how does life insurance make sense, like how does $40/month for 10 years get you 500,000 life insurance?

Question

I’m probably just stupid 😭

In: 4901

Answer 1

In short, it’s just legalized gambling. You are betting that you’ll die in the next 10 years by tossing $40 onto the poker table every month.

The insurance company is betting you WON’T die in the next 10 years and backs up their bet with $500,000.

The insurance company almost always wins your money. But not all the time.

At $40/month for $500k of insurance, roughly one out of every 105 customers would have to die in that 10-year span for the insurance company to NOT make a profit. (if I did my math right)