Okay, let’s clear up a few things in this thread:
Yes, that accounts for what appears to be a low payment now (or a large payout later), but it doesn’t tell us how much to charge today to cover the risk of paying a claim at death. The risk can be quantified using Actuarial Science.
But, they are charging much less than whole life insurance. The amount of risk to the insurance company is proportionately the same. (Roughly.)
Insurance companies are not investment firms, even though they invest money. They make their money by collecting more in premiums than they pay out in claims, while keeping their other costs under control.
Yes, this is a pricing consideration based on the “lapse ratio”, i.e. how many policies remain in force over a given period of time. Lapsing too soon is bad for the insurance company because they need the policy to in be force for a few years to recover the initial underwriting and sales costs; not enough lapses can be bad because it means that there will be more death claims because more policies will be in force at the time that the insured dies.
Well, sort of. It’s a bit of a stretch to say that paying a death claim is a cost of “producing” their products. It’s an expense that is incurred after the product is sold.
Maybe. It depends on how thoroughly the insurance company has underwritten you, and on how much your doctor knows about mortality statistics. 
Perhaps. But, more by pricing their products properly, by having good underwriting, by keeping their costs under control, by effectively matching assets and liabilities, and by selling enough insurance to keep the whole thing going.
In a general sense, yes. But, only sort of, if we use the word “underwriting” in the way that it is usually used in the life insurance business.
Who to sell and how much to charge is based on actuarial, underwriting, marketing and sales considerations.
That’s correct.
Again, not in the way that the word “underwriting” is usually used in the life insurance business. The idea of “large pools of insureds” is an actuarial consideration, not an underwriting one. Underwriters evaluate one case at a time. Actuaries look at large numbers.
This means that actuaries know how many people will die, but they don’t who is going to die. (Unless, the actuary is Sicilian … ;))
Hope that helps.