The business of life insurance is one of protection against risk. When you buy a lifestyle insurance policy, you are getting one with the theory that if an incident results in your unfortunate demise, your loved ones are taken care of financially. In other words, you purchase a policy because, to your mind, the risk of your family being left without a financial support system after your death outweighs the price tag of paying a premium.
Similarly, an insurance company also protects itself against risks arising out of undertaking its day-to-day business of issuing policies to its customers. Just as a life insurer fulfills the role of financial risk manager for you, re insurers protect the financial risks of insurance companies. These re insurers lay out guidelines for life insurers to follow before issuing an insurance plan to the customer. Essentially, the life span insurer assesses the risk connected with every individual looking to buy a policy and determines a good premium rate to complement that risk.