Where Do Health Insurance Companies Invest?
21750 POINTSview profileJim WinklerCEO/Owner, Winkler Financial Group, Houston, TexasGreat question! Insurance companies invest their money in a lot of things, but the primary investment for a lot of them is in high yielding corporate bonds. (I read somewhere that the insurance industry buys almost 70% of these bonds issued.) They make the bulk of their money from what is called the "float" - the money that is on hand before it gets paid out on claims. If they can invest and reinvest that money in a tax free vehicle before having to pay it out in a claim, they can make good profits. They also make money off of unclaimed payouts, lapsed policies, and interest off of loans. Hope that answers your question! Thanks for asking!Answered on April 25, 2014flag this answer
11498 POINTSview profileJason GoldenzweigCo-Founder, TermInsuranceBrokers.com, Goldenzweig Financial Group, Las Vegas, NevadaThere's many ways insurance companies make money. The most common way that people are familiar with is the carrier uses the premiums that they collect for the coverage they provide and investing a portion of it to grow those funds in many different things (e.g. stocks and bonds). Carriers are required to maintain a certain level of reserves so they can pay out claims on policies.Answered on April 25, 2014flag this answer
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