Life Insurance
What fortune 500 companies make the most money? Bar far, the biggest money making companies are into drugs and life insurance. Life insurance companies have oodles of money. The reason is that it is such a profitable business. The top three drug companies and the top three life insurance companies probably make more than the rest of the fortune 500 put together.
Term Life Insurance
Term life insurance is the good life insurance to buy. For around $50.00 per month you can get pretty good coverage for your family. You are buying insurance and that is all it is. When you die, the company pays out a determined amount of money to your family.
Whole Life Insurance
Whole life insurance is known to be a giant ripoff. It is sold under many different names to confuse the investor. Some people call it annuities and others call it cash value life insurance. The problem here is that people are bundling investing with insurance. The actuaries have figured out how to carefully strip you of your investment returns while providing a tiny investment insurance. One rule of thumb is to never mix insurance with investment. The two do not go together; ever.
Why do Life Insurance Companies Make so Much Money?
There is a simple fact that less than 2% of the claims are ever paid out. There are all kinds of exclusions to payout that are not disclosed when you purchase the insurance. However, the main reason is that most people simply drop coverage. After you drop for even a short while, they may not take you back. How many people are really going to keep paying the fee for their entire lives and never miss a payment? How easy it is to get dropped or have the rates skyrocket after you miss a couple payments. The other factor is that when people get older they get sick and are in the hospital for a time before they die. How many people are able to make all their payments when they are laid up in the hospital? You only have to miss one payment to have the life insurance void. Here is the bottom line, hardly anybody ever collects life insurance and as an investment it is carefully designed to rip you off.
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