Which of the following is true about insurance companies?

Insurance companies function by offering protection against specific risks in exchange for regular payments known as premiums. When individuals or businesses encounter a loss that is covered by their policy, the insurance company provides compensation to help mitigate the financial impact of that loss. This risk-pooling model allows the insurer to manage the uncertainties of insurable events while providing peace of mind to policyholders.

In contrast, requiring deposits for savings accounts relates more to banks and other financial institutions that offer savings products, and is not a service provided by insurance companies. While investment banking services are also crucial in the financial sector, insurance firms typically do not leverage their operations solely around this area; they primarily engage in risk management and underwriting. Furthermore, insurance companies do not confine their operations solely to life insurance. They often provide a diverse array of products, including health, property, and casualty insurance, covering a broad spectrum of potential risks.