Where Does Life Insurance Money Come From? 
Life insurance companies have large reserves to pay claims . They are regulated by multiple departments of insurance in states they do business in . By these regulations they are very conservative investors meaning the do n't take a lot of risk with this reserve money . The life insurance industry is a huge industry . According to LIMRA there is $ 18.4 Trillion of life insurance in force in the United States alone . The other little secret is about 1 % of term life insurance pay out claims . Therefore it is a very profitable industry but also a very needed industry . It is a shame that 99 % of term policies are cancelled before they are needed . 