Source: p 336, Personal Finance For Canadians For Dummies (4 ed, 2006; but a 5 ed (2010) exists) by T. Martin, E. Tyson
“Cash value policies are all paid up after x years. You don’t want to be paying life insurance premiums for the rest of your life, do you?”
[...] Imagine that [1.] you’re currently paying $500 a year for auto insurance, and
[2.] an insurance company comes along and offers you a policy for $4,000 per year. The representative tells you that after 10 years, you can stop paying and still keep your same coverage.
We’re surethat you wouldn’t fall for this sales tactic, but many people do when they buy cash value life insurance.
I generalise the quote above to all insurance, and not only 'auto insurance'. Why is 3 deceptive and harmful? The use of
We’re sure suggests something obvious which I have neglected.
I assume that one needs insurance for some good or service for at least 30 years. Then 2 (a total of $4,000 x 10 years) appears cheaper than ($500 x ? years), because the breakeven number of years is $4000*10/$500 = 80 years.