Life insurance (though not supposed to) is still a very controversial issue. There seem to be many different types of life insurance, but there are actually only two. They are regular insurance and lifetime (cash value) insurance. Regular insurance is pure insurance. It will protect you for a while. Full life insurance is insurance plus a sub-account called cash value. In general, consumer reports suggest that regular insurance is the most economical option for a while. However, full life insurance is most prevalent in today's society. Which one should we buy?
Let us talk about the purpose of life insurance. Once we have attributed the correct purpose of insurance to science, everything else will be put in place. The purpose of life insurance is the same as for any other type of insurance. This is to "prevent loss." Car insurance is designed to insure your car or someone else's car in the event of an accident. In other words, insurance is already in place because you may not be able to pay for the loss yourself. Homeowner insurance is to ensure that your home or items are not lost. Therefore, since you may not be able to pay for the new home, you have purchased an insurance policy to pay for it.
Life insurance is the same. This is to prevent your loss of life. If you have a family, you can't support them after you die, so you buy life insurance so that if something happens, your family can replace your income. Life insurance is not meant to make you or your offspring rich, nor does it give them reason to kill you. Life insurance is not helping you retire (otherwise it will be called retirement insurance)! If you die, life insurance is replacing your income. But evil people make us believe, so they can charge us too much and sell us a variety of other things to get paid.
How does life insurance work?
I will give a very simple explanation of the way and content of the insurance policy. In fact, it will be simplified because otherwise we will stay here all day. This is an example. We said that you are 31 years old. The typical regular insurance policy for 20 years is $200,000 and is about $20 per month. Now… If you want to buy a full life insurance policy for $200,000, you may need to pay $100 a month. Therefore, you will not be charged $20 (this is the real cost), but will be charged an additional $80 and then deposited into a savings account.
Now, this $80 will continue to accumulate in a separate account. In general, if you want to get some money from your account, you can borrow from your account and pay with interest. Now… let's say you pay $80 a month to give it to your bank. If you withdraw funds from your bank account and they tell you that you have to borrow your money from them and have interest paid off, then you may be able to clean your mind. But somehow, when it comes to insurance, this is ok
This stems from the fact that most people are not aware that they are borrowing money. “Agents” (insurance matrices) are rarely explained in this way. You see, one way for companies to get rich is to get people to pay them, then turn to borrow their own money and pay more interest! Home equity loans are another example, but this is a completely different sermon.
Transaction or not trading
Let us stick to the previous example. Let us say that the 1331-year-old child (good health) purchases the above-mentioned periodic policy (20 years, $200,000, $20 per month). If these people pay $20 a month, then $240 a year. If you take it and multiply it over a 20-year period then you will have $4,800. So everyone will pay $4,800 during this period. Since a thousand people bought the policy, they will eventually pay the company $4.8 million in premiums. The insurance company has calculated that about 20 healthy people (aged between 31 and 51) will die. Therefore, if 20 people die, the company will have to pay 20 x 200,000 or $4,000,000. So if the company pays $4,000,000 and gets $4,800,000, it will get a profit of $800,000.
This is of course a simplification, as many people will cancel the policy (which will also reduce the number of death claims paid), some of which can be used to accumulate interest, but you can get general thoughts about how things work.
On the other hand, let's take a look at life insurance. Let us say that the 13-year-old child (healthy) bought the above-mentioned lifetime policy ($200, $100 per month). These people pay $100 a month. That is $1,200 a year. If the average person's life cycle (a healthy person) reaches 75, then on average, people will pay 44 years of premiums. If you multiply it by $1,200 you can get $52,800. Therefore, each person will pay $52,800 during the life of the policy. Since a thousand people bought the policy, they will eventually pay the company $52.8 million in premiums. If you purchase a lifetime policy, the insurance company has calculated the likelihood that you will die. What is the probability? 100% because it is a lifetime (until death lets us separate) insurance policy! This means that if everyone follows their policies, the insurance company will have to pay 1000 x 200,000 = $ 2,000,000,000) That's right, $2 billion!
Ladies and gentlemen, how can a company pay $2 billion and know that it only needs $52.8 million? Now, like the previous example, this is too simplistic due to policy failure. In fact, MOST's lifelong policy does not work, because people can't afford it, I hope you see my point. Let us come to the individual. A 31-year-old man bought a policy that he assumed to pay $52,800 and get a return of $200,000. There is no such thing as a free lunch. Anyway, the company had to sell $147,200, as long as this policy is about to break! Not to mention, payment agents (who have obtained higher life policy bills), underwriters, insurance premiums, advertising fees, 30 floors, etc…
This does not even take into account these variables living and The universal life policy claims to be good for retirement. So you will pay a $52,800 policy that will make you wealthy and pay you $200,000 in death benefits and pay for agents, staff and expenses? This must be a plagiarism.
