I was going through life insurance policies and noticed that even if I lived to be 100+ the amount of money I would pay into a life insurance policy would still be lower than the insurance pay out. I imagine many people die much sooner and get paid out even more than what they contributed. How do life insurance companies still profit off these policies when everyone will eventually die and cash out? It’s not like car insurance where you can go without an accident.
In: Economics
The majority of life insurance policies are *term*, which means they’re only good for a certain amount of time (10 years, 20 years, etc.). After that time the policy either lapses or the premiums go way up.
If you survive the entire term, then you paid the insurance carrier the entire term’s worth of premiums and got nothing back (except the peace of mind of being insured, which is the point).
Most people survive the term. And many others don’t keep paying over the life of the term, and the policy lapses…again, you paid the carrier money and they pay you nothing.
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