Pooled Risk

• Insurance agencies work by pooling risk. For an individual or a company to lay away money that would protect them from any possible financial damages would be prohibitively expensive. The price of doing this would also rise as their risks rose until it became practically impossible to provide coverage. An insurance agency is able to combine the risk of all sorts of different individuals, into one pool, making the money that they individually contribute adequate for their risk.
  
  

Odds

• The majority of people who pay into the average insurance fund will end up contributing far more money to it than they will ever take out. People pay into an insurance fund to cover themselves for the worst case scenario, if it happens. Fortunately, the odds of the worst case scenario occurring in any instance are much lower than not. Insurance companies remain profitable by bringing in high numbers of lower risk individuals.
  
  

Individuals

• Individuals take advantage of insurance in a whole variety of ways. Health insurance is one particularly important area. By buying health insurance a person insures that they are covered for the worst case scenario concerning their health. As well, homeowners insurance protects many people in the case of damage to their houses or property. Insurance has managed to protect an uncountable number of people from damages of many sorts, making risk a manageable phenomena.
  
  

Businesses

• Insurance is a routine instruments that businesses use to manage their risks. Most businesses will take out insurance policies to protect the property in their possession. Businesses also often take out insurance to protect them from their legal liability in the threat of lawsuits. Many businesses take out particular insurance policies when they are about to undertake a particularly high-risk ventures to cover at least some of their losses if they fail.