Archive for the ‘Insurance’ Category

On Insurance, Part III - Life Insurance Calculations

On Insurance, Part III – Life Insurance Calculations

By The Banker | Blog Posts, How Not To Invest, Insurance, Personal Finance

I previously argued that insurance is useful for risk transfer, but less attractive as an investment.  I also think that under certain conditions – such as responsibility for minor children or limited savings, you need life insurance.  I thought a quick post using compound interest calculations could help illustrate why life insurance can be an [&hellip

On Insurance, Part II - The Good, The Optional, & The Bad

On Insurance, Part II – The Good, The Optional, & The Bad

By The Banker | Blog Posts, Insurance, Personal Finance

Please see my previous post, on Insurance as Risk Transfer Only Good uses of insurance Car insurance – mandatory and necessary, appropriately transfers risk of sudden damage to car or bodily health away from you to a company that can spread that risk around. Homeowners and renters insurance – similarly transfers risk of catastrophic damage [&hellip

On Insurance, Part I - Risk Transfer Only

On Insurance, Part I – Risk Transfer Only

By The Banker | Blog Posts, Insurance, Personal Finance

Insurance has one purpose, and one purpose only.  Remembering that purpose will keep you from expensive insurance ‘solutions.’  The purpose of insurance is risk transfer. For the rest of your life, insurance salespeople will try to sell you the idea that you can both increase your wealth and protect against risk at the same time. [&hellip

A Business Model Based on Neglect

A Business Model Based on Neglect

By The Banker | Blog Posts, Insurance

The agreement by MetLife to better track customer deaths in order to make contractually obligated payments  to the heirs of people with life insurance remind us of how successful businesses often depend on neglect.  The MetLife building over Grand Central Station?  MetLife bought that for $400 million from Pan Am, the same amount the firm [&hellip