Ok, how can they tear you off? Maybe in the first five years of the policy, there is no cash value (you may want to check your policy). Maybe it distort the value of the return (it's easy if the customer doesn't understand the exact way the investment works). In addition, if you read my article on the 72 rules, you can clearly see that donating money to someone else's investment may make you lose millions! You know, you can pay $52,800, but that doesn't take into account how much you invested and don't invest! This has nothing to do with the extent to which your agent may tell you how much the company will invest your money! Simple and simple, they have to overcome you in some way, otherwise they will go bankrupt!
How long do you need life insurance?
Let me explain the so-called theory of reducing responsibility, maybe we can answer this question. Let us say that you and your spouse have just married and have children. Like most people, they were crazy when they were young, so they went out to buy a new car and a new house. Now, here you have a young child and debt to the neck! In this particular case, if one of you dies, the loss of income will have a devastating blow to another spouse and child. This is the case of life insurance. But this is what happened. You and your spouse begin to repay the debt. Your child gets older and your dependence on you is reduced. You start building your assets. Remember, I am talking about real assets, not fake or false assets, such as equity in the family (this is just a fixed interest rate credit card)
Finally, the situation is this. The child is not at home and no longer depends on you. You don't have any debt. You have enough money to live and pay for your funeral (it costs thousands of dollars now, because the death industry has found new ways to make money, let people spend more honor and money after they die, then they make people Still alive). So… at this point, what do you need to insure? Absolutely not! Absolutely no! Then why do you want to buy full-life (aka death) insurance? The idea that a 179-year-old adult child does not depend on his/her still paying premiums is at least arguable.
In fact, if a person learns not to accumulate responsibility and quickly accumulate wealth, the demand for life insurance can be greatly reduced and quickly eliminated. But I realized that this is almost impossible for most people in this materialistic intermediate matrix society. But anyway, let us go further.
Confused insurance policy
This next statement is very obvious, but very substantial. Life and death are exactly the opposite of each other. Why do I say that? The purpose of the investment is to accumulate enough money so that you can live while you retire. The purpose of purchasing insurance is to protect your family and loved ones if you die before retirement. These are two opposite actions! So, if an "agent" sells you a full life insurance policy in your house and tells you that it can guarantee your life and it can help you retire, your red pill problem should be like this:
"If this plan will help me to retire safely, why do I always need insurance? On the other hand, if I will go bankrupt in my future life, I still need insurance, is this a good retirement plan? "
Now, if you ask the insurance broker about these issues, she/he may be confused. This of course comes from the sales confusion policy, which simultaneously makes two opposites.
Norman Dacey speaks best in the book "The Mistakes in Your Life Insurance"
"No one can argue for the idea of protecting their families at home." At the same time, the fund is accumulated for the purpose of education or retirement. But if you try to complete these two tasks through an insurance policy, both jobs will inevitably be done badly."
So you see the whole life There are many new changes, such as variable life and universal life, all kinds of bells and whistles (reporting better than the original, typical overall life policy), must always ask for red pills! If you plan to buy insurance, then buy insurance! If you plan to invest, then invest. It's that simple. Don't let insurance agents trick you into buying a lifelong policy because you assume that you are too incompetent and have no discipline to invest your own money.
If you are afraid because you don't know how to invest, educate yourself! This may take some time, but it's better than donating money to others so they can invest for you (and get rich for it). If the company gets money from customers, invests and turns to and provides all the profits to its customers, how is the company profitable?
And don't because of the old "if the run is exhausted and you can't get the reinsurance skills." Listen, there are many deadline policies that can be extended to old age (75-100). Yes, the price is much higher, but you must be aware that if you buy a lifetime policy, then when you reach this point, you will be cheated of even more money (if this happens). This is another reason why you are smart with money. Don't buy a confused policy.
How much should you buy?
I usually recommend 8-10 times your annual income as a good face value for your insurance. Why is it so high? This is the reason. Let us say that you earn $50,000 a year. If you are going to die, your family may spend $500,000 ($10 multiplied by $50,000) and deposit it into a 10% fund (which will give them $40,000 a year) instead of touching the principle. So what you do is to replace your income.
This is another reason why life insurance is not good. You cannot afford the amount of insurance you need to purchase a very high price policy. Regular insurance is much cheaper. Beyond that, don't let high face values scare you. If you have a lot of responsibilities and you are worried about your family, then the insurance is not much better than no insurance. Buy something you can manage. Don't sell things you can't manage.