Insurance where does it come from??

Question

once you have insurance after you die your famiy or parents get the money.. But where does all the money come from where do it from like do they get it from your taxes when you pay or i dont know but where does it all come from?

Answer 1

It comes from the insurance companies that issue the policies.

Answer 2

The insurance companies collect monthly (called premiums) on all the insurance policies they have sold.  

The company accumulates all that money and puts it into stocks and bonds which also pay interest and dividends to the insurance company.  So, they are increasing assets all the time.

When an insured person dies, the insurance company pays the stated amount of the life insurance from its assets.  It has nothing to do with taxes; it is a commercial enterprise in the business of making money.

The insurance company makes money each time a person takes out a policy, pays on it for several years, then stops making the payments.  The company gets to keep all the premiums paid.  Of course, sometimes people take out a policy, pay on it a couple of years, then die.  So, in this case, the company has to pay out more than it takes in, so it has a loss.