Shit Sandwich – Variable Annuities

In my favorite movie of all time, Rob Reiner recalls the two-word alliterative review of Spinal Tap’s unsuccessful second album “Shark Sandwich,” as simply “Shit Sandwich.’

The band members react to this shocking review with resentment, but also with a sense for what newspapers are allowed to actually say.

David St. Hubbins: “Where’d they print that?”

Nigel Tufnel: “That’s not real!”

Derek Smalls: “You can’t print that!”

Which bring me to my two-word review of an extremely popular ‘investment’ product known as the variable annuity. For variable annuities, I’ve got the same two-word review: “Shit Sandwich.”

Variable annuities deserve the same two word review: “Shit Sandwich”

They Can’t Print That

As I wrote this, I knew the newspaper I write a column for wouldn’t carry my real review of variable annuities.1

Of course they won’t let me print a traditional four-letter word. But, for the record, I really don’t think scatology is why most media “can’t print that’ when it comes to my review.

No, they really ‘can’t print that’ because insurance companies are really important media advertisers and variable annuities are really profitable for insurance companies. Hence, you will rarely see an honest review of variable annuities in traditional media.

I’ve been a faithful reader of the Wall Street Journal for nearly twenty years. They are the best daily newspaper when it comes to finance. Just about every three months or so the ‘Retirement’ or ‘Investments’ section of the Journal has a special on annuities, including ‘variable annuities.’ Alongside these sections of course are a slew of brokerage and insurance company advertisements. (If you didn’t already know, that’s the point of these special sections. This is the nature of the Financial Infotainment Industrial Complex.)

That’s where the fun begins. The writers of the Wall Street Journal are smart, and they are also commercially sensible, by which I mean they know where their bread is buttered. So they do this funny tortured-writer’s dance when describing variable annuities. “New annuity guarantees raise questions,” mumbles one ambiguous headline, or “They’re changing our annuity!” writes another, in which, buried in the heart of the article, we learn of many things that can go wrong with these things, without the writer coming out and saying the one thing he or she clearly knows, which is “stay away from variable annuities if you plan on having enough money in retirement.”

Up until this point I haven’t really explained: What is a variable annuity? Also: why should you care?

I’ll start with the second question first. You should care because an overwhelmingly large number of people who don’t know any better have followed their investment advisor/insurance broker/retirement specialist’s advice and bought this shit sandwich, to the tune of approximately $660 Billion. And this overwhelmingly large number of people plan to use it as a main vehicle for their retirement. Don’t know if you have one? Check your retirement plan. Do you use an insurance company for your investments? If yes, chances are, sadly, you bought one of these.

But back to the first question:

What is a variable annuity?

The insurance companies claim that a variable annuity is an investment product that offers both things that every investor wants, namely ‘safety’ plus ‘good returns.’ The variable annuity appears to offer ‘safety’ via a guaranteed income in retirement. The variable annuity also appears to offer ‘good returns’ by adjusting the guaranteed income upward if stock markets do well during the investment period of the variable annuity.

Ok, so…safety and good returns sounds pretty nice…What’s the problem? The biggest problem is extraordinary fees. Like, probably, all-in fees of 3.5 percent per year on your portfolio, which is a serious drag on your money (but great for the insurance company!)

All appearances to the contrary, insurance companies are really not magical wand-wavers that offer the mythical unique combination of safety and good returns. They pretty much just invest your money in stock and bond markets (plus real estate and some derivatives I guess) just like you can directly, except instead of offering you the actual returns of the blended portfolio you bought, they offer you the returns of a blended portfolio minus decades of huge fees. A really dumb combination of stocks and bonds invested over decades will beat a similarly-invested variable annuity every single time. Because of the fees.


Other problems

There are some other problems with variable annuities which I’ll list here for completeness’-sake.

