Underlying Mortality Assumption

See: Life Insurance. See: Mortality Tables.

Life insurance payouts are based on how long the company expects you to live. You're paying in a "modest sum" each month so that, when you die, those you love (or used to love) will inherit the million bucks from your lifelong payings-in.

It's the amount you pay each month that is largely the "art" of life insurance financing. The biggest boon to the industry? Healthy eating. Reduction of smoking. Chillin' about life. People simply lived longer than the 67-ish years they did in the '40s. The industry continued to charge life insurance buyers like they were gonna live 67 years, when they started to live more like 70, then 75, then 80. That extra decade and change of payings-in and the subsequent compounding of investment for the industry yielded massive returns.

See: Warren Buffett. Yeah, there's a reason he became one of the wealthiest men in the world.

The underlying mortality assumption of the industry was wrong: people lived and are living way longer than the industry expected.