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How life insurance works?

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Shailesh Kumar, Co-founder, Insurance Samadhan verified
Answered on April 17,2022

Answer is very simple , let us say 100 people own a mobile phone worth Rs 10000 and it is assumed that 1  person may loose mobile within one month .but there is equal probability of loss for each person .

So either one person have a loss of Rs 10000 or all 100 people decide to share the loss . Each person contribute Rs 100 to pay Rs 10000 to the person who looses mobile .

Insurance works on the same principle that all have equal responsibility of death and they all contribute to the family .

Insurance Company is just a manager of the fund and pool .

Hope this clarifies 

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