27 May 2007 No Comment Print This Post  Email This Post

What happened today was funny yet disturbing. I was going over finances with my parents and as we were looking at their credit card bill, it turns out that some BS company had tricked my dad into buying life insurance over the phone a few years back and hes been charged $10 a month for a few years. How can they sell something like life insurance over the phone? My dad didn’t even know what he was buying and they had the nerve to start the policy with his supposed “consent”. So basically I called them, the salesman gave me some stupid reasons to have us keep the policy and at the end of the day the policy was canceled.

That got me thinking about life insurance for young people like us. My parents bought me a policy when I was 17 through a family member who was selling insurance. Out of pity or ignorance, I now have a life insurance policy that my parents have been paying for since I was 17. I’m now 22 with no kids. I find it idiotic for insurance salespeople to try to sell us life insurance being that we’re young and have no dependents. The purpose of life insurance is to replace your income stream so that dependants won’t have financial difficulty if you’re gone. The money is supposed to get them through the adjustment period. If you do not have kids, you do not need life insurance. Lets say for the sake of argument (knock on wood), something were to happen to you. The policy pays out say 70K to your parents. Think about this….what good does that do your parents? They can’t buy another you with that 70k. They won’t be jumping for joy.

So why would you pay $20-$100 depending on type and coverage for a life insurance policy if you are young and have no dependents? Yes the policy will pay out $50-$100K but remember that only happens when you are gone. And like I said earlier, your parents aren’t going to say, “Thank God she bought that policy, now I can buy a new Mercedes.” Insurance salesmen will tell you this and that because they want their commission. They get paid continuously until you cancel your policy. They’ll make it sound like you need it, trust me.

That money is way better off being invested every month. If you don’t die soon, then you’ll have a nice junk of money put away over the years. I’m not against life insurance at all, quite the contrary. When the time is right, like when I have kids, I will buy a term life insurance policy. I’ll give my take as to why term is the best way later.

Moral of the story is, for one, don’t buy life insurance over the phone lol. Just kidding. Know what you’re buying and keep in mind that every so called advisor’s agenda is their own. Also, keep a close eye on your credit card statements, sometimes I find the most random $5 a month charges on there that I don’t remember signing up for. Sneaky bastards.