How Does Life Insurance Work?

Life insurance is essentially a contract between the insured and the insurance company that pays out if the policyholder, the insured, dies. The life insurance money generally goes to a family member or beneficiary.
But, how can this even be profitable for the insurance company? Everyone dies, after all. Well, this all has to do with how the contracts are set up.

Media:

Brittle Rille - Reunited by Kevin MacLeod is licensed under a Creative Commons Attribution 4.0 license. https://creativecommons.org/licenses/by/4.0/
Source: http://incompetech.com/music/royalty-free/index.html?isrc=USUAN1200047 />Artist: http://incompetech.com/