Is it as simple as person x gives money to some company to be spent a certain way after person x dies? How is that any different from a will? etc..
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Almost, but different. You pay premiums, but the amount the company pays out is usually a lot more than the premiums. However, the premiums are calculated based on how old you are and how healthy you are. If you are quite old, your premiums will be very high because they want to get as much money from you every month as they can and if you are very old, you may not live that long so they’ll have to pay out more than you put in. If you are younger the premiums are less because you are usually healthier and have longer to live…however you might also do riskier things.
Usually, life insurance is part of your employment benefits. You still pay some, but your company kicks in a lot too. So if you die, your family will be paid something like twice the amount of your yearly salary.
So it’s not just like putting money into a bank and then if you die the money in the bank is spent on something.
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