Life insurance is essentially a contract between the insured and the insurance company that pays out if the policyholder, the insured, dies. The life insurance money generally goes to a family member or beneficiary.
But, how can this even be profitable for the insurance company? Everyone dies, after all. Well, this all has to do with how the contracts are set up.

Media:

Brittle Rille – Reunited by Kevin MacLeod is licensed under a Creative Commons Attribution 4.0 license. https://creativecommons.org/licenses/by/4.0/
Source: http://incompetech.com/music/royalty-free/index.html?isrc=USUAN1200047
Artist: http://incompetech.com/

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7 thoughts on “How Does Life Insurance Work?”
  1. You neglect to mention that the most compelling reason for life insurance is to provide for dependents, which is why in most cases term insurance makes more sense. Strangely, few people will voluntarily get disability insurance during their working life; despite its obvious usefulness. Most people who have the latter type of insurance have it because it's a mandatory benefit in their collective agreement.

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