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

You’re unlikely to die within those 10 years, so the insurance company is betting that they will collect payments from you but pay out nothing.

Then they have a million other clients that they’re pricing similar plans for. Since they have *extensive* statistics on the chance of people dying, they’re likely to only end up paying out a few of those policies.