Don’t Burn The House Down!
Years ago an interesting experience happened to my friend Steve. He was in Meijer (a one stop grocery and everything else mega store) when he heard people that were coming into the store saying “There is a car on fire out there!” In his curiosity Steve made his way out of the store to see the spectacle. He noticed the smoke was coming from close to where he parked. Sure enough, it was his car on fire! Steve was very glad that he had taken out full insurance coverage on his car!
My wife has an uncle who was in the insurance business. We decided to do our house and car insurance through him. We have faithfully paid our premiums through the years like almost everyone else. Very rarely have we had any kind of claim. Personally, I don’t like insurance companies. In almost any city you go to the insurance companies and the banks have the largest buildings. Yet when you think about it, what do they actually do to make revenue? The answer is they take money from you and I and do their advertising and build their buildings with it! They make enormous profits from the gamble that they will take in much more money than they have to dish out. Obviously it is a business and they don’t have to take us on as clients. They are experts on the percentages of risk involved with each of us. When they write up a policy it has to go to the home office for approval. If you and I are good risks (not likely to make a claim) then we are approved! Otherwise they have an option not to take us on as a clients. Obviously my family has proven to be good risks through the years. We are paying out hundreds of times more money than what we have ever claimed.
When I’m buying something I like to get instant satisfaction from the purchase. Insurance doesn’t do that for me. Insurance companies take advantage of the fear factor. I have paid for house insurance for almost thirty years now and I may have had one very small claim. Yet each year I get the annual bill. The bill doesn’t stay the same amount either. You would think it would go down as we have such a good record of not claiming. As my house gets older apparently there are more risks. At least that is how the insurance company sees it as they add more premium to my bill. We do get a very small discount because we have a smoke alarm. We know that it works too as a couple of times through the years something got burned in the oven triggering it.
Of all of the insurances you can buy life insurance is the most misunderstood. The first problem is that it really should be called death insurance. Of course nobody really wants to think about it in that way and the insurance companies try to put more of a positive spin on it for marketing. Instead of just selling us straight insurance they also include a “savings program” to add some life to their policies! If you just bought insurance without the “savings program” that is called term insurance. Usually you have to almost hold a gun to the insurance persons head to sell you the term. They are all pushing for the savings program insurance such as whole life, universal life and the like. They will argue that term is not “permanent insurance” and should be avoided. Why do they want to sell the policies with the “savings program” in them? The answer is that the premiums are double and triple the amount of straight term policies. The more the premium the more commission for the salesperson!
The insurance person will argue that at least with the savings program you are getting more than insurance. They will argue the “what if you don’t die?” argument. Of course we all would like to live a long long time and buying just insurance for an early death isn’t real appealing. So we listen to all of the benefits repeated about this wonderful “savings program” within our insurance policy. We are intrigued when they tell us how much the “cash values” will be worth in a certain amount of time.
The truth about the “savings program” is that if you die your beneficiary does not get it! Let me say that again they will not get the savings program! The insurance company will argue that the savings program is included because as we get older the actual insurance costs more and needs to be supplemented by the “cash values”. Let me give you an example of how it really works. Let’s say that you buy a whole life policy with a face value of $50,000. Let’s say that the premium you pay is $600.00 a year. Let’s say that you could get a term policy for $200.00. Paying the extra amount is sold to you by the fact that a “savings program” is included in the policy. The person pays on this policy for years and accumulates $10,000 in “cash values” and then they die. You would think the beneficiary would get the $50,000 plus the $10,000 right? Not so, the payment would only be the face amount of the policy $50,000. So what happened to all of the extra money in premiums paid throughout the years? It was quietly swept under the rug. OK lets say the person lives and now wants to take their “savings program” to retire on. Well they can take the savings but that means they are cancelling the policy. Another option that the insurance company will generously point out is that we can borrow the money. After all we can keep the insurance in this fashion. Let me get this straight, I have been overpaying my premiums all of these years and now that I want some of my “cash values” I have to borrow my own money? Remember that $50,000 policy we talked about. Let’s say that the person “borrowed” $10,000 of their cash values and died. The amount of the check to their beneficiary would now be $40,000 ($50,000 – $10,000). In this case it probably would be less than $40,000 as interest is also charged on “the loan”. In conclusion you pay for both but you cannot have both. Either you get the insurance or you get the savings program. If you want your insurance and you would like to get some cash values too you would have to borrow your own money and pay interest on it! If you have to borrow the money is it really your money? What did the insurance company do to get the money for you to borrow? They charged you more for the benefit. It was originally your money but they sneakily put it in their account!
Now before everyone runs out and cashes in their old “cash value” policies for term make sure that you are insurable. As bad as these “cash value” policies are at least they are insurance. Insurance companies deal in risk and they may not want to insure you anymore. However if you are younger and insurable consider cashing in your old cash values policies and buying term insurance. Take that difference and invest it in something that will grow and is outside of your insurance policy. That way it is your money and if you need it you won’t have to borrow it or cancel your insurance.
Having said all of that let me say that insurance is necessary. Having some kind of catastrophe happen could be devastating to a family financially. When someones house burns down the first thing observers are likely to say is “I hope they had insurance”. We buy the “peace of mind” that comes when we figure that if anything did happen we would be protected. That peace of mind is very important and it is what keeps the insurance companies in business.
Since the uncle of my wife has retired we were referred to his replacement. We have been paying our premiums and now she is the beneficiary. Every now and then we talk to her if something comes up, but for the most part our dealings with insurance is the yearly and semi annual payments through the mail. I used to tell my son if we were leaving him alone for awhile “don’t burn the house down”. Of course, if that happened his safety would be the only thing that mattered. The house could be replaced because we continue to pay for our “peace of mind”.
So many of us in our christian walk treat God like our insurance person. With him it is fire insurance he provides that gives us peace of mind. If we need him he is there. If we don’t need him we just continue paying the premiums and hope that if we have to make a claim he’ll be around. God wants to be so much more of a part of our lives than our fire insurance agent! He wants to walk with us every step of the way as we walk with him! He wants to be our best friend and guide us into all righteousness in our daily lives! What the insurance company can’t and won’t give us God gives us in abundance! For giving our life to him we get so many benefits! We get peace of mind, we get eternal life, we get a heavenly home prepared by our savior, we get a counselor and a friend! Lastly we get fire insurance from the one who loved us so much that he died for us! There are no fine print items that takes away what the larger print gives in this policy! It is backed up by the word of God that always speaks the truth! It is a policy of love from Jesus and it is written and signed with his blood!