Considering that people who take life insurance would inevitably die and so the companies have to pay out the premiums, why do insurance companies still offer these options?
[Used the economics flair as I didn’t know which one to use.]
In: Economics
Most policies don’t last until the end of life and get prohibitively expensive after the policy holder is 50 years old.
Think of it as a gamble. You gamble you’re gonna die before the policy ends, say in the next 25 years and give them your stake. They gamble you’re gonna live past that point, so they get to keep your stake without paying out. To entice you they give you massive odds, say £20/month for £150,000 payout. Their objective is to never payout. For every policy that does payout, there’s a hundred or so that don’t.
There are “Whole of Life” policies but the stake to payout is ridiculously narrow as the underwriter knows it’ll be paid out at some point
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