No one can say when a specific individual will die
Furthermore, life insurance is not typically thought of as something one would touch or "enjoy" during the life of the insured. Because we don't know when someone healthy enough to qualify will die, the timeframes are likely to span many decades, making life insurance a financial intangible. Thus, insurance companies can create a viable economic model to insure certainties, as long as the distribution of risk is determinable. During times of plagues, wars, peace, and terrorist attacks such as 9/11, the likelihood is fairly constant that in a group of a million 37-year-old males, one thousand will die this year. What makes life insurance work, then, is that in large groups (one million or more) of individuals, there is a high degree of certainty on how many of those one million will die each year. Seemingly contrary to that model, life insurance is a contractual arrangement in which the policy owner makes periodic payments to a life insurance company on behalf of an insured so that there will be a substantial income tax-free cash amount paid at the insured's death, no matter how soon that might happen, and even though - but for timing - the event is a certainty. The economic model is that an insurance company can collect a relatively small premium from the many who have similar risk profiles, earn a reasonable profit, and have sufficient reserves to cover the liability should it occur. he classic circumstance of the ideal insurable risk is when the potential loss has extreme financial consequences but the probability of such loss is low. Permanent insurance (again by premium as a percentage of market share) out-sold term more than 3 to 1. That year, Current Assumption and Indeterminate premium policies out-sold Whole Life almost 2 to 1 based on premium as a percentage of market share. Slightly less than $50 billion of life insurance was purchased in 1955; $1.6 trillion was purchased in 2003 (the last year for which industry data is available). As America's economy became more complex, and as technology and economic necessity encouraged evolutionary product offerings, amounts of life insurance - and the types of policies purchased - have transformed.