Life Insurance, Playing the Game

Life Insurance, a closer look

Just a quick look at another passing thought, of that wonderful slippery slope of growing old and that eternal insurance game.

I went out and checked my mail, behold, a note from my bank requesting acceptance from me on Life Insurance. Interesting. For a very low figure, my bank will purchase Life Insurance for me and give to my beneficiary. The sum this person would get is insanely small, it may repay the flowers they send. But… Don’t you love that word? But, if I choose the one that is recommended, my benefactor would receive approximately three hundred thousand percent more in payoff, while charging me quarterly for a small sum. That, of course, would be paid by me. Reasonable you say, of course. But on reading the fine print, I noticed something that struck me hard. “All coverage is reduced by 50% at age 70 or older”.

Let’s see, first, the Insurance companies are after Americans to purchase insurance at an early age, with the promise that the rates will never rise on them. Then take into consideration that, most Americans are living beyond the age of 70.

The insurance companies have dipped into your pockets for thirty to fifty years, now you hit age 70, and your payoff has just dumped you by half. Wow. Another reminder, you still haven’t even reached retirement age! So your rate is the same, but your payoff is cut in half.

What happened here? What happened was the insurance company was betting on your life span, knowing the statics that you would most likely outlive your insurance plan. And when you have thousands and thousands of people purchasing plans, year after year, insurance is raking it all in, I think you can guess the rest.

I can remember as a kid, my grandpa had an old can that I would catch him occasionally put money into. Never gave it much thought, I was a kid.

Maybe Grandpa had something we didn't know about? A little sense and I'm not talking about the money in the mattress scheme. It wasn't that he didn't trust banks entirely, we know he had his account and used it accordingly. And yes, he had insurance, but one thing he could count on was putting money in a spot at home, providing no one stole it, it would be there. Money that did not come with interest rates, penalties or drafting fees. This my friends was his way of becoming "self-insured". This money was a savings, insurance of his own, one that would never drop in value (providing we don't have another crash in the market).

Lesson here is a little sense that can make a lot more cents.

While I am not a closed proponent of insurance, I think one would do well to read and THINK about what they need, not want, when choosing insurances