  1. Once in a while, but more often than we’d like, insurance companies totally miscalculate variable annuity payouts and throw themselves into receivership (a kind of bankruptcy for insurance companies.)
  2. State insurance regulators know this, so they really like to see heavy fees to accompany these products, to keep up the capital base of insurance companies, to avoid receivership. That’s not good for you.
  3. The other way insurance companies avoid receivership is to change the rules governing payouts after you’ve already bought in to the variable annuity. Yes, they do this, and that’s not good for you either.
  4. States typically charge a special tax on payouts from variable annuities, possibly to compensate states for that future receivership problem. Also not good.
  5. You owe ordinary income tax (meaning, top tax rates) on variable annuity income. Regular investments in taxable accounts, held for over a year, offer better tax treatment than this.
  6. Variable annuities are roach-motel investments. You can get in easily, but it’s hard to get out, typically unless you pay hefty “surrender charges” if you try to get out within a 5 or 10 year “surrender period.” This is, basically, unconscionable. My advice: Just make like the French army,2 take the pain, and move on to a better investment.
  7. Variable annuities come to you accompanied by unreadable documentation, incalculable payouts, and small-print ‘disclosures.’ Nobody buying into these things can actually explain to themselves how they work.3
  8. That lack of understanding includes your insurance broker. Ask him some time to explain, in plain language, why this is a better deal than a simple blended portfolio of stocks and bonds. Whatever his moving lips appear to say, the real answer is “my fat commission,” which runs about 5 percent of the amount you invested.

As I’ve written here before, I don’t sell any investment product for a living, and no investment company or insurance company is paying me, so I don’t benefit whether you follow my advice or not.

Variable annuities are good for the insurance company because they make excessive fees from them. They are good for your insurance broker/retirement specialist because of the commission.

Good for the insurance company and great for your broker. Not good for you. But hey…

They are not good for you. But hey, as Meatloaf sang, “Two out of three ain’t bad.”

Newspapers of the world: I challenge you to print honest reviews of variable annuities.

But as Derek Smalls said, “They can’t print that.”



A version of this post, without the scatological reference, and with a toned-down version of my critique of how the Financial Infotainment Industrial Complex really operates, ran in the San Antonio Express News.


Please see related posts:

Very simple, final word, on how to invest

Stupid Smart People

Guest Post: The Simplest Investing Approach Ever

Insurance Part 2 – The Good The Optional The Bad

Insurance Part 1 – Risk Transfer Only




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  1.  I’m not so much concerned with the vulgarity. (Although my editor was!) After all, let’s talk truth for a moment: you can’t read the national or international news section of any ‘respectable’ daily paper without worrying that your curious ten year-old will glance over your shoulder and ask you for definitions of ‘beheadings,’ or ‘pedophile,’ or ‘systematic rape.’ I mean, we’ve got worse problems than a little scatology.
  2. Surrender immediately, obviously
  3.  Except apparently this guy at who offers, for an initial $150 fee, (and who knows after that, maybe more?) to analyze your variable annuity and give you a ten page report on all of its features, pluses and minuses. I don’t have any ties to the service myself, I only saw it referred to in the WSJ, but it strikes me as a good idea for people already stuck with these roach motels. Also, note the fact that if you need a ten-page report to describe your investment product then that investment has violated the “Keep It Simple, Smarty” rule of investing.

On Warranties

warranties_suckI’m the least handy person I know.

The Fourth Law of Thermodynamics in my household states: “Physical objects that appear to be broken, will remain broken through time and space.”

I carry my un-handyness with me through life, including matters having to do with cars. When I came up with a flat rear left tire a few weeks ago on the way to drop off the girls, I rolled into the national-chain tire store a block away from their school. We walked from there.

Tire guy called me a half-hour later. (I will now paraphrase our conversation.)

“Your tire is unfixable, we’d recommend replacing that. We also noticed your two fronts are about three years old, have seen some wear-and-tear, and we are coming up to the fourth-year factory-recommended replacement time. So you should probably have us put new ones on there as well.”

“Ok, how much will that be?”

Now, as I mentioned, I am not handy. This places me at a specific disadvantage when it comes to having people diagnose and fix physical things for me, like my car’s tires. Tire Guy could have used some Walter Mitty-speak (“Uh, sir, we’re noticing the bifurcated invertabrator is missing three hamnails, and we’d recommend slotting in a T-bolt in the five-square”) and I’d probably agree to get those things fixed as well. I mean, how could I argue with him? It sounds legit.

A crucial error


But then Tire Guy made a crucial error. He quoted me the price for new tires. It was roughly $90 for one tire, including – he wanted me to know – a very good deal on a warranty, or $270 for three tires, again including a great deal on the warranty, plus labor. That put me all-in around $330.

Ok, that’s a lot, and I don’t know anything, and I knew I’d probably have to agree to that price.

