Life Insurance: Is It A Foolish Purchase?

Are life insurance companies taking from the poor and giving to the rich? Are their premium rates higher than what they need to be? You probably have asked yourself the same questions many times.

First, we can probably assume that you and I agree that it is difficult to defend any large corporation. If we accept that almost as a universal given then the real question you and I need to ask ourselves is, are insurance companies giving us a fair exchange for our premium dollar?

Is probably worth while, however, for us to participate as consumers in the life insurance picture. In its simplest form life insurance is simply a case of spreading risk across a large group of people so you and I might benefit. Of course, in its role as an administrator the life insurance Company probably makes an out better than anyone else but the product or service that they all for is an extremely important one.

The best perspective for us as consumers is to focus less on how much profit the insurance companies are making and look instead at how we can profit from the situation. There is no doubt that in many, many cases individuals do profit enormously.

Even though the typical way of profiting from a life insurance policy is for someone to die nevertheless, once we get past the selfish jokes it is the individual with a mature and rational love for spouse and family that makes the purchase anyway.

Yes, it is more frequently true now that both parties in a marriage, for instance, do have full time jobs but that hardly means that the surviving partner will not have a very difficult time financially in the event of death. Most families in America now are multi-income families and very much dependent on that second or third source of income. Especially in today's mortgage market with many people having very high monthly mortgage payments it is very important to be financially secure.

Perhaps the best way to walk that fine line between over paying on a life insurance policy and the need for a reasonable amount of life insurance is to always deal with a local independent agent. While they are going to have as much drive to make money as anyone else at least they are free morally and legally to seek out the best buy for their clients. It's your duty to be sly in working with any agent but again you'll save the most money by dealing with a local agent.

As to our original question regarding whether the purchase of life insurance is a foolish expenditure the simple answer is not when the end result is going to help protect financially someone that you care a lot about. A simple cost and benefit analysis exploring the idea of spending $25, or $50 for a monthly premium in exchange for $100,000 of financial security for a loved one really is a simple decision. It is a wise decision and not a foolish one.

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