In this beginners guide video, I explain the basics of the business model of an insurance company, and how they make money while protecting you from a contingency ("the law of large numbers"). Have you ever wondered what happens to the premiums you pay when you buy an insurance policy? I walk through the typical insurance cycle: stage 1 comprising the insurance company receiving premiums and incurring upfront acquisition and billing expenses, stage 2 when the premium received is invested in financial assets and earns a return, and stage 3 when claims are processed.  

For further details on a specific insurance policy such as car insurance, you can go through a beginners guide into car insurance basics