For life insurance companies, understanding how much to charge for term life policies is important to ensure, statistically, that profits and payouts can be made. To do this, the company must understand the likelihood that a policy holder would die while being insured. How is this breakeven point calculated? Salman Khan of the Khan Academy explains.
From this video you will understand:
- How death probabilities factor into life insurance premiums
- The way companies identify their breakeven points on life insurance