Tuesday, November 23, 2010

Insurance Meant for Protection, Not Investment

There's been letters about term insurance in the papers recently. I've never heard of Term Insurance until the 2008-9 financial crisis with those Minibond investors losing $ & Tan Kin Lian attempting to recoup their $. Is on his blog that he talk about term.

A no. of personal finance books talk about buy term & invest the difference. I'm in favor of this approach. No doubt will lose $ in beginning but the learning experience will be worth it in taking control & increased self-confidence & esteem. Furthermore this 'life skill' is applicable in other countries' markets & no age limit & discrimination.

Analogy i can think of for Insurance & Equities are a tank & a sports car. Both are vehicles built for different purposes. Tank=insuranace, Sports Car=equities. A tank can travel too but it won't go fast to reach your destination of financial security (or independence/freedom). A tank is heavily armored to protect the crew as what insurance is supposed to do.

Insurance industry spend a ton of $ on advertising. Little to none is spent on educating. Without ignorant people, it won't be easy to sell high profit margin products to boost its bottomline. Ignorance in financial matters is not bliss. Ignorance is pain, exploitation by others & slavery.

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