Insurance = Short Term, Long-Term Investment

Many people assume that insurance is a long-term program. This assumption is not entirely correct. The insurance actually not a long-term program, but a program of short-term or medium-term furthest.

If there are long-term insurance products, such as the type of endowment and unit-linked products, it is the savings or investment. Own insurance difficult for so-called long-term program. Why?

If you take out a life insurance (unit-linked or not) with the benefit of the soul UP 1 billion, then the money 1 billion may seem large at the present time, but will decrease in value in the future. For now, the money 1 billion could be used to buy luxury homes, but 10 years later perhaps only secondary home alone. And 20 years later, the house may not be a very simple matter.

If you take out health insurance (unit-linked or not) with the benefit plan rooms 1 million, it is still able to obtain the contents VIP class 1. But 10 years later, the room for $ 1 million a day is probably equivalent contents rooms 4, and 20 years later may be no more room in the hospital at a rate of 1 million overnight, just as we are now difficult to find room for 100 thousand.

So, if you take out the insurance, intend was for a short period only, a maximum of 5 or 10 years. After that you have to increase the benefits of your insurance policy, either by upgrading the existing policy or add a new policy.

Because of the assumption that insurance is a long-term program, I've got a request from prospects who want health insurance for retirement. The current age of 40 years and plans to retire at the age of 55 years. This time as long as it works, health insurance borne by the office. He's already getting quotes from other insurance in the form of unit linked products with premiums 1 million per month and benefit plan room 800 thousand. When I say that 15 years from now room 800 thousand might just get a 3-class room, he was shocked and finally realized that it is very naive taking health insurance now with the intention for future use.

While investment is indeed a long-term program, because the benefits of new investment will be felt in the days to come. Investment is useful to meet our needs in the future, such as college kids, pilgrimage, and pension funds. If we regularly invest in mutual funds for example 1 million per month, its value still feels small in the early years. Only after 5 years, or 10 years, worth more pronounced, and if consistent in 20 years it would be very surprising.

Knot

Insurance is a program of short-term because the longer the value gets smaller.

Investing is a long-term program because the longer the greater its value.

There is a saying: "Bit by bit long into the hills". This is about saving or investing.

As for insurance, must be reversed proverb: "Hill that continues long into the eroded lowland"

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