I am 34yrs of old and I have got term insurance for 50Laks covered till my 70yrs of age. I pay a premium of 9200pa. Thus in effect, I endup paying only 3,31,200 for my entire tenure. Thus in total, the company has to collect amount from 15 people of my age for the same premiums so that the total policy amount can be covered.(50 lakhs/3,31,200)=~15.
I am curious to know, in a group of 15, who have been covered for the same amount and aged almost the same, how would the company pay the sum assured, when there are 2 deaths(for the entire tenure)? Note, essentially, they would have taken approx. 49.5 Lakhs from policy holders and they would have to pay 1Crore. Wouldn’t the company be in loss?
Please clarify.
Thanks
Sunil Kumar