The first one is paying for final expenses, i.e. cost of administration of the estate, funeral costs, medical bills, etc.. (lawyer-monthly.com)
The cash comes from investments the company makes with whatever you pay over your regular premium and cost of administration fees. (insuranceproviders.com)
Once the second reclassification had occurred, the total cost of administration in 2012 - 13 (as reported in PESA 2013) dropped back to about # 13 billion, somewhat lower than that reported in 2010. (blog.politics.ox.ac.uk)