Why life insurance is so cheap ?

Question

are they really going to pay after death ???

Answer 1

life is cheap..

Answer 2

Term assurance is cheap.  That's where you insure your life for a fixed term.  If you die during the term, they pay up.  If you survive to the end of the term, they don't.

Whole life assurance is where you keep paying the premiums and they'll pay up on death whenever.  That's a lot more expensive because eventually they are going to have to pay.

Answer 3

Life insurance is based on: age, type of policy, tobacco use, etc, etc.

If you have received a life quote that is really cheap it is probably because it is either a (1) term life insurance policy or (2) an accidental death policy.

For more information on the different types of life insurance policies http://mysite.verizon.net/ressg6c7/savin...

Answer 4

Cheap?  You must be looking at term insurance.  Which is fine for things like making sure you have enough $$$ to pay off loans in the event of your death (suggest 30 year term for amount of mortage and car loans plus $100K more for kids' college), but whole life (you keep it your WHOLE life-and it builds a cash value you can borrow against) is expensive but very very very very useful.  And yes they pay after your death to your beneficiaries.

Answer 5

As long as you didn't lie on your application or commit suicide, the insurance company will pay.  

It is not cheap for everyone.  You must be young and healthy.  The price of life insurance is based mostly on your age, gender, whether you smoke and your health.  The chances of a young, healthy person dying within the next 10 to 20 years is so small that an insurance company can afford to let them pay $20 a month for $500,000 of term insurance.  

If the rates seem WAY too good to be true make sure there are no exceptions, waiting periods, or that its really life insurance and not just an accidental death policy.

Answer 6

It's so cheap because their loss ratios(amount paid out versus amount taken in) is usually only around 10%-15%. So, for every dollar in premium they take in, they only pay out around a dime. This means they can provide you an awful lot of coverage for a reasonable price. And yes....they most definitely pay up after death.

Answer 7

Yes, if you pay your premiums, the insurance company would pay the entire death benefit to the beneficiary, in a lump sum, tax-free. True if you die 50 years from now. True if you die 30 years from now. And true if you die next month. The principle at work is “shared risk.” Chances are you’re not going to die next month or even in the 30 years. Meanwhile, your premiums—and the premiums of everyone your age—will stay with the insurance company. The company will invest this pool of cash and earn more from it. They set their actuarial table and premium rates so that they can pay claims and still make a profit.

Answer 8

Yes.  The claims rate is relatively low.  you can be assured they wouldn't offer it at money-losing rates.

Answer 9

All businesses are there because there's money to be made.

Remember the money you pay is worth a lot more now than when you die (which statistically is more often later than sooner) so if they invest your contributions they will make a profit overall.