But I do know one big rule of personal finance, which I will now pass on to all of you, and which constitutes the entire purpose of this long-winded tire story:

Warranties, generally speaking, are bad.

“So ok, $330, that sounds like a lot,” I tentatively began, “how much would it be without the warranties?”

“Oh well, you see, that was a really good deal on the warranties,” he began to reply.

“Ok, I get it, but let’s say I want to skip the warranty?

“Let me recalculate here. Um, yeah, it looks like about $385 without the warranty. You see it’s all part of the package deal.” (Please note: $55 bucks more without the warranty)

“No. I don’t see. That’s not right. You can’t offer me something supposedly valuable, like a warranty, and then charge me more when I remove the warranty. Excuse my language, but that’s…”

…And…you’ll have to imagine the classy and stylish way in which I expressed displeasure to emphasize my point.

“Well, let me see here, ok, I suppose I could replace the three tires – without the warranty – for about $315.” (or about $5 less per tire without the warranty.)

More tire warranty details

Now, my finance-guy curiosity took over. I wanted to know more details about this supposedly good-deal warranty.

“If my new tire needs replacement while I’m still under warranty, would it be free?”

“Not free, but it will only cost you only $20 to replace.”

“If I have a warranty with you guys, can I get the tire replaced anywhere else?”

“No, we’d be the only ones to honor the warranty.”

“Ah, I get it, so you want me to pay part of the cost today of the next tire needing replacement, and I have to do the work at your shop, rather than anywhere else where I happen to get a flat or have a problem. So really the point of the warranty is to get me to come back only to your shop?”

“Well, not exactly, but see they do want us to sell these warranties…”

“Forget it. Don’t do three tires. Just replace the one tire, no warranty.” And then I told him the problem of misleading customers – especially gullible and unhandy ones like me – is that customers who lose trust in their service-provider generally don’t come back. That’s a separate issue from a warranty, of course, and a fundamental rule of business, but an important point nevertheless. I will do my darndest to avoid going back there.

Rewinding for a moment, however, to review the personal finance issue of warranties: For most electronic devices and most household durables, most people most of the time would do better to forgo paying for a warranty. It’s a kind of excess insurance-policy that you should avoid, unless special circumstances apply.

Another warranty story

What even is this thing?

I remember purchasing in the early ‘00s a totally awesome stereo-component: A 100-CD changer (roughly the size of an overseas shipping/railcar container, if memory serves me correctly). The Best Buy salesman really, really, really wanted me to get that warranty. I found it odd that he focused on the high likelihood of my totally awesome 100-CD changer breaking within the next year, as I had not even left the store yet. I declined. I’m happy about that choice, even though of course it broke within three years, because by then Apple had begun to render moot all legacy music devices, with the iPod.

And I know what your next question is:

“What’s a CD?”


A version of this post ran in the San Antonio Express News.

Please see related posts:

Audio Interview – Wendy Kowalik on Insurance

Longevity Insurance – Do You Feel Lucky?

Guest Post by Lars Kroijer – Don’t buy too much insurance

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



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On Longevity Insurance – Do You Feel Lucky?

clint eastwoodFor starters, I hate most insurance products that purport to replace investment products. But I had not heard of longevity insurance until this week, so I decided to check it out.

Here’s the concept: Pay a big lump sum to an insurance company now (before retirement), in order to draw on a hefty fixed income many years in the future – but starting past the age you might not live to see.

The idea – known as longevity insurance or a deferred annuity – is meant to fit a certain type of person concerned with running out of money in the mixed-blessing event that he or she lives long enough to outlive most of his or her savings. By deferring the income for many years, a lump sum can create a significant income-for-life in later years, alleviating the risk that retirement money completely runs out.

This recent Bloomberg article offers the example of a 60 year old man who pays $125,000 to New York Life today in order to draw nearly $45,000 a year, starting at age 80 – twenty years from now. This article says New York Life offers $17,614 guaranteed annual income after age 80 for a $50,000 premium.[1]

dirty harry

The article claims a retiree’s account must grow by an unlikely 11% to match the income available from this type of deferred annuity, without specifying exactly how that percentage was calculated.

You think this is the equivalent of 11% return?

11% return?

“Go ahead. Make my day.”

I’ll use the latter Bloomberg article’s precise numbers later in this post to calculate what I think about all this, from a financial perspective.

