| Why Is Life Insurance With Cash Value A "Ripoff" For Most Customers? |
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| Written by Steven Lo |
| Wednesday, 23 June 2010 11:54 |
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A lot of people get confused by millions of types of insurance plans out there. The truth is, it's very simple to choose: Refuse all kinds of life insurance with the cash value feature, and simply choose the basic, no non-sense term life insurance.
A lot of people get confused by millions of types of insurance plans out there. The truth is, it's very simple to choose: Refuse all kinds of life insurance with the cash value feature, and simply choose the basic, no non-sense term life insurance. The reasons? As a former life insurance agent who has seen a lot of cases where customers really got burned, I can say that it is really a bad deal for customers to buy life insurance for their entire life. Insurance isn't designed to insure the inevitable, but the unpredictable. If an insurance policy isn't built upon this principle, the customers will pay more than they should. Let me explain. Life insurance isn't a gamble. The insurance companies do all the math and stats to make sure the number of people who die during their coverage will not cost them more than the premium they have collected. Those who live long will share the cost with those who die early. Therefore, the overall cost for a policy plan depends on the group of people it insures. For example, if the group consists of smokers, it will be much more expensive than for the group that doesn't smoke. If you buy whole life insurance, the insurance companies expect you to die and to pay you the death benefit at some point, so they take that into account and increase the price of your insurance accordingly. The increase of price is a lot. For term insurance, the maximum period of coverage is about 30 years, so you will be much less likely to die, compared with whole life insurance. Another huge factor that makes life insurance with cash value so expensive is the cash value feature. It gives insurance agents more commission. In one of my articles, I have outlined all the pitfalls of cash value life insurance, and mental detours that insurance salesman imposed on customers. There were also numerous cases where customers found out the problems of some of the newer versions of cash value life insurances, such as the Variable life insurance, only when their policies got very expensive and they couldn't afford the cost anymore. You can find the link to that article in the below. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. Learn more about how to challenge your insurance agent and get back the money. And visit my other page where you can find out all about buy term and invest the difference |