As life Insurance Company deals with liabilities, its financial stability is very important. Prudent business operations are the fundamental management principle of a life insurance company. Life Insurance Company reserves the cash for the company to pay against obligations to customers at certain points of time. The insurance company invests its reserve to create a pool of money received by the premiums from the policy owner and from which it can pay claims and finance the insurance company’s operations. It may not always be true that the majority of the money that insurance companies make comes directly from premiums paid, as money gained through investment of premiums can never, even in the most ideal market conditions, vest enough money per year to pay out claims. Rates charged for life insurance increase with the insured’s age because, statistically, people are more likely to die as they get older.The insurer calculates the policy prices with intent to fund claims to be paid and administrative costs, and to make a profit. The cost of insurance is calculated by actuaries using mortality tables. Actuaries are professionals who employ actuarial science, which is based on primarily probability and statistics. Mortality tables are statistically-based tables showing expected annual mortality rates. The longer an insurance policy has been in force, the less risky it is for an insurance company. Therefore, after sales, service to long–term customers is extremely important for the insurance companies.

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