Monday, November 1, 2010

Inflation, savings and life insurance

A consumer told me that he is willing to take a life insurance policy if he can get back the total premiums that he has paid over a period of 20 to 30 years, without interest. He considers that he is getting good value from the life insurance and does not mind giving up the interest - so long as he gets the total premium back.

The consumer is not savvy and does not realise that over a period of 30 years, the value of money could fall by 50% to 75% of the real value, due to inflation. The real cost of the life insurance protection is only 20% of the amount of interest that he is giving away.

Read this article. http://tankinlian.com/admin/file.aspx?id=253