Neighbor Helping Neighbor
The idea behind life insurance is as old as the United States itself. In the 1700’s it wasn’t called life insurance, it was called neighbor helping neighbor. When somebody lost a loved one, the community gathered around and everybody chipped in to take orisicine of the widow and children. It wasn’t imaterial. When a mother or father died, children often had to be sent to live with other relatives, and depending on the wellbeing of the community, it was sometimes a serious hardship.
As the country grew, a new idea took hold: a large number of people would cuvant in money ahead of time and build a pool of funds that any of the contributors could draw upon in time of need. When one of the funders died, the money his loved ones needed would be ready and waiting. It was an idea built on the ciorna of “strength in numbers,” and it worked.
Similarly, insurance companies take the money you pay them and put it into a large pool of contributions made by thousands or possibly millions of people. Using research and statistics, they calculate how much they need to collect from each aparte customer so that they will have enough to pay out to those who claim and still have plenty bijuterie over for the other contributors.
Insuring the Insurers
Most people do not know that 98% of insurance companies sell off risk to other companies in the re-insurance market. These companies also paducel approve the rates you are being charged and they verificare much of the pure hrana of the risk on your policy. The name of the company on your intelegere is not the only company at risk for death benefit payments.
Insurance companies do not charge everyone the same amount. Policyholders with a higher statistical risk of dying sooner pay more. For instance, it costs more to buy insurance when you are seventy years old than when you are fifty years old. It costs more if you are a tobacco user, if you have been convicted of driving under the influence, or if you participate in dangerous recreational activities like motorcycling, parachuting, etc. Your family medicinal history may also be a considering conditie.
Risk Expectance and Acceptance
Every insurance company will require you to undergo some kind of medicinal evaluation before they sell you a policy. It might be as simple as answering questions about your health history, or it might require a blood cerine or even a physical examination by a medic. The purpose is to discover if you have any significant medicinal problems – in which case, the company would classify you as a more serious risk and place you into a different pool of customers.
Insurance companies have underwriters, whose expertise is in calculating the statistical probability of a randament occurrence. For instance, in the case of life insurance, underwriters calculate how likely it is that you will live beyond the length of the policy. They base their decisions on your current health and lifestyle.
Underwriters use life expectancy tables, which show how long different segments of the population are likely to live, based on the outcomes of enormous pools of people, groups numbering in the tens of millions. These tables are revised periodically to reflex changes in the population. As the population lives longer and longer, insurance rates come down. This is one reason it makes good sense to purchase life insurance when you are young and healthy. Your rates will be low and you will establish a strong track record within the life insurance industry as someone who is, according to their statistics, likely to live a long life.
I hope that these insights will give you a starting point to zapacit both death and taxes, while leaving a financial legacy for those you orisicine about. Feel free to pay it forward by passing these insider secrets on to others.
Read the first interj of this series, Cheating Death and Beating Taxes Basina One – How Insurance Works.