I have been asked many times about why I find life insurance policies to be a bad investment, when I had been selling life insurance for 30 years.
The life insurance policies sold during my time gave a yield of about 5% per annum. The expenses were low and high rates of bonuses were distributed to the policyholders. This was an attractive yield.
Today, the yield for most policies is about 2.5% per annum. This is unattractive when it is possible for the consumer to earn more than 4% per annum from other types of investments, e.g. in an index fund or exchange traded fund.
If you can find a life insurance policy that gives a yield of 4% per annum today, it is all right. But 2.5% is too low.
The life insurance policies sold during my time gave a yield of about 5% per annum. The expenses were low and high rates of bonuses were distributed to the policyholders. This was an attractive yield.
Today, the yield for most policies is about 2.5% per annum. This is unattractive when it is possible for the consumer to earn more than 4% per annum from other types of investments, e.g. in an index fund or exchange traded fund.
If you can find a life insurance policy that gives a yield of 4% per annum today, it is all right. But 2.5% is too low.
A simple answer...when you were the ceo your products gave quick breakeven and higher return above inflation. If return is NOT above inflation there is NO real saving.
ReplyDeleteToday the new products are all under water type border on scams. Do you dare say they are good investment?
An honest person will con people just because HE HAS TO MAKE A LIVING.If salesmen and insurance companies have to make money ask them NOT TO ROB THE POOR...they are already poor. Can they live with the thought they all grow rich and big by sucking the blood of the poor? Do the insurance companies and their salesmen have conscience? These companies are run by educated people with actuary qaulifications, MBAs etc, how can they design products that cheat the people? How can the salesmen have no qualms and conscience to cheat their fellow human beings because of making a living? Do you want to feed your family with money that is gotten unethically and immorally? As long you don't put your clients' interest first you have committed an immoral act. if you push or peddle a product up front without finding the real needs of your clients you are committing a crime.
It is so simple. Search your conscience. If the salesmen truly and sincerely want to put their clients' interest first they MUST ensure they are competent to so otherwise they are committing a crime. It is like a 'surgeon' who has no knowledge of surgery and no experience in operation and yet undertake an operation, right?
Come on , all salesmen MUST conduct due diligence on the products before recommending to their clients. It is their fiduciary duty. I am finding the industry lacking the morals and ethics anymore. It is a snake oil business now.
I am confused now. So my wholelife policy bought during your time as CEO is good, but now it is not giving good returns, so it is not good now? so should I terminate it or continue?
ReplyDeleteReply to 3:01 AM. Be educated. Buy book and attend talk. Do not expect to be spoon fed the answer.
ReplyDeleteAnon. September 18, 2011 3:01 AM,
ReplyDeletebuy a term insurance to replace it first before terminating it. I strongly recommend that you terminate it because the longer you delay more losses will be incurred. When you BUY a term is is VERY IMPORTANT THAT YOU CALCULATE THE RIGHT AMOUNT OF COVERAGE YOU NEED.I am sure you are under insured , so make sure you have it fully. Don't make the same mistake. After buying the insurance save the rest in a diversified portfolio and watch it grow. Don't be conned by the insurance salesmen who will say that it is risky. It is NOT. How can it be risky when you see the cash value IMMEDIATELY and break even in very short while, in a few days or a week, right? You will begin to see your saving growing.
Why insurance agents don't want to recommend this approach although they know? Hahaha, the answer is the COMMISSION and not your interest. Commission is evil, right? it has cuased the agents to go astray and become evil too that they do anything, from lying to misrepresenting, mis-selling to con you of your money.
Consumers must stop this practice. The regulator is not coming to your help and you must help yourself to combat this evil.
Stop buying whole life or limited pay WL and endowment. They are all scams products to benefit the agents and the company.
ReplyDeleteDon't buy and you have no problem.