Many people still rely on life insurance policies as an important form of personal savings for the future, either for their own retirement or for their children. They may save 10 to 15% of their monthly incomes. The accumulated savings over a working life could amount to $500,000 or more.
It is important that they avoid insurance policies that take away a large part of their accumulated savings. This is stated in the column "effect of deduction" in the benefit illustration. I have seen many benefit illustrations where the deduction is 40% or higher. This is excessive. If the accumulated savings is $500,000 and 40% is taken away, you are left with only $300,000. Surely $200,000 is too much money to give away?
This will make the insurance agent and insurance company rich, but the policyholders poor. In many cases, the maturity benefit may not even keep up with inflation!
The "effect of deduction" is explained in my book, Practical Guide on Financial Planning. It also contains tips on the types of investment to avoid, such as structured products and unrelated investment products. It also advice you to invest in low cost investment funds.
If you wish to invest in a life insurance policy, as you are not familiar with other types of investments, you must make sure that the effect of deduction does not exceed the benchmark shown in my book. The benchmark depends on the period of investment.
Spend $12 and 12 hours to be educated. Buy and read the book.
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