Power of marketing

Here is an example of the power of marketing, that act against the interest of the customer.

If you are 30 years old, you can insure for $100,000 under a decreasing term plan and pay only $8 a month.

The insurance agent does not offer this product to you. He will tell you to buy a whole life plan and pay $160 a month (ie 20 times of the cost). His marketing pitch is, "if you buy a whole life policy, you can get a return".

The return on the whole life policy is probably 3% per annum.

If you pay for the term insurance separately and invest the difference to earn a modest 5% per annum, you can get 20% more at the end of 20 years. The difference could be higher.

Why does the whole life or endowment policy pay a poor return? This is due to the commission that is paid to the agent. It can take away up to 1.5 years of the premium.