To think about the numbers and the math behind longevity insurance, it’s helpful – regrettably – to think about the probabilities of death.

Stats about death probabilities

We know from Social Security’s actuarial tables that the risk of death between 60 and 80 – meaning in this case the risk of paying over a big lump sum and getting exactly nothing back – is significant.

The probability of death at any age each year rises, for a man[2], from about 1.1% for 60 year olds, to about 6% for 80 year olds. Combine the annual risk of death for every year between 60 and 80, and we can see – actually we know this instinctively, but still we can see – that this deferred annuity could end up worth zero.

The sum of all the one-year probabilities of death, for a man, between age 60 through age 79 is 54%, meaning that there’s a greater than 50% chance that the annuity income is never collected.

This all may seem morbid to talk about, but as my friend Clint says in The Unforgiven, “We all have it coming, kid.”

Here are some other interesting and relevant, stats from the SS actuarial tables:

A 60 year old man has an expected life of 21.27 more years. This means the average man has just 1.27 years past age 80, on average, to receive guaranteed income from the longevity insurance annuity. Taken at face value, that seems like very few years, on average, to received guaranteed income after age 80.

Next, should that man make it to age 80, the expected life from that point onward is 8.1 years. That seems more palatable from a financial perspective, and instinctively the guaranteed income for 8 years sounds more reasonable. Below I will do some math, however, to move from ‘instinct’ to ‘calculation.’

Insurance for high-probability events

Now, the low probability of receiving ‘fair value’ for this annuity premium is not – in itself – a reason to avoid longevity insurance. Insurance, after all, can make sense even for low probability events.

I pay for home insurance against complete outlier events like devastating fires or meteor crashes, even though, chances are, these won’t happen in my lifetime. (quickly knocking wood).

But since living and dying are not outlier events, but rather guaranteed events with an uncertain time schedule, I have to consider only a part as insurance against the unknown and part as a straight-up financial investment around a known event, with adjustments for the probabilities of living a certain amount of time, within a limited range – e.g. greater than zero, and something less than 45, for a 60 year old man.

Calculating the returns of longevity insurance

So what does the financial return of longevity insurance look like?

We can use a combination of discounted cash flow and compound interest calculations to answer this question.

In the New York Life quote in the Bloomberg article cited above, a 60 year old man can pay $50,000 and receive an annual income of $17,614, guaranteed for life, starting at age 80.

I’ll cover 4 scenarios for this type of longevity insurance, plus 1 alternate scenario of not buying the insurance.

Clint says it best in A Fistful of Dollars: “Get 3 coffins ready. My mistake, four coffins.”


Scenario #1 – The 60 year old dies before age 80, receives no income

In this sad case, the insurance company pockets the $50,000 premium and pays out nothing in guaranteed income. Obviously, from a pure financial standpoint, this is a losing trade. Also, this will happen 54% of the time, for the average 60 year old considering this purchase.

The Outlaw Josey Wales says it best: “Dyin’ aint much of a living, boy. You know this isn’t necessary. You can just ride on.”


Scenario #2 – The average 60 year old man

Let’s say the man lives to the 60 year old’s average of 21.27 additional years, or 1.27 years past age 80.

That 60 year old man today can expect to collect $22,369.78 total in annuity income (that’s 1.27 * $17,614).

But that average future income is quoted in future dollars, so we need to know the present value of those dollars, discounted to the present day.

We use the discounted cash flow formula PV = FV / (1+Y)^N in which

PV = Present Value – That’s what we want to figure out.

FV = Future Value – That’s $22,369.78 in this example.

Y = Some assumed interest rate. Let’s say 5% because that’s close to where NY Life discounts retirement benefits for its employees, according to their 2013 financial statement.

N = Number of years. That’s 20 years in this example.

So plugging those number into the PV = FV/ (1+Y)^N formula, our present value tell us that the future income is worth $8,430.93

Since I’m paying $50,000 today to receive the equivalent value in today’s dollars of $8,430.93, I’m not particularly excited about the value of this product for the average 60 year old man in scenario #2.

The High Plains Drifter is keeping up with this math, so I hope you are.

“How ‘bout it stranger? Think you’re fast enough to keep up with us?”

“A lot faster than you’ll ever live to be.”


Scenario #3 – Today’s 60 year-old man lives to age 85.

