taw, real life insurance costs increase drastically as you age, but only if you are beginning the policy. They don’t readjust the rates on a life insurance policy every year; that’s just buying a series of one-year term-life policies.
I.e., if I buy whole-life insurance coverage at 25, my rate gets locked in. My monthly/annual premium does not increase as I age due to the risk of dying increasing.
In the UK these are called life assurance policies. Assurance, because the event (death) will assuredly happen. You pay a fixed annual sum every year; the insurance company pays out a lump sum when you die. It is a combination of insurance and investment.
Insurance, because the death payout happens even if you don’t live long enough for your payments to cover the lump sum. Investment, because if you live long enough the final payment is funded by what you put in, plus the proceeds of the insurance company’s investments, minus their charges—part of which is the cost of early payouts to less fortunate people.
Some versions have a maturity date: if you’re still alive then, you collect the lump sum yourself and the policy terminates. At that point the lump sum will be less that what you could have made by investing those payments yourself. The difference is what you are paying in order to protect against dying early.
As always, remember that investments may plummet as well as fall.
All these benefits come with a guarantee that your premium won’t change. The basic premium you agree to now will remain the same throughout the life of your policy.
So umm… yeah. That’s how life insurance usually works.
ETA: This is the first time I’ve heard, “life insurance doesn’t work” as an objection to cryonics.
If you don’t mind my asking, how much goes in, and how much comes out? taw’s math that no policy is going to pay out more than fifty times the annual pay-in seems like it has to be right.
Remember that a lot of people who get life insurance policies cancel them before they die, or fall on hard times and can’t pay the premiums. I’m 24 and healthy. I went the more expensive route and got whole life insurance, so my premiums are $64/month. With Alcor dues I end up spending about a grand per year on cryonics. Did I mention I picked what is basically the most expensive option? (Alcor whole body preservation with whole life insurance). You could easily cut that down to $300/year if you went with CI and term life insurance.
$64 * 12 * 50 = $38,400, which is a bit less than the policy of $200k. If that money were invested every month, it would end up being significantly more than the policy amount.
Why is it stupid? Young people are the best customers- they aren’t likely to die anytime soon so insurer’s make a bundle off them even with the lower rates.
taw, real life insurance costs increase drastically as you age, but only if you are beginning the policy. They don’t readjust the rates on a life insurance policy every year; that’s just buying a series of one-year term-life policies.
I.e., if I buy whole-life insurance coverage at 25, my rate gets locked in. My monthly/annual premium does not increase as I age due to the risk of dying increasing.
How does the insurer hope to make a profit, given that they’re probably betting on death being inevitable?
In the UK these are called life assurance policies. Assurance, because the event (death) will assuredly happen. You pay a fixed annual sum every year; the insurance company pays out a lump sum when you die. It is a combination of insurance and investment. Insurance, because the death payout happens even if you don’t live long enough for your payments to cover the lump sum. Investment, because if you live long enough the final payment is funded by what you put in, plus the proceeds of the insurance company’s investments, minus their charges—part of which is the cost of early payouts to less fortunate people.
Some versions have a maturity date: if you’re still alive then, you collect the lump sum yourself and the policy terminates. At that point the lump sum will be less that what you could have made by investing those payments yourself. The difference is what you are paying in order to protect against dying early.
As always, remember that investments may plummet as well as fall.
AngryParsley did a good job summing it up below.
1) While death is inevitable, payout is not.
2) Investment income.
3) Inflation eroding the true cost of the payout.
I’d love to see which insurer is stupid enough to offer something like that. Care to provide links?
I have a policy with Kansas City Life Insurance:
So umm… yeah. That’s how life insurance usually works.
ETA: This is the first time I’ve heard, “life insurance doesn’t work” as an objection to cryonics.
If you don’t mind my asking, how much goes in, and how much comes out? taw’s math that no policy is going to pay out more than fifty times the annual pay-in seems like it has to be right.
Remember that a lot of people who get life insurance policies cancel them before they die, or fall on hard times and can’t pay the premiums. I’m 24 and healthy. I went the more expensive route and got whole life insurance, so my premiums are $64/month. With Alcor dues I end up spending about a grand per year on cryonics. Did I mention I picked what is basically the most expensive option? (Alcor whole body preservation with whole life insurance). You could easily cut that down to $300/year if you went with CI and term life insurance.
$64 * 12 * 50 = $38,400, which is a bit less than the policy of $200k. If that money were invested every month, it would end up being significantly more than the policy amount.
Why is it stupid? Young people are the best customers- they aren’t likely to die anytime soon so insurer’s make a bundle off them even with the lower rates.