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

Life insurance is a gambling game you play with a company.

“I bet you $40/month that I will die in the next 10 years. If I do, you have to give this person $500,000. If not you can keep the money.”

Like all gambling games, it’s a matter of statistics. Since life insurance companies set their own numbers, you can be assured that it’s strongly in their favor.