Life insurance companies exist to make money. When you pay a whole-life premium, the insurer first deducts the mortality cost, the amount needed to cover your death risk, before investing the rest. Understanding mortality cost and actuarial science matters most for clients.
What's the goal of a— and I use this same story over and over and over and over— what's the main goal of a life insurance company? To make money. That's the goal. That's the first question I ask. I wait for that answer. They give me that answer. Next question: when the life insurance company gets your premium for that whole life policy that you love, when it arrives at the home office, what do they do with the money? And wait for the answer. Here's the answer. I go, they invest it. No, before they invest it, they've got to cover the risk of you dying. Write this down. It's called mortality cost. It's an actuarial science. How many of you could remember mortality cost, actuarial science? Remember that. Those are the biggest words you'll ever need to know. Just ChatGPT it, it'll tell you what that means. Okay.