Again, we will apply the discounted cash flow formula, but now we have 5 years’ worth of receiving a guaranteed annual income of $17,614. More palatable, I think. But let me see what the numbers say.[3]

To figure out the total value of this income – to a hypothetical 60 year-old man living to age 85 – we’ll need to add up the individual values of the annual incomes for each of the years. So, the sum of 5 PVs, using the same PV = FV / (1+Y)^N, just calculated 5 times.

Income Year #1 (through age 81):

FV = $17,614, Y = 5%, N = 20

So, PV = $6,638.53

Income Year #2 (through Age 82):

FV = $17,614, Y = 5%, N = 21

So, PV = $6,322.41

Income Year #3 (through age 83):

FV = $17,614, Y = 5%, N = 22

So, PV = $6,021.34

Income Year #4, (through age 84):

FV = $17,614, Y = 5%, N = 23

So, PV = $5,734.61

Income Year #5, (through age 85):

FV = $17,614, Y = 5%, N = 24

And so, PV = $5,461.54

At the end of all this – admittedly much easier to do and show in a spreadsheet – The total value in today’s dollars is $30,178.43, compared to the $50,000 premium required to receive this value.

Even living to age 85, I still much prefer the insurance company’s side of the deal rather than the hypothetical 60-year-old’s deal.


Scenario #4 – The 60 year-old man lives to age 90

I’m going to fast-forward on all the formula stuff, but in this case all that is required for your calculations is to discount the annual $17,614 by ten different discount rates. The total present value at the end of ten years of income is $53,824.03. This, finally, compares favorably to the $50,000 premium. So, from a purely financial standpoint, you start to get the positive side of the deal between years nine and ten after age 80. Enjoy!

Also, by then you’ll be this guy, gruffly shouting at his neighbors to “get off my lawn!”

This assumes, of course, that 5% is the right discount rate. In other words, can you achieve an after tax return of 5%, comparable to the discount rate? If you can achieve a better return in the market, then the breakeven is significantly longer than ten years. If you think you can achieve only a 2% return outside of this deferred annuity, then your breakeven point is between four and five years.


Alternate scenario

What about that “equivalent to 11% return” quoted in the Bloomberg article? First off, I have no idea how that’s possible, and the author of the article doesn’t say. My guess is that number came straight from New York Life, and the author made no attempt to reproduce those numbers. So, shame on him.

However, we can look at what happens if you invest the $50,000 in market securities at age 60 instead of purchasing a deferred annuity.

For that, we use the compound interest formula, which is just the inverse of the discounted cash flows formula: FV = PV * (1+Y)^N, where:

FV = Future Value – what we’re trying to calculate.

PV = Present Value – That’s $50,000 in our example.

Y = Some assumed interest rate. I’ll stick with 5% for consistency’s sake.

N = Number of years of compounding. N is 20 in our example, to get to age 80. And then we can look at larger Ns, for later years, as the invested amount continues to grow.

Our $50,000, invested in the market and returning a compounded 5% annual growth, becomes $132,665.

Which, if you might die before age 80, you’re significantly better off than if had you paid that $50,000 as a lump sum to New York Life at age 60.

Now, to take income from that $132,665 at age 80 you’ll need to decide at what rate to draw it.

If you decide to withdraw 10% of the total every year – and assuming an after-tax 5% return as well – then at the end of ten years you’ll still have $70,204 left. You’ll also draw a declining income between $13k and $7.5K. That income isn’t great, but you’ll actually have some wealth you can still call your own at age 90, which can be something useful.

If you decide instead to withdraw the fixed $17,614 per year – to match the annuity assumption – again we see that the break-even is between years nine and ten, with one significant difference: There’s money left over for heirs if you die at any time between age 80 and 90 when you invest it yourself, rather than convert it to an annuity. With an annuity, there’s no money left over, ever.

Insurance companies and financial journalists generally don’t want to talk about the poor returns of their investment products.

Which kind of puts me in the mindset of certain elderly gentleman in Detroit, “You ever notice how you come across somebody once in a while you shouldn’t have fucked with? That’s me.”

In sum

I don’t know. Obviously I started out as an insurance-product skeptic, and this exercise did not convince me otherwise. From the math I’m looking at, the vast majority of people would do better by investing their own money for retirement rather than turning over lump sums to an insurance company to receive unlikely income of dubious, low value.

