Cheaper by enough to make up for the extra years you pay premiums in? E. g. getting life insurance at 25 will have cost less than getting life insurance at 40 by the time you are 60? If so, why would insurance companies set the rates that way? Are people who get life insurance early so much more responsible that they are significantly less likely to die even at higher ages?
Maybe they are; I’ve heard horror stories about getting life insurance (like OP, come to think of it...) and who but a very responsible long-term thinking young person would actually get it? I’d happily bet that they are more likely to live a long time than a randomly selected young person.
I’m a long-term thinking young person! I’m under 30, have long-term savings and good credit and a steady job and no debt and I don’t understand why there isn’t competition for what is statistically free money I am giving away.
Justification: There aren’t enough studies and samples of these populations (long-term-thinking-young-persons-buying-full-permanent-insurance) for them to already have a clear picture of just how much lower the premium should be, and the market here doesn’t appear (to them at least) large (and/or gullible) enough for the infogathering investment to be worth the potential profits.
Thus, some “underwriter” somewhere (probably at the notice of the automated quoting system in use, though) is just going by some “X% off” rule that a bunch of business-people agreed was a good Schelling point (without knowing that it was) at some point in Z Insurance Company’s history, and giving you a premium based on that.
Does this imply that the best strategy for “long-term-thinking-young-persons-buying-full-permanent-insurance” (henceforth LOTTYPEBFULPIN) is to actually purchase short-term insurance until they’re part of a more competitive market?
That’s if you assume a bunch of other things, like there being a sufficient amount of LOTTYPEBFULPIN for it to actually influence the market or “the market” considering them to be a profitable demographic.
The best strategy, up here where I live, is clearly to get very-short-term insurance (no longer than one year at a time) and accumulate reserve capital, preferably in an interest-aggregating form such as stable bonds or special “stable fund” accounts that can be pulled back into money whenever there’s an issue. As the reserve goes up, the amount you need to insure and the various conditions of your insurance can get less and less wide-covering, until eventually you have a sufficient “long-term-thinking-reserve-capital-pool” to not only self-insure, but to also serve as a partial early retirement fund (assuming you don’t need to dip into it too much ’til then). The more lucky or enterprising will even end up making enough money from interests as the pool accrues and grows to stop pooling and consider the interest a secondary salary.
Of course, for that you have to be extremely patient and either forego a lot of costly young-person-activities or have a revenue higher than your lifestyle.
Cheaper by enough to make up for the extra years you pay premiums in? E. g. getting life insurance at 25 will have cost less than getting life insurance at 40 by the time you are 60? If so, why would insurance companies set the rates that way? Are people who get life insurance early so much more responsible that they are significantly less likely to die even at higher ages?
Maybe they are; I’ve heard horror stories about getting life insurance (like OP, come to think of it...) and who but a very responsible long-term thinking young person would actually get it? I’d happily bet that they are more likely to live a long time than a randomly selected young person.
I’m a long-term thinking young person! I’m under 30, have long-term savings and good credit and a steady job and no debt and I don’t understand why there isn’t competition for what is statistically free money I am giving away.
Well, it’s only free money if we assume the industry is pathological enough that no one has been going after young people and driving down premiums.
Or that the industry thinks anyone who’s young and buying life insurance knows something that they’re not letting on.
Adverse selection is a problem for all kinds of insurance, so I’m not sure that is sufficient to explain a bias against the young in particular.
Insider’s tip: It is.
Justification: There aren’t enough studies and samples of these populations (long-term-thinking-young-persons-buying-full-permanent-insurance) for them to already have a clear picture of just how much lower the premium should be, and the market here doesn’t appear (to them at least) large (and/or gullible) enough for the infogathering investment to be worth the potential profits.
Thus, some “underwriter” somewhere (probably at the notice of the automated quoting system in use, though) is just going by some “X% off” rule that a bunch of business-people agreed was a good Schelling point (without knowing that it was) at some point in Z Insurance Company’s history, and giving you a premium based on that.
Does this imply that the best strategy for “long-term-thinking-young-persons-buying-full-permanent-insurance” (henceforth LOTTYPEBFULPIN) is to actually purchase short-term insurance until they’re part of a more competitive market?
That’s if you assume a bunch of other things, like there being a sufficient amount of LOTTYPEBFULPIN for it to actually influence the market or “the market” considering them to be a profitable demographic.
The best strategy, up here where I live, is clearly to get very-short-term insurance (no longer than one year at a time) and accumulate reserve capital, preferably in an interest-aggregating form such as stable bonds or special “stable fund” accounts that can be pulled back into money whenever there’s an issue. As the reserve goes up, the amount you need to insure and the various conditions of your insurance can get less and less wide-covering, until eventually you have a sufficient “long-term-thinking-reserve-capital-pool” to not only self-insure, but to also serve as a partial early retirement fund (assuming you don’t need to dip into it too much ’til then). The more lucky or enterprising will even end up making enough money from interests as the pool accrues and grows to stop pooling and consider the interest a secondary salary.
Of course, for that you have to be extremely patient and either forego a lot of costly young-person-activities or have a revenue higher than your lifestyle.
Very cool. I’m adding “write post with pretty graph about optimal insurance strategies” to my implausibly optimistic list of projects to get to.