Ever visited life insurance consumer sites? Then, you should have noticed how some people can be critical about life insurance. They say life insurance is all scam. Even if you have not read something like that, you may share the general negative attitude that many people cater to about life insurance. If you are in doubt about life insurance, this post is for you. It shares 3 most upsetting life insurance facts lack of information of which may impact your financial planning.
As a result of negative criticism, you may wonder whether you should buy life insurance at all or not. You may also decide not to insure yourself while you should. Also, you may find it difficult to decide which company you should go to and trust.
Let not qualifiers like scam, bullshit or cheater or bloodsucker overwhelm you right now. Note that it is a matter of your family’s future security. Instead, get to the life insurance facts before you decide.
Most Overwhelming One of the False Life Insurance Facts: Life Insurance Is a Scam
Despite the prevalent popular negative attitude toward life insurance, purchase of life insurance by most of the U.S. citizens is a proof that they have trust in life insurance industry. Nearly 60% of the Americans have sought life insurance protection for their dependents. Around 27.52 million of the U.S. nationals purchased life insurance in 2016.
The statistics suffice to tell that many of the buyers have instances and experiences that tell them to buy life insurance. Often, purchasing life insurance comes almost as a tradition of trust to many families.
Most Confusing One of the Life Insurance Facts: Life Insurance Companies Don’t Pay
Many people believe that life insurance companies do not pay. They also think that insurers keep finding loopholes so that they may not have to pay to the policyholders. While it may apparently seem that life insurance companies are averse to paying benefits to the beneficiaries, the fact may be quite different. You need to know that life insurance companies are 100% strict with respect to following their terms and conditions.
They cannot hold you from getting what you deserve if you are eligible for a claim. Once your claim meets their terms and conditions, you receive your benefit without a hassle. Insurers have paid in billions to their customers. Below are examples of life insurance companies’ paying benefits to the eligible customers.
In 2016, MassMutual paid nearly 5 billion and New York Life 10.1 billion to their policyholders. Nationwide’s payout to their customers was $17.2 billion.
What about the total benefit paid out? Well, Professor David Cummins tells us in Responsible Regulation, “$774 billion in life insurance, annuity and disability payments from 2010 to 2014, an amount equal to 20 percent of Social Security payouts during the same period.”
So, that life insurers do not pay benefits is not a true.
Most Doubtful of the Life Insurance Fact 3: Insurers Pay Don’t Pay Dividends
Switch on the TV, read one of the most-read newspapers like New York Times or Forbes, you will find people making jihad against whole life insurance. And, this may lead you to believe that participating whole life insurance is all too bad.
Sometimes, you will find critics speak in a way that makes it look like a villain that promises you dividend without guarantee. Yes, dividend, which is your takeaway of the profit that mutual insurance companies make, is not guaranteed.
While it is true participating whole life plans are not as good as agents tout them to look like, they will surely not take your money away. You will usually benefit from your insurance and also get dividend. So, let not a myth take away your peace of mind.
Life insurance companies do not guarantee dividend because money market can be agile any time and there may be losses. But wonder not to hear the life insurance fact that some life insurance companies have been paying dividends to their customers for more than a hundred years without exception.
For example, New York Life, who introduced dividend share in the industry, have been paying dividends to their policyholders since 1854. They are expecting to pay $1.78 billion to their customers who have participating life insurance policies with the company. Counting from 2012, their dividend payout rate has kept increasing to 37%, going upward every year.
Mass Mutual also has made dividend payout consecutively for since 1869. They paid $1.5 billion to their participating life insurance policyholders in 2016. In 2018, they are expecting to pay 1.6 billion to the eligible customers.
Northwestern Mutual has approved $5.3 billion to disburse in 2018. They have been paying dividends since 1871. The amount is $147 more than they paid in 2017.
Whether you may or may not need life insurance depends on what financial situation you are in. But most people, the average ones, need it. If you are one of them, let mistrust not impact your decision.
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