[jndsn402]

Actuary here, though I don't work with these types of policies.

Your description of how insurance makes money is the standard understanding. However, I would think that most products do have some underwriting gain built in as well.

It can get pretty complex as you need to set up a liability (reserve) to match the assets (premium) that come in. Interest causes both the asset and liability to increase. As benefits are paid out, both the asset and liability decrease. If the liability decreases more than the asset, you make money. Or if you have a substantial surplus (asset - liability), the interest on that is pure profit as well.