Law of Large Numbers

Insurance companies have a way of working in insurance risk management. The workings of this life insurance company is to move the impact of loss / risk of an individual to a group and share / spread the losses / risks to the entire group. In this case life insurance can also be called as a tool to spread the risk. So the risk should be borne by an individual will be shared by all members of the group.
As a tool to spread the risk, Life Insurance can only work if the insurance company is able to bear the same risk in large numbers. When life insurance companies are able to bear the same risk in large numbers, then the law shall apply the Law of Large Numbers.
Then what is stipulated in the Law of Large Numbers?
In the Law of Large Numbers states if the amount of loss exposure increases, the predictions of loss will be real close to the amount of loss (actual loss).
By using the Law of Large Numbers would allow insurance companies to predict the amount of losses arising better.
The use of this law is very important for life insurance companies because they must determine the amount of premium to be paid by an individual (based on an estimate of loss) to the insurance company. This premium collection will be used by insurance companies to provide compensation for financial losses / assets arising from a risk / disaster suffered by the insured. In this case, of course life insurance is expected to be used to reduce the impact of risks arising from the occurrence or accident.