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
Archive for the ‘Insurance’ Category
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
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.
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