Your premiums are pooled with other policyholders' contributions to form a large fund. This fund is used to pay out claims to beneficiaries when someone covered by the insurer passes away.

Think of it like a community fund where everyone contributes, and when someone needs help, the community comes together to support them.

Part of your premiums covers the risk of your policy, while the rest goes towards administrative costs, claims processing, and maintaining the insurer’s financial stability.

The goal is to have funds ready when your family needs them most, providing the protection and peace of mind that life insurance offers.