When a contestant wins a million dollars on a game show, the producers are not usually reaching into a giant vault of cash.

For many television contests, ordinary prize money is simply part of the show's budget. Producers know roughly how much they expect to award over the course of a season and plan accordingly.

But unusually large prizes often involve a different strategy: insurance.

A specialized product known as prize indemnity insurance allows companies, television shows, and contest organizers to offer eye-catching jackpots without risking a financial disaster if someone wins.

Here's how it works.

The show pays an insurance company a premium to cover a specific prize. If nobody wins, the insurer keeps the premium. If someone does win, the insurance company pays the prize according to the terms of the policy.

The same approach is used for million-dollar hole-in-one contests, half-court basketball shots, perfect sports brackets, and other promotions with huge payouts and long odds.

Many game show prizes are also less expensive than they appear. Cars, vacations, and electronics are often provided at discounted rates or through promotional partnerships because manufacturers value the national exposure.

So while the winner may drive away with a luxury car or a giant check, the financial arrangements behind the scenes can be surprisingly complex.

The next time someone wins a life-changing jackpot on television, there is a good chance an insurance company was watching closely too.