Life Insurance and Death Probability: CNBC Explains

Life Insurance and Death Probability: CNBC Explains

For life insurance companies, knowing 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 will die while being insured. How is this breakeven point calculated? Salman Khan of the Khan Academy explains.

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