1. Death is not conducive to profit.
2. Cost differences and benefits
3. Interest difference
1. The bad news first. Life insurance companies should refer to the life table when calculating insurance premiums. What's on the table? What is the probability of death at the age of 20, 2 1 year, 22, and 23 ... until around 1999. I don't remember how much the specific table is overdue. Life insurance companies always have an uncertain age. For example, if you buy a death insurance for 130 years old, the insurance company may cry. )
Why are there [benefits]?
Because once he underwrites according to the probability of life table, and not so many people actually die at that age, the insurance company will make a profit.
For example, the life table shows that the probability of death at the age of 20 is 10000, and there are 634 people in it (forgive me for not filling in the data! ), but in fact, only 523 out of every 10000 people insured in that year died, so the insurance company obviously didn't need to pay as much insurance money as 634 people, but when he collected the premium, it was charged by 634 people, so the difference between them was the profit of the insurance company.
Obviously, the benefits of death are basically related to the sky, not to people, and the insurance company can't control it. This is not the main means of profit (if more people die this year, they will lose money, so there is still [death loss])
I won't say much about Fei Chayi. In fact, the company always has some expenses, similar to administrative expenses. For example, exhibition fees (actually to attract customers) and so on. Insurance companies will also add these costs when calculating premiums (because this is also the cost). If the expenses in that year are less than expected and the premiums are charged as expected, then the insurance company is profitable. On the other hand, if the cost is too much, the insurance company will also lose money, that is, [cost difference loss].
The last and most important thing is the interest margin.
It is very difficult for an insurance company to make a profit if it relies on the surplus difference between death and expense (uncontrollable). Therefore, its biggest advantage actually comes from investing to earn spreads.
To put it simply, life insurance policies of insurance companies have promised interest rates to customers, and insurance companies will also earn interest rates by investing in assets. If the latter is higher than the former, then the insurance company is profitable, on the contrary, it is a loss.
Further reading: How to buy insurance, which is good, and teach you how to avoid these "pits" of insurance.