How Does Life Insurance Work If Everyone Dies? 
Another part to this answer is that not all life insurance policies ever pay a death claim . Most life insurance is not designed to be in force when you die unless you die younger than average . Term Life Insurance only pays a death claim if you die while it is in force . That 's usually 20-years when you are in your 30 's and 40 's and often up into your low 60 's . But most people do n't die that young . Other insurance is tied to your employer and only covers you during your working years . Most people do n't die during your working years . So the insurance company gets to keep all those premiums . Whole-life insurance is priced much higher than the others because it will pay a death claim 100 % of the time unless you cancel the policy . All insurance is priced based on the likelyhood of it ever paying a death claim . That 's why a healthy 35 year old man can buy a million-dollar 20-year term policy cheaper than a 70-year old would pay for a $ 10,000 whole-life policy . One is very unlikely to ever cost the insurance company anything . The other will certainly be paying a death claim within the next couple decades if not sooner . 