Question #24424

How does life insurance work for an insurer?

Being that EVERYONE will die at some point. Do most people end up paying for the payout amount with the premiums over the years?

  • ?

You pay monthly premiums and if they are paid up, your beneficiary gets the proceeds. Many people stop paying and that money is gone forever. Insurance companies make big profits from premiums and from denying claims if they also sell other types of insurance.

  • Anonymous

Most people don't have life insurance in force at the time they die. Most people keep it in force for five years or less.

  • ?

Insurance companies employ people called actuaries. An actuary's job is to make sure that the company is never out of pocket. They use statistics relating to life expectancy and deaths to determine the premiums to charge.

  • Insurance Pickle.com

It's like Social Security. It's a transfer system. The premiums of EVERYBODY pay the claims of a few in any given year. Your premiums have NOTHING to do with you benefits.

  • StephenWeinstein

Not everyone will die while they still have the insurance. Many don't. The insurer keeps the premiums that they pay when they have insurance, but there is no payout because they do not have the insurance when they die.

  • Jack

Additionally - - - many people cancel their policies when they no longer have a need for life insurance. They may have paid their premiums for decades, but will cancel the insurance when no one is dependent on their income any more.

  • ?

sure everybody dies eventually - but some live longer than others before they die

  • tro

if you look at your policy and the amounts you have paid over the years, you will fid that at any time the cash pay out you might want to take before you die is vastly less than you have paid, but if you leave it, your beneficiary will get the full amount at your death, a wide difference in what you can get with a cash pay out

  • DEBS

Like all insurance. Many people pay into it, but based on the length of the policy and how long individuals are expected to live, not everyone gets a payout. Rates are set to make sure the insurance companies don't pay out more than they receive. This is the same as auto insurance, home owners' insurance, etc.

  • Qidong Jiangsu

yes