You may never see an offer like this. No one would buy, right? It is too obviously a bad deal.
But people get tricked into doing essentially the same thing, all the time. Buying insurance you do not need is a lot like buying dimes, eight for a buck.
A recent retiree told us about being offered “Medicare Supplement Plans” where the one that had a potential $180 per year exposure to deductibles was $250 cheaper than the one that featured full coverage. The agent said most people prefer the “better” policy, desiring full coverage. But when you think about it, why pay $250 to save $180?
Another told us of a proposal to buy long-term care insurance, which sometimes makes sense. But this person supported a lifestyle that already cost more than long-term care, a lifestyle whose expenses would disappear if the need for home care or assisted living or long-term residential care emerged. A more expensive lifestyle would disappear if the cheaper long-term care lifestyle came into play. No coverage needed!
These thoughts came to mind as I cancelled a disability policy into which I had faithfully paid each month for forty years, one that would have provided needed benefits when I had large family obligations and little in the way of other resources.
Insurance is a marvelous invention. We believe in buying all of it that you need—and none that you don’t.
Otherwise, you’re buying dimes, eight for a buck.
Clients, if you would like to talk about this or anything else, please email us or call.
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