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That was quite a hiatus from the world of personal finance. A number of you wrote in asking if I was away on work-related travel again — since whenever the blog goes silent it’s usually because I’m traveling. This time though, I was helping D venture into the fascinating world of entrepreneurship. The past couple of weeks have been a roller-coaster ride as we’ve had to significantly evaluate quite a number of things in our life. (Should D leave her job or not? Should we discuss this step with family members or not? Should we even get into all this at all? What if everything fails? How would people around us react? And quite a number of other such, generally pessimistic, thoughts.) I’ll probably compile all of this into a series of articles — I’ve seen a good number of people having similar thoughts and ultimately failing to take even a single step forward. But all of that for a bit later. It’s back to the world of personal finance for now.
So, here’s this headline that recently caught my attention –
A Life Insurance Plan where you pay for 12 years and get double of what you’ve paid every year for the next 12 years, guaranteed.
It’s got to be good right?
But take a look at these charts –
Chart that shows how the life insurance company can afford such claims purely off the interest earned from the premiums that you pay! (Click on the image to see a full-size version.)
Illustration that shows just how profitable you can be for the life insurance company. (Click on the image to see a full-size version.)
Illustration that shows how, in general, you’re generally very profitable for the life insurance company. (Click on the image to see a full-size version.)
After seeing all this, why would you even want to invest in such a plan? Oops! See there you go — we subconsciously used the word “invest” when we’re actually looking at a “life insurance” plan. Stay away whenever you even get a whiff of such a thing.
Thanks for reading this article. I'd love to hear your opinion. Please use the comments section below to share your thoughts. I frequently write new articles that also cover several other aspects of personal finance including credit cards, financial goals, health insurance, income tax, life insurance, mutual funds, retirement planning, and much more. You can Subscribe through Email and receive new articles directly in your Inbox or you can Subscribe through the RSS Feed and receive new articles in your feed reader.