I’ve addressed the pure-finance angle, but some people want total certainty, and they crave a fixed income for life with no risk.

The rest of us, I think, should live with the gamble.

In the end, I must turn again to Dirty Harry to summarize.

Knowing the break-even point is between nine and ten years of guaranteed income for your life past age 80 in the example quoted by New York Life, you have a clear calculation to make.

Now, I know what you’re thinking.

“Will I live 10 more years past 80, or only nine?”

To tell you the truth, in all this excitement, I’ve forgotten myself.

So you have to ask this yourself question:

Do I feel lucky?

Huh punk? Do you?


Please also see related posts on:

Calculating Discounted Cash Flows

Insurance I – Risk Transfer Only

Insurance II – The Good, The Optional, and The Bad

Insurance III – Life Insurance As An Investment

Ask an Ex-Banker – Should I buy an Annuity?

Compound Interest – The Most Powerful Force in the Universe


[1] The article also mentions a few technical details. The US Treasury has recently made longevity insurance more viable by allowing up to either 25% or a maximum of $125,000 in retirement accounts to invest in deferred annuities like this. Longevity insurance makes up less than 1% of the market right now for insurance, but may grow as insurance marketing kicks in, and the US Treasury rule which began in January 2014 ‘normalizes’ the product.

[2] I’m going to just use the calculations for a man, because it makes it easier for me and the Bloomberg article did not give a price quote for longevity insurance for a woman. We can assume, however, that the income payout will be somewhat lower for a woman, because women live longer on average and the insurance companies will adjust their income payouts accordingly.

[3] I’m going to belabor this point by showing all of the discounted cash-flow math, because the highest wish of my life is that Bankers Anonymous readers will follow along with spreadsheets to see how useful discounting cash-flows can be to understanding finance. So – humor me?



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On Insurance, Part III – Life Insurance Calculations

Bill MurrayI 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 effective risk transfer, but an ineffective investment.

As a 41 year old non-smoking man, $100,000 of pure life insurance would cost me $91.07 per month, for the rest of my life.[1]  I would need to maintain those monthly payments – without fail every month – in order (for my heirs) to receive the $100,000 benefit when I die.  I cannot access the $100,000 myself at any time, and I cannot waiver from the monthly contribution, or I lose my entire life insurance coverage.

Another option with $91.07 per month would be to invest it myself.  Assuming a 4.35% return annually on that same amount of money, and assuming I live to precisely my expected life of 37 more years, l would have accumulated almost exactly $100,000 in savings, to match the life insurance policy payout amount.

The big difference?  I don’t have to die to use that money, either at the end of 37 years or at any point along the way.

Not only that, if I could beat the 4.35% return and achieve a 6% annualized return on investment instead, my 37 years of investing $91.07 per month would be worth $149,397.

Of course, if I die early, my investment return goes up.  So I’d have that going for me.  But then, of course, I’m dead.[2]

In addition, if I’m unfortunate enough[3] to live longer than my expected 37 more years, my implied ‘return on investment’ via life insurance looks a lot worse versus a potential return available elsewhere.

Most importantly, if I skip a few months of investing $91.07 monthly, I still control all of my invested money.  I have access to that invested capital at any point along the way in my lifetime, for other investments – or consumption – as I saw fit. 

With life insurance, if you miss a few payments, your policy lapses and all of your money disappears.[4]  In fact, the life insurance business depends on the expectation of policy lapses, as I explained in an earlier post.

So insurance as an investment never matches up attractively, at all, to other investment options. 

As a risk-transfer policy, life insurance works great, but keep that function apart from your investments.

Please see other posts on

 Insurance I – Risk Transfer Only


Insurance II – The Good, the Optional, and the Bad

[1] That’s the quote I got today from my life insurance company USAA.

[2] Although the Lama did grant me total consciousness.  Which is nice.

[3] Yes, that’s sort of sarcastic.

[4] Yes, there are versions of whole life insurance which allow you to skip a few monthly payments, or in which you get to borrow against ‘accumulated value’ in the policy, but I’ll make two quick points about that.  1. That skipping option gets reflected in your premium price (which will be higher than the $91.07 that I got quoted for a very stripped-down policy, and  2. That option to access ‘accumulated value’ is a way to ease you into the unholy alliance of risk-transfer and investment, violating my cardinal rule of insurance, which is to keep those two functions entirely separate.

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