Final answer:
Insurance companies calculate premiums based on factors like income, debt, willingness to pay, and level of risk to ensure coverage of claims and profitability.
Explanation:
Insurance companies determine premiums based on various factors like the level of risk associated with insuring an individual. Factors such as the person's income, debt, and willingness to pay also play a significant role in premium determination. Insurance companies aim to set premiums that cover potential claims, operational costs, and ensure profitability.
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