I haven’t done much research but from what I’ve read, the life insurance monthly payments are under $100 but will pay out huge numbers.
The example I found –
“Insurance Barometer Report said a $250,000 term life insurance policy for a healthy 30-year old would cost $500 a year or more.”
That’s like $25k total payments if they reach 80 years.
Am I missing something? How can companies afford this? Why isn’t absolutely everyone insured?
In: 6
Your example is *term* life insurance, which is the most common type of insurance policy issued. In term insurance, you pay a set premium over a *term period* of X years (10, 20, 30, etc), and then the policy either expires, is converted to permanent, or the guaranteed premium becomes a vastly inflated premium.
If your 30-year-old is truly healthy, then he is unlikely to die within the term. All the premiums he paid will be for naught (except of course the peace of mind of knowing his beneficiaries are covered, which is the point of insurance). The insurance company doesn’t have to pay him, and gets to keep all that premium to invest it, and occasionally pay out to the few unfortunate people who do pass away while being covered.
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