How Insurance Works with Henrietta

Henrietta is back in the insurance world again. She lives on a big farm with 9 other chickens. Life is good – plenty of corn to eat, fresh air, and cozy coop. But Henrietta and the other chickens know that life can be unpredictable – sometimes a chicken might get sick, injured, or lose feathers in a bad storm. Fixing these problems can be expensive, so the chickens come up with a plan to help each other out.

🥚 Step 1: The Chicken Safety Fund

To keep everyone protected, the chickens decide to start a Chicken Safety Fund. Each chicken contributes one egg per week to the fund.

With 10 chickens, that’s 10 eggs per week added to the fund
If nothing bad happens, the eggs just sit there and build up
If one of the chickens has a problem, they can take eggs from the basket to help cover the cost of fixing it

🐔 Step 2: Disaster Strikes

One day, Henrietta is out scratching in the yard when – oh no! – she gets her foot stuck in a fence and hurts herself. Now she needs a trip to the farm vet, which will cost 5 eggs.

Luckily, the Chicken Safety Fund has been building up, the group uses 5 eggs from the fund to cover Henrietta’s bill. She gets treated and feels much better!

🌧️ Step 3: More Trouble on the Farm

A week later, a big storm rolls through the farm.

Penny loses some feathers and needs 3 eggs to buy a new feather coat
Clucky catches a cold and needs 4 eggs for medicine

Now the Chicken Safety Fund only has 1 egg left because Henrietta, Penny, and Clucky have all taken from the pool.

🏡 Step 4: Increasing the Contribution

The chickens realize that their fun isn’t big enough to handle these emergencies. The decide that everyone should contribute 2 eggs per week instead of one.

With 10 chickens now giving 2 eggs each, the fund will grow by 20 eggs per week instead of 10
This way, if more chickens have trouble, there will be more eggs available to help

😡 Step 5: Some Chickens Complain

Henrietta’s friend Pecky isn’t happy. Pecky has never been sick or lost any feathers, so she doesn’t see why she should have to give more eggs.

Henrietta explains the fund exists to protect everyone by sharing the risk. Even though Pecky hasn’t needed help yet, she could lose feathers in the next storm, and when that happens she’ll be thankful for the Chicken Safety Fund being there to help.

➡️How This Relates to Real Insurance

✅ The Chicken Safety Fund = an insurance company

✅ Each chickens weekly egg contribution = an insurance premium

✅ The eggs in the fund = the insurance pool

✅ Using eggs for Henrietta’s bill = filing a claim

✅ Raising the egg contribution after more claims = a rate increase

🔑The Lesson

Insurance works by spreading the cost of unexpected problems across the whole group. And when unexpected problems keep happening, the group might need to contribute a little more to make sure everyone stays safe and cared for. This way, no single chicken is left struggling alone! 🐔🥚