How Does Life Insurance Profit? 
That 's a question many have wondered about , but it 's really quite simple . First the premiums collected are invested in diversified investments and provide the basis of any dividends that are paid out . Additionally , particularly on the Term policies that the provider issues , there are a large percentage of clients who never collect on the death benefit , because they either out live the policy or let the policy lapse . Finally there are those who allow their whole life policies lapse without having accumulated cash or surrender value . So those premiums that had been paid stay with the provider and are invested . 