be discussing property and liability health long term care disability and life insurance.