Eli5: If an insurance company is willing to sell you insurance, does that mean the insurance company is expecting to make profit and therefore you will make a loss and should not take up insurance?

Question

Eli5: If an insurance company is willing to sell you insurance, does that mean the insurance company is expecting to make profit and therefore you will make a loss and should not take up insurance?

In: Economics

Answer 1

Insurance is about spreading the risk and cost. If yo have 1/100,000 chance of needing to pay $100k, you pay insurance so you can not have to come up with $100k when you need it. Like of you were involved in a traffic accident, or needed a major surgery. The insurance company of course sets the rates so its profitable